S.Y.J.C. (Commerce) Prof.

Vijay Patil

**************************************************************************************************************

CHAPTER 6
CORRESPONDENCE WITH MEMBERS
**************************************************************************************************************

Q.1. Which Precautions are to be taken by the Secretary while

Corresponding with Members?

Ans: A) MEANING:
A company secretary has to correspond with members on different
occasions. Writing letters to the members is a challenging task and it
requires skills, knowledge and techniques.

B) PRECAUTIONS:
The following steps should be taken by the secretary before writing
a letter:
1. Correct Information:
 Secretary should always provide correct, up-to-date and factual
information to the members.
 Secretary should take due care while providing information to the
members.

2. Secrecy:
 Secretary should not disclose any secret information of the company
to the members.
 Secretary should tactfully answer some letters without giving any
secret information of the company.

3. Prompt Response:
 Secretary must be prompt in replying to
a) Letters received from the members.
b) Any questions or queries raised by the members.
c) Complaint letters from the members.

-1-
S.Y.J.C. (Commerce) Prof. Vijay Patil

4. Politeness:
 A complaint letter should be replied in a polite manner.
 Rude language should be strictly avoided while corresponding with
members.

5. Legal matters:
 Secretary should compulsory follow all the provisions of Companies
Act, 2013 while corresponding with the members.
 While drafting the letters, secretary should consult with legal advisor
on legal matters.

6. Image of the company:

 Secretary should always try to project a good image of the company
in every situation.
 While drafting the letters, secretary has to try his best to remove the
doubts, queries and difficulties of members.

7. Consideration:
 Secretary should give due importance & consideration to the
reader’s problems.
 Care should be taken in drafting the letters in such manner that
members are not hurt.

8. Easy language:
 Secretary must use easy, simple words and sentences while writing
letters to the members.
 Technical words, long sentences should be avoided in the letter.
 It should be easy to understand.

C) CONCLUSION:
Secretary has to be very cautious and careful while corresponding
with members.

-2-
S.Y.J.C. (Commerce) Prof. Vijay Patil

Q.2. What are the Circumstances under which Secretary undertakes

Correspondence with Members.
A) MEANING:
A company secretary has to correspond with members on different
occasions. Writing letters to the members is a challenging task and it
requires skills, knowledge and techniques.

B) CIRCUMSTANCES:
Following are the various Circumstances where secretary writes the
letters to the members of the company.

1. Allotment Letter
2. Regret Letter
3. Issue of Share Certificate
4. Executions of Right Issue
5. Letter for Payment of Dividend
6. Approval of Transfer of Shares
7. Notice & Agenda of General Meeting
8. Dividend Mandate
9. Reply to Queries raised by the Members
10. Issue of Bonus Shares
11. Notice of Loss of Share Certificate
12. Others
a. Refusal of Transfer of Shares
b. Letters to Legal Representatives regarding Transmission of
Shares.

C) CONCLUSION:
Secretary has to be very cautious and careful while corresponding
with members.

-3-
S.Y.J.C. (Commerce) Prof. Vijay Patil

OBJECTIVE TYPE QUESTIONS

A) Select the correct option and rewrite the statements.

1. Directors are the ____________
(a) paid employee of the company (b) representatives of the shareholders
(c) creditors of the company

2. The dividend is to be paid to the shareholders within ____________ days from

the date of declaration.
(a) 30 (b) 40 (c) 20

3. Registered shareholders receive dividend through ____________ warrant.

(a) share (b) debenture (c) dividend

4. Shares issued free of cost to the shareholders are known as ____________

shares.
(a) preference (b) equity (c) bonus

5. Share Certificate should be ready for delivery by the company within

____________ months after the allotment of shares.
(a) 3 (b) 5 (c) 2

6. Secretarial correspondence with members should be ____________

(a) lengthy (b) shortcut (c) prompt and precise

7. Dividend is recommended by ____________

(a) Board of Directors (b) shareholders (c) Depositors

8. Dividend is paid out of ____________ of the company.

(a) Capital (b) Building Fund (c) Profit

9. ____________ acts as a link between the Directors and the members.

(a) Shareholders (b) Government (c) Secretary

-4-
S.Y.J.C. (Commerce) Prof. Vijay Patil

10. ____________ is issued by the company to its registered shareholders after the
declaration of dividend at the Annual General Meeting of the company.
(a) Dividend Warrant (b) Interest Warrant (c) Share Warrant

B) Write a word or a term or a phrase:

1. Shares given free of cost to the existing equity Bonus

shareholders. shares
2. Instrument for payment of dividend. Dividend
Warrant
3. The shareholders to whom the bonus shares are Equity
issued. shareholders
4. The authority which recommends the rate of dividend. Board of
Directors
5. An officer who comes into contact with all the members Secretary
of the company through correspondence.
6. A special kind of cheque issued by a company on its Dividend
banker to pay certain sum of money as dividend to its warrant
members.
7. Dividend declared by a company between two Annual Interim
General Meeting Dividend

C) State whether the following statements are True or False.

1. Bonus shares are issued to existing equity shareholders. True

2. Building fund is used for issue of bonus shares. False
3. Bonus shares means capitalisation of reserve fund. True
4. Registered shareholder gets dividend through dividend True
coupons.
5. Dividend is the portion of the profits of the company which is True
allotted to the holders of the debentures of the company.
6. Every company must issue or dispatch a share certificate to the False
allottee within three months after allotment of shares.

-5-
S.Y.J.C. (Commerce) Prof. Vijay Patil

7. A complaint letter should not be replied promptly. True

8. Secretary can consult legal advisor on certain matter while True
drafting letters.

D) Complete the sentences.

1. Dividend is recommended by ____________ Board of

Directors
2. A company capitalises its Reserve Fund for issue of Bonus
____________ shares.
3. Payment of dividend must be made within ____________ 30
days of its declaration.
4. Dividend is approved by the ____________ in the Annual Shareholders
General Meeting.
5. The ____________ has to communicate the decisions of Secretary
the management to the members by conducting
correspondence.
6. Bonus shares are given as a ____________ to the equity Gift
shareholders.
7. A share certificate should be signed by at least Two
____________ directors.

E) Correct the underlined word/s and rewrite the following sentences.

1. Dividend is recommended by shareholders. Board of

Directors
2. The person who purchases shares of the company is Shareholder
called Depositor.
3. Bonus shares are issued as a free gift to Equity
the preference shareholders.
4. Payment of dividend must be made within 21 days of its 30
declaration.

-6-
S.Y.J.C. (Commerce) Prof. Vijay Patil

5. A company must issue the Share Certificate Two

within three months of allotment of shares.

F) Select the correct option from the bracket.

(Written communication, Bonus shares, Dividend, ECS)
Sr. Sr.
Group ‘A’ Group ‘B’
No. No.
1) Return on shares a) ………………………….
2) Capitalisation of Reserve Fund b) ………………………….
3) Correspondence c) ………………………….
4) d) Payment of Dividend
………………………….
Electronically

Ans:
Sr.
Group ‘A’ Ans.
No.
1) Return on shares Dividend
2) Capitalisation of Reserve Fund Bonus shares
3) Correspondence Written communication
4) ECS Payment of Dividend Electronically

G) Find the odd one:

1. Secrecy, Dividend, Interest Secrecy
2. Bonus Letter, Dividend Letter, Board of Directors Board of
directors
3. Dividend Warrant, Interest Warrant, Demat Demat
4. Secretary, Board of Directors, Dividend, Lucid Language Lucid
Language

H) Arrange in proper order:

1. Allotment of shares, Application for shares, Share certificate.
Ans: Application for shares, Allotment of shares, Share certificate.

-7-
S.Y.J.C. (Commerce) Prof. Vijay Patil

2. Member, Applicant, Bonus shares.

Ans: Applicant, Member, Bonus shares.

3. Payment of dividend, Issue of Share Certificate, Annual General Meeting.

Ans: Issue of Share Certificate, Annual General Meeting, Payment of
dividend.

4. Dispatch of Share Certificate, Allocation of Shares, Issue of Dividend

Warrant.
Ans: Allocation of Shares, Dispatch of Share Certificate, Issue of Dividend
Warrant.

======================================================================

I) Explain the following Concepts:

1. Dividend Warrant:
Ans: Explanation:
 Dividend is the share of profit distributed by the company to its
shareholders.
 Dividend warrant is an instrument through which amount of the dividend
is paid to the shareholders.
 Shareholders can deposit the share warrant in their bank account like
a cheque.
 The amount will be credited to their account.

2. Capitalisation of Reserves:
Ans: Explanation:
 It means converting the accumulated reserves of the company into capital.
 Company capitalises its reserves by issuing bonus shares to its existing
shareholders in proportion of shares held by them.
 Such bonus shares are issued free of cost.

-8-
S.Y.J.C. (Commerce) Prof. Vijay Patil

3. Bonus Shares:
Ans: Explanation:
 Bonus shares are fully paid up shares.
 Company capitalises its reserves by issuing bonus shares to its existing
shareholders in proportion of shares held by them.
 Such bonus shares are issued free of cost.

J) Justify the following Statements:

1. The company secretary should take certain precautions while
corresponding with members.
Ans: This statement is True.
Explanation:
 Secretary should always provide correct, up-to-date and factual
information to the members.
 Secretary should not disclose any secret information of the company to the
members.
 Secretary must be prompt in replying to Letters received from the
members, any questions or queries raised by the members, complaint
letters from the members.
 A complaint letter should be replied in a polite manner.
 Secretary should compulsory follow all the provisions of Companies Act,
2013 while corresponding with the members.
 Secretary should give due importance & consideration to the reader’s
problems.
 Secretary should always try to project a good image of the company in
every situation.
 Secretary must use easy, simple words and sentences while writing letters
to the members.
 Hence, the company secretary should take certain precautions while
corresponding with members.

-9-
S.Y.J.C. (Commerce) Prof. Vijay Patil

2. There are certain circumstances when a secretary has to correspond

with members.
Ans: This statement is True.
Explanation:
A company secretary has to correspond with members on different
occasions.
1. Allotment Letter
2. Regret Letter
3. Issue of Share Certificate
4. Executions of Right Issue
5. Letter for Payment of Dividend
6. Approval of Transfer of Shares
7. Notice & Agenda of General Meeting
8. Dividend Mandate
9. Reply to Queries raised by the Members
10. Issue of Bonus Shares
11. Notice of Loss of Share Certificate
12. Others
a) Refusal of Transfer of Shares
b) Letters to Legal Representatives regarding Transmission of
Shares.

=============================================================================

- 10 -