SHARES & DEBENTURES

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
FOR – PGPSE PARTICIPANTS
mobile : 91+9414430763

5 DECEMBER 09 www.afterschool.tk 1
 TYPES OF SHARE CAPITAL
NOMINAL / AUTHORISED /
REGISTERED : which is mentioned in
memorandum of association
ISSUED CAPITAL : issued to public
SUBSCRIBED CAPITAL: subscribed by
public
PAID UP CAPITAL
RESERVE CAPITAL
CALLED UP / UNCALLED CAPITAL
5 DECEMBER 09 www.afterschool.tk 2
 SHARES WITH
DIFFERENTIAL RIGHTS

Companies amendment act 2000 permits

shares with different rights regarding voting,
dividend etc - for this there must be provision
in AOA (articles of association), there must be
shareholder approval, differential shares should
not be more than 25% of total capital. Follow
the rules of this (issued in 2001) the company
must have distributed profit in last 3 years.
5 DECEMBER 09 www.afterschool.tk 3
 Preference shares (sec. 80)

Preference in divident and payment of capital

in comparison to equity shareholders.
For max. 20 years (redeemable only)
must be fully paid
must be redeemed out of profit / new issue /
redemption reserve created out of proift.
5 DECEMBER 09 www.afterschool.tk 4
 Buy back of shares
Introduced in 1999
sec : 77A, 77AA, 77B
max. Upto 10%, (upto 25% with special
resolution) out of reserves / premium account /
new issue proceeds. Approved by shareholders.
Debt equity ratio must be 2:1 or better after
buy back.
Shares must be fully paid
to be complete in 12 month from resolution
5 DECEMBER 09 www.afterschool.tk 5
 Sweat equity shares

Allowed from 1999

must be of shares already issued
must be authorised by special resolution
at least 1 year must be gone after
commencement of business
as per SEBI guidelines
5 DECEMBER 09 www.afterschool.tk 6
 Share warrants (sec 114 & 115)

With prior approval of government – a

company can issue warrant – which gives a
person the right to buy shares
can be issued to fully paid shareholders only
only by public company
it is a negotiable instrument
5 DECEMBER 09 www.afterschool.tk 7
 Debentures sec (2(12))

Includes debenture stock, bonds and other

securities
carries fixed rate of interest
for a fixed period
type: convertible / non-convertible

5 DECEMBER 09 www.afterschool.tk 8
 Debenture trust deed

Sec 117A : in proper format

as per SEBI guidelines
in 3 months from date of debenture issue
Trustees of debenture mortgaged property try
to keep security of property
trustees try to protect the property

5 DECEMBER 09 www.afterschool.tk 9
 Debenture trustee

As per SEBI regulations 1993, a trustee can be

any of these :
bank,
insurance company
financial institution
body corporate
5 DECEMBER 09 www.afterschool.tk 10
 DRR (debenture redemption
reserve) – sec. 117 C

As per rules of 2000, out of proifts every year

can be used only for redemption of debentures

5 DECEMBER 09 www.afterschool.tk 11
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