PRESENTATION ON COMPANY ACCOUNT

Presented By: Priyanka, Preeti Jitendra & Naved

INTRODUCTION OF COMPANY

The industrial revolution brought significant changes in

the size of business structure. The unlimited liability and smaller size of business units could not meet the huge financial requirement of the modern business and provide limited to its members. Joint stock company as a modern form of the business emerged to meet the requirements of the large sized business. Company in our country are governed by the provisions of the Companies Act, 1956.

MEANING OF COMPANY
A joint stock company is an artificial person, created by law, with a fixed capital, divisible into transferable shares, with perpetual succession and common seal.
The company has a separate legal entity. It must be compulsorily registered. The company is owned by shareholders, who subscribe for its shares. It is managed by the board of directors, the elected representatives of the shareholders. The company has a permanent life, not at all affected by the death, insolvency or lunacy of its members.

KINDS OF COMPANIES
Companies may be classified on the following basis:

A. On the Basis of Incorporation

(i)

Chartered companies: Those companies, which are incorporated under a special charter by the king or sovereign are chartered companies, such as East India Company. Such companies are ready formed now-a-days as trading companies. special act of the legislatures or parliament e.g. the Reserve Bank of India, the Industrial Finance Corporation etc.

(ii) Statutory companies: These companies are formed by the

(iii) Registered companies: These companies are incorporated

under the Indian Companies Act, 1956 or were registered under the previous Companies Acts.

B. On the Basis of Liability

(i)

Limited companies: In case of such companies the liability of each member is limited to the extent of nominal face value of shares held by him.

(ii) Guarantee companies: The liability of the member of such

companies is limited to the amount which he has undertaken to contribute to the assets of the company in the event of its being wound up. This guaranteed amount is limited by fixed sum which is specified in the memorandum.
(iii) Unlimited companies: A company not having any limit on the

liability of its members is an unlimited company. It may or may not have share capital.

C. On the Basis of Transferability of Shares

Private companies: A private company means a company which has a minimum paid up capital of Rs. 1 lakh or such higher capital as may be prescribed and which by its articles: (a) Restricts the right to transfer its shares. (b) Limits the number of its members to fifty. (c) Prohibits any invitation to the public to subscribe for any shares or debentures of the company.
(i) (ii) Public companies: A public company means a company which (a) Is not a private company; (b) Has a minimum paid up capital of Rs. 5 lakh or such higher paid

up capital as may be prescribed; (c) Is a private company which is subsidiary of a company which is not a private company. A public company needs minimum seven persons for its registration.

SHARES

 The capital of a company is divided into units, called shares. In other words, shares are the denomination of share capital. Funds generated through issue of shares are known as share capital. In the words of Farwel, A share is the interest of a shareholder in the company measured by a sum of money.

TYPES OF SHARES
Shares are of two types:
a.

Equity shares: - A share which is not a preference share is an equity share. It means that if the shareholder is not entitled to a fixed dividend in preference to others or if there is not prior right for the capital to be repaid, the share capital will be treated as equity share capital. Preference shares: - Preference share are those shares which are entitled to a priority in the payment of dividends at a fixed rate, and sometimes also in the return of capital in the event of the winding up of the company. The rates of dividend are fixed in the Articles of Association.

b.

ISSUE OF SHARES
1. Issue of Shares at par Issue of shares at the face value is a share of Rs. 10 for Rs. 10 or a share of Rs. 100 for Rs. 100 is known as issue of share at par. 2. Issue of shares at premium A company can issue its shares at more than its face value . Excess of issue price of share over its face value is termed as securities premium. 3. Issue of shares at discount A company can issue its shares at less than its face value.

DEBENTURE
 Debenture is an instrument issued by the company acknowledging its debts to the holder under its seal. Debenture carries interest at certain percent. As it is a loan taken by the company, it is repaid after certain specified period or at the option of the company as per the terms of their issue. There are no legal restrictions on the price for which debentures are issued. Debentures may be issued at par, at discount or at premium like shares.

FEATURES OF DEBENTURE
It is a document which evidences a loan made to a company. It is a fixed interest bearing security. Interest which payable on specified date regardless of the level of the profit. The Original sum is repaid at the specified future date or it is converts into shares or debentures.

TYPES OF DEBENTURE
1. From the Point of view of Security
Secured Debentures: Secured debentures refer to those

debentures where a charge is created on the assets of the company for the purpose of payment in case of default. The charge may be fixed or floating.
Unsecured Debentures: Unsecured debentures do not have a

specific a charge on the assets of the company. However, a floating charge may be created on these debentures by default. Normally, these kinds of debentures are not issued.

2. From the Point of view of Tenure

Redeemable Debentures: Redeemable debentures are those

which are payable on the expiry of the specific period either in lump sum or in Installments during the life time of the company. Debentures can be redeemed either at par or at premium.
Irredeemable Debentures: Irredeemable debentures are also

known as Perpetual Debentures because the company does not give any undertaking for the repayment of money borrowed by issuing such debentures. These debentures are repayable on the on winding-up of a company or on the expiry of a long period.

3. From the Point of view of Convertibility

Convertible Debentures: Debentures which are convertible

into equity shares or in any other security either at the option of the company or the debenture holders are called convertible debentures. These debentures are either fully convertible or partly convertible.
Non-Convertible Debentures: The debentures which cannot be

converted into shares or in any other securities are called nonconvertible debentures. Most debentures issued by companies fell in this category.

5.From Coupon Rate Point of view

Specific Coupon Rate Debentures: These debentures are issued

with a specified rate of interest, which is called the coupon rate. The specified rate may either be fixed or floating.
Zero Coupon Rate Debentures: These debentures do not carry a

specific rate of interest. In order to compensate the investors, such debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures.

.From the view Point of Registration

Registered Debentures: Registered debentures are those

debentures in respect of which all details including names, addresses and particulars of holding of the debenture holders are entered in a register kept by the company.
Bearer Debentures: Bearer debentures are the debentures

which can be transferred by way of delivery and the company does not keep any record of the debenture holders. Interest on debentures is paid to a person who produces the interest coupon attached to such debentures.

REDEMPTION OF DEBENTURE
 Redemption of debenture means repayment of debentures.

Debentures are the liability of the company so the redemption means the discharge of the liability . Debenture-holders are the lenders of the company, so their loans must be paid to them back. This is why, the company while issuing debentures describes the terms, conditions and mode of repayment of debentures. Redemption means reduction, elimination or cancellation of debenture s to the extent they have been redeemed.

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