Company Law - Stocks & Shares
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COMPANY LAW
“ Law is the King of Kings far more powerful and rigid than they; by whose aid, even the weak may prevail over the strong.”
•
-Rig Veda
Company Law
George Mathew Joby Philip Joseph George Luku George Thomas Prayag Sunder
Agenda
Kinds of companies 1.Statutory company 2.Incorporated / Registered company 3. •
Statutory Company Incorporated by a special Act passed either by the Central or State legislature E.g.: RBI, SBI, LIC… Cannot have the word ‘Limited’ as part of their name’s Provisions of Companies Act, 1956 •
Incorporated / Registered companies Companies registered under the Companies Act, 1956 All companies in India, except the statutory companies • • •
Types of registered companies 1. Based on Number of Members a) Private Company b) Public Company 2. Based on Liability of Members a) Limited by shares b) Limited by guarantee c) Unlimited companies •
Private Company Lim its th e n u m b e r o f m e m b e rs S h a re s n o t issu e d to p u b lic b u t to fa m ily a n d frie n d s Tw o d o cu m e n ts to b e su b m itte d fo r registration: In te rn a l ( A O A ) E xte rn a l ( M O A ) B u sin e ss in co rp o ra tio n ce rtifica te
Public Company A company which is not a private company No limit on the maximum number of members (minimum 7 members) No restriction on transfer of shares Can invite public for subscription of its shares and debentures • •
Other Kinds of companies 1 . C o m p a n ie s n o t fo r P ro fit / Lice n se d C o m p a n ie s 2. One Man Company / Family • Company 3 . Fo re ig n C o m p a n y 4 . G o ve rn m e n t C o m p a n y
CAPITAL
SHARES
Difference b\w Stocks & Shares Stocks
Shares
Has no Nominal value Always Fully paid May be transferred in any fractions May be of different denominations Stock bears no distinctive number
Has a Nominal Value May or may not be fully paid Transferred as whole All are of equal denominations Shares have unique numbers to help identify
Types of Shares
Equity Shares
Types of Shares
Preference Shares
Types of preference shares
Types of Shares
Bonus shares
Types of Shares
Sweat equity shares
Issue of shares at a discount The shares must be of a class already issued Issue of the shares at discount must be authorized by resolution passed in the general meeting of company and sanctioned by the company law board. The resolution must also specify the maximum rate of discount at which the shares are to be issued Not less than one year has elapsed from the date on which the company was entitled to commence the business. The shares to be issued at discount must issued within 2 months after the date on which issue is sanctioned by the company law board or within extended as may be allowed by the Company Law Board. The discount must not exceed 10 percent unless the Company Law Board is of the opinion that the higher
Issue of shares at a premium
Calls on Shares
Minimum Subscription
Reduction of share capital
Transfer of Shares
Transmission of Shares
Difference b\w Transfer & Transmission Transfer Deliberate act of members Execution of instrument of transfer. Payment of stamp duty. Effected against consideration.
Transmission Arises due to operation of law No execution of instrument of transfer. No payment of stamp duty. Doesn’t involve any consideration.
Conversion of shares into stocks
Buy-back of shares
Rights of share holder
Share Certificate
Share Warrant
Difference between Warrant & Certificates Share certificate
Share warrant
Issued by public and private company Is a statutory obligation Can be issued at any stage of payment Transfer is complete only after registration Stamp duty payable on transfer Holder is a member of the company Is not an negotiable instrument Holder can file a petition
Issued only by public company Requires provision in AOA and approval from central government Can be issued with respect to fully paid up shares. Transfer needs no registration Stamp duty not payable on transfer Holder’s name must be struck of from the register of members
Lien on Shares
Forfeiture of shares
Surrender of shares
Bibliography Indian Company Law » Harpal Singh »
• Company law and practice » AK
Maju mdar & GK Kapo or
»
Company Law » KC Garg &
Quessssstionssss ????
“ Law is the King of Kings far more powerful and rigid than they; by whose aid, even the weak may prevail over the strong.”
•
-Rig Veda
Company Law
George Mathew Joby Philip Joseph George Luku George Thomas Prayag Sunder
Agenda
Kinds of companies 1.Statutory company 2.Incorporated / Registered company 3. •
Statutory Company Incorporated by a special Act passed either by the Central or State legislature E.g.: RBI, SBI, LIC… Cannot have the word ‘Limited’ as part of their name’s Provisions of Companies Act, 1956 •
Incorporated / Registered companies Companies registered under the Companies Act, 1956 All companies in India, except the statutory companies • • •
Types of registered companies 1. Based on Number of Members a) Private Company b) Public Company 2. Based on Liability of Members a) Limited by shares b) Limited by guarantee c) Unlimited companies •
Private Company Lim its th e n u m b e r o f m e m b e rs S h a re s n o t issu e d to p u b lic b u t to fa m ily a n d frie n d s Tw o d o cu m e n ts to b e su b m itte d fo r registration: In te rn a l ( A O A ) E xte rn a l ( M O A ) B u sin e ss in co rp o ra tio n ce rtifica te
Public Company A company which is not a private company No limit on the maximum number of members (minimum 7 members) No restriction on transfer of shares Can invite public for subscription of its shares and debentures • •
Other Kinds of companies 1 . C o m p a n ie s n o t fo r P ro fit / Lice n se d C o m p a n ie s 2. One Man Company / Family • Company 3 . Fo re ig n C o m p a n y 4 . G o ve rn m e n t C o m p a n y
CAPITAL
SHARES
Difference b\w Stocks & Shares Stocks
Shares
Has no Nominal value Always Fully paid May be transferred in any fractions May be of different denominations Stock bears no distinctive number
Has a Nominal Value May or may not be fully paid Transferred as whole All are of equal denominations Shares have unique numbers to help identify
Types of Shares
Equity Shares
Types of Shares
Preference Shares
Types of preference shares
Types of Shares
Bonus shares
Types of Shares
Sweat equity shares
Issue of shares at a discount The shares must be of a class already issued Issue of the shares at discount must be authorized by resolution passed in the general meeting of company and sanctioned by the company law board. The resolution must also specify the maximum rate of discount at which the shares are to be issued Not less than one year has elapsed from the date on which the company was entitled to commence the business. The shares to be issued at discount must issued within 2 months after the date on which issue is sanctioned by the company law board or within extended as may be allowed by the Company Law Board. The discount must not exceed 10 percent unless the Company Law Board is of the opinion that the higher
Issue of shares at a premium
Calls on Shares
Minimum Subscription
Reduction of share capital
Transfer of Shares
Transmission of Shares
Difference b\w Transfer & Transmission Transfer Deliberate act of members Execution of instrument of transfer. Payment of stamp duty. Effected against consideration.
Transmission Arises due to operation of law No execution of instrument of transfer. No payment of stamp duty. Doesn’t involve any consideration.
Conversion of shares into stocks
Buy-back of shares
Rights of share holder
Share Certificate
Share Warrant
Difference between Warrant & Certificates Share certificate
Share warrant
Issued by public and private company Is a statutory obligation Can be issued at any stage of payment Transfer is complete only after registration Stamp duty payable on transfer Holder is a member of the company Is not an negotiable instrument Holder can file a petition
Issued only by public company Requires provision in AOA and approval from central government Can be issued with respect to fully paid up shares. Transfer needs no registration Stamp duty not payable on transfer Holder’s name must be struck of from the register of members
Lien on Shares
Forfeiture of shares
Surrender of shares
Bibliography Indian Company Law » Harpal Singh »
• Company law and practice » AK
Maju mdar & GK Kapo or
»
Company Law » KC Garg &
Quessssstionssss ????
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