Académique Documents
Professionnel Documents
Culture Documents
2(46) :
5 DECEMBER 09 www.afterschool.tk 1
Types of shares :
Equity
preference (preference in dividend, wind up
etc. )
sweet equity (for employees)
share warrant (right to buy shares in future)
right shares (right of existing shareholders to
buy share)
bonus share (freely given to existing
shareholders)
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Types of capital
Authorised / nominal/ registered (mentioned in
MOA)
issued
subscribed
called up
paid up
reserve
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Can a company issue
irredeemable preference shares ?
No
only redeemable preference shares can be
issued (sec. 80 of company act) – these must
be redeemed in max. 20 years
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Rules regarding redemption of
preference shares :
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Shares with differential voting
rights ....
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WHY BUY
` BACK?
To increaase EPS
where there is surplus profit
When company has excess funds / liquidity
to defend company from possible takeover bids
to provide exit route to shareholders
to increase market value of shares
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How to have buy back?
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How much can a company buy
back?
10 % of paid up capital + reserves = if
authorised by AOA + board resolution
by special resolution : Max. 25% of paid up
capital + reserves
buy back must be completed in 12 months
all the shares must be fully paid up
SEBI (buy back) regulations 1998 must be
followed
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Rules of buy back :
In 6 months company cant issue bonus / fresh
issue / convert warrants into equity / sweat
equity
fill up form 4a & 4b must be filled with ROC
ratio of debt equity ratio 2:1
read :
www.sebi.gov.in/faq/buybackfaq.htm
www.legalserviceindia.com/articles/shares.htm
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Penalty
50000
or 2 years imprisonment for default
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Prohibition of buy back (sec. 77B)
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Case: Sterlite
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SWEAT EQUITY SHARES
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Issues regarding sweat equity
How to value / price sweat equity shares ?
VERMA COMMITTEE
RECOMMENDATIONS
http://www.hinduonnet.com/2002/10/04/stories/200
www.financialexpress.com/printer/news/55236
/ - Angola
5 DECEMBER 09 www.afterschool.tk 16
ISSUE OF SHARES AT
PREMIUM / DISCOUNT
5 DECEMBER 09 www.afterschool.tk 17
HOW TO USE SHARE
PREMIUM
AS PER 78(2) :
FOR BUY BACK OF SHARES
FOR ISSUE OF BONUS SHARES
WRITING OFF PRELIMINARY EXP /
COMMISSION / DISCOUNT
FOR PREMIUM ON REDEMPTION OF
SHARES
5 DECEMBER 09 www.afterschool.tk 18
BONUS ISSUES
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Share allotment
Allotment must be unconditional
within reasonable time
sec : 73(1A),69,72,73 and 70 must be followed
– issue of prospectus, minimum subscription,
min. Application money etc. Must be followed
apply to stock exchanges and take permission
otherwise allotment will be void (if Stock
exchange refuse, apply to SAT) .
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How to transfer share in private
company ?
Generally answer is No – private company doesnt allow share
transfer
(i) Transferor should give a notice in writing for his intention to
transfer his share to the company.
(ii) The company in turn should notify to other members as regards
the availability of shares and the price at which such share would be
available to them.
(iii) Such price is generally determined by the directors or the
auditors of the company.(iv) The company should also intimate to
the members, the time limit within which they should communicate
their option to purchase shares on transfer.
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Minimum subscription
90% - in 120 days from prospectus
otherwise return in 130 days othersie interest
6%
as per SEBI guidelines, these rates have
changed – so read latest SEBI guidlines
www.sebi.gov.in/commreport/rep245.html
www.sebi.gov.in/acts/ipguidelines.pdf
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Calls
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Underwriting commission
2.5% on debentures
5% on shares
must be mentioned in prospectus
agreement with underwriter must be submitted
to ROC
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Sebi guidelines
http://www.sebi.gov.in/SectIndex.jsp?sub_sec_id=4
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What is minimum subscription
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Issue norms
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Nomination
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Difference between transfer &
transmission ?
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Important rules
It is not dated
it is not signed
it is not accompanied with documents
it is not as per company law & SEBI guidelines
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STATEMENT IN LIEU OF
PROSPECTUS
1. when a private company becomes a public
company (within 30 days)
2. when public company is not issueing shares
to public, they have to issue this.
3. when a public company doesnt allot shares
to public
it must have contents similar to prospectus,
penalty if untrue statement : 10000
http://www.vakilno1.com/bareacts/companiesact/s44
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BE A PROMOTOR
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Steps ......
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LEGAL FORMS
http://www.vakilno1.com/froms_html/co_form.htm
5 DECEMBER 09 www.afterschool.tk 39
THANKS....
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5 DECEMBER 09 www.afterschool.tk 40