NITIKA BACHHAWAT

Revision Charts – CA Inter

Share and Share Capital

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Shares section 2(84): share is a share in the share capital of the company and includes stock.
Share capital
Equity share capital
 With voting rights
 With differential rights as to dividend or voting
Equity shares with differential rights (section 43 and
Rules)
Following conditions
1. Articles must authorize
2. Pass an OR (in case of listed company approved by
postal ballot)
3. Shares with differential rights < 26% of the total post
issue paid up equity share capital including shares
with differential rights.
4. Distributable profit for last 3 years
5. Not defaulted in filing financial statement and
annual return in the 3 immediately PFY
6. No subsisting default in
 Payment of dividend declared
 Repayment of matured deposits or interest
 Redemption of preference share
 Redemption of debentures or interest
7. No default in
 Payment of dividend on preference shares
 Repayment of term loan or interest from any FI,
state level financial institution or scheduled bank
Preference share capital
Carries preferential rights wrt
 Payment of dividend
 Repayment of capital at the time of winding up
Redeemable preference shares (section 55 and Rules)
1. Company cannot issue irredeemable preference
shares
2. The shares must be redeemed within 20 years.
3. May be redeemed after 20 years if
 it is for infrastructure project
 for a period not exceeding 30 years
 redemption of 10% of shares beginning 21st
year at the option of the preference
shareholder.
4. The shares to be redeemed must be fully paid up
5. Shares shall be redeemed out of
 Profits of the company or
 Proceeds of fresh issue
6. If redemption out of profit an amount equal to the
amount of redemption shall be transferred to CRR out
of the profits of the company.
7. If a company is not in a position to redeem the
preference shares or to pay any dividend it may issue
further redeemable preference shares of the same value
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  Dues with respect to statutory payments to with the consent of
employees  3/4th in value of such preference shareholder
 Default in crediting amount to IEPF  Consent of tribunal on petition made (will give
Provided that after the expiry of five years consent with order of redemption of shares of
from the FY in which the default was made such shareholders who did not agree)
good company may such shares Such reissue shall be deemed to redemption of the
8. Company not penalized by court or tribunal in the preference shares.
past 3 years under
 SEBI
 SCRA
 FEMA
 RBI
 Special Act under which the company is regulated

Existing shares cannot be converted into shares with

differential rights

Such shareholders shall have all other rights as equity

shareholders such as bonus, right shares.

Voting rights of a member
(section 47)
 Every person holding
equity shares shall have a
right to vote on every
matter.
 Voting on poll shall be in
proportion to the share in
Variation of shareholders Share certificate (section 46 Calls (section 49 and 50)
right (section 48) and Rules)
1. The MOA or AOA 1. Issued under the 1. A company shall make
must authorize or if no common seal of the calls on uniform basis
authorization company, if any, or on shares of the same
variation not signed by two directors class.(section 49)
prohibited by the or one director and the 2. A company may accept
terms of the issue of CS if the company has calls in advance if

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 the paid up share capital
of the company.
 Preference shareholders
shall have a right to vote
only:
 Any matter directly
affects their rights
 Resolution for
winding up
 Reduction of equity
or preference share
capital.
 If he is not paid dividend
for a period of two years
or more such class of
preference shareholders
will have a right to vote
on every matter
 Proportion of voting rights
of equity to preference
shall be in the same
proportion as the paid up
share capital of equity and
preference.
Premium (section 52) Discount (section 53)
such share. appointed one. authorized by its
2. Consent in writing of In case of OPC by one articles.
holders of not less than director and the CS or 3. Member shall not be
3/4th or if the meeting by any person entitled to any voting
of such class then SR . authorized by the Board. rights on the calls in
3. Variation affects the 2. Shall be issued in advance. (section 50)
rights of some other  SH 1
class consent of holder  Specify the name
of 3/4th of such class. of the person and
4. Holders of not less the amount paid
than 10% of the issued up
share did not agree to  and shall be a
variation prima facie
application evidence of title.
within 21 3. A duplicate certificate
days from the may be issued if
date of  It is proved to be
resolution lost or destroyed
Tribunal  Defaced,
5. If such application is mutilated or torn.
made variation will 4. In case of depository the
have affect only after entry in the register of
the consent of the depository shall be the
tribunal. prima facie evidence of
holder of interest.
Sweat equity (section Right issue Bonus issue (section
54) 63)
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The securities premium A company shall not As per Section 1. Must be offered to the out of its—
account may be applied issue shares at a 2(88)―sweat equity equity shareholders in i. its free reserves;
by the company— discount, except in the shares means such proportion to the paid ii. the securities
a) towards the issue case of an issue of equity shares as are up share capital premium
of unissued sweat equity shares. issued 2. The letter of offer shall account; or
shares of the Any share issued by a by a company to state iii. the capital
company to the company at a discount  its directors or  The number of redemption
members of the shall be void.  employees shares reserve account:
company as fully at a  The day within no issue out of reserves
paid bonus A company may issue  discount or which the created by the
shares; shares at a discount to  for consideration payment shall be revaluation of assets.
b) in writing off its creditors when its other than cash, made (not less 1. it is authorised
the preliminary debt is converted into for than 15 and more by its articles;
expenses of the shares in pursuance of  providing their than 30 days) 2. it has on the
company; any statutory know-how or  Member shall recommendatio
c) in writing off the resolution plan or  making available have a right to n of the Board,
expenses of, or debt restructuring rights in the renounce. been authorised
the commission scheme in accordance nature of  The letter of in the general
paid or discount with any guidelines or intellectual offer shall be meeting of the
allowed on, any directions or property rights or sent through company;
issue of shares or regulations specified  value additions, registered post 3. it has not
debentures of the by the Reserve Bank by whatever name or speed post or defaulted in
company; of India under the called. electronic mode payment of
d) in providing for Reserve Bank of India 1. authorised by a or courier or interest or
the premium Act, 1934 or the special any other mode principal in
payable on the Banking (Regulation) resolution having proof of respect of fixed
redemption of Act, 1949. 2. the resolution delivery. deposits or debt
any redeemable specifies the  The notice must securities
preference number of be sent to every 4. it has not

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 shares or of any shares, the shareholder defaulted in
debentures of current market atleast 3 days respect of the
the company; or price, before the payment of
e) for the purchase consideration, if opening of the statutory dues
of its own shares any, and the class issue. of the
or other or classes of 3. Shares refused or not employees, such
securities under directors or taken up the Board as, contribution
section 68. employees to shall dispose off such to provident
whom such shares in a manner not fund, gratuity
equity shares are detrimental to the and bonus;
to be issued; interest of company or 5. the partly paid-
3. listed on a members. up shares, are
recognised stock 4. Shares may be offered made fully paid-
exchange, the to the employees under up;
regulations made a scheme of employee
by the Securities stock option scheme by
and Exchange passing a SR
Board in this 5. Shares may be offered
behalf and if they to any person by a SR
are not listed, in for cash or
accordance with consideration other than
rules prescribed cash if the value of
under the such shares is
Companies determined by a
(Share and registered valuer.
Debentures) 6. Conversion of debt
Rules, 2014. into equity shall not be
regarded as a further
issue of shares.

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7. where the govt passes
an order for
conversion of loan or
debenture into equity
such issue shall not be
regarded as a further
issue
8. terms of conversion
not acceptable to
company appeal to
tribunal within 60
days of
communication of
order of CG

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