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Role of a secretary in capital formation

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Provisions and procedures regarding shares

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Role of a secretary in capital formation

  1. 1. ROLE OF A SECRETARY IN CAPITAL FORMATION Mr. Atul Abhiman Agalawe (M. Com, B. Ed, D.B.M)
  2. 2. Shares  Share means a smallest unit of the share capital of company.  Shares have specific values  Types of Share Value  Face Value  Issue Value  Market Value  Book Value  Real Value
  3. 3. Issue Value of Shares  At Par: Issue value equal to face value  At Premium: Issue value more than face value  At Discount: Issue value less than face value  At Bid Price: by book building process The upper /maximum/highest price is known as Cap/Bid Price. The lower /minimum/lowest price is known as floor/ask price.
  4. 4. Methods of Issue of shares  Initial Public Offer  Bonus Shares (Sec 63)  Right Issue (Section 62)  Employee Stock Option Scheme  Private Placement (Section 42)  Sweat Equity Shares (Section 54)
  5. 5. Issue of Shares  Share issue is the process by which companies pass on new shares to shareholders, who may themselves be new or existing shareholders.
  6. 6. 6 ISSUE OF SHARES Prospectus Application Repayment/ dividend Allotment  Detail of a Company & Shares in Prospectus.  90 % application is necessary  If access application received then company issue shares by pro rata basis  full amount can be called up by company at the time of application or it can be paid up in installments also (calls)  share of the company may be issued in any of the following three ways: 1. At par; 2. At premium; and 3. At discount.
  7. 7. Preliminary Works Financial Planning Drafting and Filing of Prospectus Appointment of Banker Appointment of Underwriter Listing of shares with Stock Exchange
  8. 8. Issue of Shares Issue of Prospectus Receiving Application Sorting out Applications Preparation of List
  9. 9. Possibilities for Subscription of shares  Under Subscription: Less Application  Over Subscription: More Application
  10. 10. Allotment of Shares  Allotment means the act of appropriation by the board of directors of the company of a certain number of securities to persons who have made applications for securities.  Regular Allotment: follow the all provisions  Irregular Allotment: not follow the provisions  Effects of Irregular Allotment  Voidable for allotte  Director Liability  Fine
  11. 11. Conditions of Allotment  Statutory Allotment 1. Registration of Prospectus 2. Application Money 3. Depositing Application Money 4. Minimum Subscription 5. Opening & Closing of Subscription List 6. Permission to Deal in Stock Exchange 7. Oversubscription  General Conditions 1. Proper Authority 2. Allotment against Application only 3. Allotment not to be in contravention of any other law 4. Reasonable Time 5. Communication 6. Absolute and unconditional
  12. 12. Procedure for Allotment Preparation of List Appointment of Allotment Committee Decision about basis of Allotment Finalization of Allotment Board Meeting Nominee of SEBI Sending Letters Receiving Allotment Money Making Entries on Allotment Sheet Filing Return of Allotment Preparation of Register of Members Issuing Share Certificate
  13. 13. Share Certificate (Sec 46)  It is a registered document of title to the shares issued by the company under its common seal, duly stamped and signed by at least two directors and counter signed by secretary of the company.  It is a certificate issued to the members by the company under its common seal specifying the number of shares held by him and the amount paid on each share.  Statutory Provisions 1. Time Limit 2. Default 3. Sanction of the Board 4. Content of Share Certificate 5. Seal and Signature 6. Entry in Register of Member 7. Preservation 8. Dispatch by Registered Post 9. Shares un De-mat
  14. 14. Procedure Printing of Share Certificate Filling the Details Board Meeting Public Notice and Circular Letter Dispatch of Share Certificate
  15. 15. Share Warrant  It is a bearer document of title to the shares issued by the company under its common seal, duly stamped and signed by at least two directors of the company.  Statutory Provisions 1. Only Public Ltd 2. Against Fully Paid- up Shares 3. Provision in Articles 4. Permission of Central Government 5. On the Request of Shareholder 6. Abolished by Companies Act
  16. 16. Procedure Written Application Lodgement Ticket Compliance of Law Board Resolution Preparation of Share Warrant Entries in Register of Member Letter to Applicant
  17. 17. Transfer of shares  Transfer the ownership of shares by selling or gift from one person to another.  Seller known as Transferor  Buyer known as Transferee  It is a voluntary action taken by shareholder  Provisions 1. Instrument of Transfer 2. Transfer by Legal Representative 3. Application for Transfer 4. Power to Refuse Transfer 5. Share certificate
  18. 18. Procedure for Transfer of shares (Sec 56) Submission of Instrument of Transfer Verification of Documents Notice of Lodgement Board Sanction Registration of Transfer Issue of Share Certificate
  19. 19. Transmission of Shares  The passing of title of shares by operation of law of inheritance upon happening of death, insolvency or lunacy of a shareholder to his legal representative.  It is a compulsory action by operation of Law.  Provisions  Ownership of shares  Rights of legal Representative  Notification to Company  Powers of Board
  20. 20. Receive Request Letter Scrutiny Board Meeting Entry in Register of Member and Issue of share certificate Application Procedure of Transfer Entry in Register of Member and Issue Share Certificate Become as a Member Incase of Transfer
  21. 21.  Forfeiture of shares: When a Company terminates/cancels membership of the shareholder by compulsion due to non-payment of call money, it is known as forfeiture of shares. Regulations 28 to 34 of Table F  Surrender of shares: If any shareholder returns shares to the company for avoiding the long procedure of forfeiture is known as Surrender of shares. It is a voluntary action taken by shareholder. No regulations in the Companies Act 2013 and Table F.