COMPANY LAW

Ms. Trupti Kokate

SHARE & SHARE CAPITAL
 A share in a company is one of the units into which the total share capital of the company is
divided.
 According to sec 2(84) of the companies act, 2013 a share is a share in the share capital of the
company, and includes stock.
 The capital of a company is divided into a number of indivisible units of a fixed amount, these
units are known as ‘shares’.
 Share represents a bundle of rights and obligations
 SHARE CERTIFICATE Sec. 46
It is a document that certifies the fact that a person or an individual is owner of certain amount of shares.
It is issued under the company’s seal signed by 2 directors, a managing director and a company secretary.
It is the prima facie evidence of title. It acts as estoppels to the title and estoppels as to the payment.

 SHARE WARRANT
It is a bearer document and it is transferable by delivery.
It is not dealt in companies’ act 2013. It is issued only on public company by the permission of the central
government.

 STOCK
It is the aggregate of fully paid-up shares of a member merged into one fund of equal value.
It is a set of shares put together in a bundle.
It is expressed in terms of money and not in number of shares
Company cannot make an original issue of stock. It can be issued by an existing company by converting its fully
paid-up shares
Stock may be transferred in any fraction.
 COMPANY

OWNED BORROWED

EQUITY PRERERENCE DEBENTURES

With voting rights  Cumulative & Non-cumulative  Non Convertible Debentures

 Participating & Non-participating  Partly Convertible Debentures
 Redeemable & Non- redeemable  Fully Convertible Debentures
With differential  Convertible & Non- convertible  Optionally Convertible Debentures
voting /dividend rights
 CLASSIFICATION OF CAPITAL

Nominal/A
Subscribed Called up Reserve
uthorised/ Issued Capital Paid up
Capital Capital Capital
Registered
1. AUTHORISED/NOMINAL/REGISTERED –
Sec. 2(8) authorised capital or nominal capital is a capital authorised by the memorandum of a company to be the maximum
amount of share capital of the company.

2. ISSUED CAPITAL –
Sec. 2(50) issued capital means such capital as the company issues from time to time for subscription. It is that part of the
authorised or nominal capital which the company issues for the time being for the public subscription and allotment. This value
is computed at the nominal value.

3. SUBSCRIBED CAPITAL –
Sec. 2(86) subscribed capital is such part which is for the time being subscribed. It is that portion of the issued capital at face
value which has been subscribed for or taken up by the subscribers of the shares in the company. It is clear that the entire issued
capital may or may not ne subscribed.

4. CALLED UP CAPITAL –
Sec. 2(15) means such part of the capital, which has been called for payment. It is that portion of the subscribed capital which has
been called up or demanded on the shares by the company.

5. PAID-UP CAPITAL –
Sec 2(64) such aggregate amount of money credited as paid up as equ to the amount received as paid up in respect of shares
issued and also includes any amount credited as paid up in respect of shares of the company, but does not include any other
amount in respect of such shares, by whatever name called.
 EXERCISE
 XYZ Company has a registered capital of Rs. 50,00,000 consisting of 5,00,000 shares of Rs.
10 each. It has issued 3,00,000 shares and applications for 3,20,000 shares were received.
3,00,000 shares were allotted . At the time of closing, the company has called only Rs. 7 per
share. All money was duly received except for a few shareholders holding 10,000 shares on
which only 5 rs per share was paid. Mention the total paid up capital as per the classification
of capital.
 Authorised capital - Rs. 50,00,000/-
 Issued capital - 3,00,000 /-
 Subscribed Capital – 3,20,000/-
 Called up Capital – 3,00,000 * 7 = 21,00,000/- (10000*2=20000)
 Paid up – 21,00,000- 20,000 = 20,80,000/-
 TYPES OF SHARES

EQUITY

WITH DIFFERENTIAL PARTICIPATE

VOTING /DIVIDEND SURPLUS
RIGHTS ASSETS

CUMALATIVE & NON-

CUMALITIVE

PARTICIPATING & NON-

PARTICIPATING

REDEEMABLE & NON-

REDEEMABLE

CONVERTIBLE & NON-

CONVERTIBLE
 PREFERENCE SHARES

 Cumulative And Non-Cumulative Preference Shares Meaning: In the case of cumulative preference
shares, if a particular company doesn’t declare an annual dividend, the benefit is carried forward to the
next financial year. Non-cumulative preference shares don't provide for receiving outstanding dividends
benefits.
 Participating/Non-Participating Preference Share Definition: Participating preference shares allow
shareholders to receive surplus profits, after payment of dividends by the company. This is over and
above the receipt of dividends. Non-participating preference shares carry no such benefits, apart from the
regular receipt of dividends.
 Convertible/Non-Convertible Preference Shares Meaning: Convertible preference shares can be
converted into equity shares, after meeting the requisite stipulations by the company’s Article of
Association (AoA), while non-convertible preference shares carry no such benefits.
 Redeemable/Irredeemable Preference Share Definition: A company can repurchase or claim
redeemable preference share at a fixed price and time. These types of shares are sans any maturity date.
Irredeemable preference shares, on the other hand, have no such conditions.
 BASIS FOR COMPARISON EQUITY SHARES PREFERENCE SHARES
Meaning Equity shares are the ordinary shares of the Preference shares are the shares that carry
company representing the part ownership of the preferential rights on the matters of payment of
shareholder in the company. dividend and repayment of capital.

Payment of dividend The dividend is paid after the payment of all Priority in payment of dividend over equity
liabilities. shareholders.
Repayment of capital In the event of winding up of the company, equity In the event of winding up of the company,
shares are repaid at the end. preference shares are repaid before equity shares.

Rate of dividend Fluctuating Fixed

Redemption No Yes
Voting rights Equity shares carry voting rights. Normally, preference shares do not carry voting
rights. However, in special circumstances, they get
voting rights.

Convertibility Equity shares can never be converted. Preference shares can be converted into equity
shares.
Arrears of Dividend Equity shareholders have no rights to get arrears of Preference shareholders generally get the arrears of
the dividend for the previous years. dividend along with the present year's dividend, if
not paid in the last previous year, except in the case
of non-cumulative preference shares.