Shares & Debentures

(1)

SHARES & DEBENTURES

by : by : DR. T.K. JAIN DR. T.K. JAIN AFTERSCHO AFTERSCHO☺☺OLOL

centre for social entrepreneurship centre for social entrepreneurship sivakamu veterinary hospital road sivakamu veterinary hospital road

bikaner 334001 rajasthan, india bikaner 334001 rajasthan, india FOR – PGPSE PARTICIPANTS FOR – PGPSE PARTICIPANTS

mobile : 91+9414430763 mobile : 91+9414430763

(2)

TYPES OF SHARE CAPITAL

NOMINAL / AUTHORISED / NOMINAL / AUTHORISED /

REGISTERED : which is mentioned in REGISTERED : which is mentioned in

memorandum of association memorandum of association

ISSUED CAPITAL : issued to public ISSUED CAPITAL : issued to public SUBSCRIBED CAPITAL: subscribed by SUBSCRIBED CAPITAL: subscribed by

public public PAID UP CAPITAL PAID UP CAPITAL RESERVE CAPITAL RESERVE CAPITAL

(3)

SHARES WITH

DIFFERENTIAL RIGHTS

Companies amendment act 2000 permits Companies amendment act 2000 permits shares with different rights regarding voting, shares with different rights regarding voting, dividend etc

dividend etc - - for for this this there mthere must ust be provisionbe provision in AOA (articles of association), there must be in AOA (articles of association), there must be shareholder approval, differential shares should shareholder approval, differential shares should

not be more than 25% of total capital. Follow not be more than 25% of total capital. Follow the rules of this (issued in 2001) the company the rules of this (issued in 2001) the company

must have distributed profit in last 3 years. must have distributed profit in last 3 years.

(4)

Preference shares (sec. 80)

Preference in divident and payment of capital Preference in divident and payment of capital

in comparison to equity shareholders. in comparison to equity shareholders. For max. 20 years (redeemable only) For max. 20 years (redeemable only)

must be fully paid must be fully paid

must be redeemed out of profit / new issue / must be redeemed out of profit / new issue /

redemption reserve created out of proift. redemption reserve created out of proift.

(5)

Buy back of shares

Introduced in 1999 Introduced in 1999 sec : 77A, 77AA, 77B sec : 77A, 77AA, 77B

max. Upto 10%, (upto 25% with special max. Upto 10%, (upto 25% with special resolution)

resolution) out out of of reserves / reserves / premium premium account /account / new issue proceeds. Approved by shareholders. new issue proceeds. Approved by shareholders.

Debt equity ratio must be 2:1 or better after Debt equity ratio must be 2:1 or better after

buy back. buy back.

Shares must be fully paid Shares must be fully paid

to be complete in 12 month from resolution to be complete in 12 month from resolution

(6)

Sweat equity shares

Allowed from 1999 Allowed from 1999

must be of shares already issued must be of shares already issued

must be authorised by special resolution must be authorised by special resolution

at least 1 year must be gone after at least 1 year must be gone after

commencement of business commencement of business

as per SEBI guidelines as per SEBI guidelines

(7)

Share warrants (sec 114 & 115)

With prior approval of government – a With prior approval of government – a company can issue warrant – which gives a company can issue warrant – which gives a

person the right to buy shares person the right to buy shares

can be issued to fully paid shareholders only can be issued to fully paid shareholders only

only by public company only by public company it is a negotiable instrument it is a negotiable instrument

(8)

Debentures sec (2(12))

Includes debenture stock, bonds and other Includes debenture stock, bonds and other

securities securities

carries fixed rate of interest carries fixed rate of interest

for a fixed period for a fixed period type:

(9)

Debenture trust deed

Sec 117A : in proper format Sec 117A : in proper format

as per SEBI guidelines as per SEBI guidelines

in 3 months from date of debenture issue in 3 months from date of debenture issue

Trustees of debenture mortgaged property try Trustees of debenture mortgaged property try

to keep security of property to keep security of property

trustees try to protect the property trustees try to protect the property

(10)

Debenture trustee

As per SEBI regulations 1993, a trustee can be As per SEBI regulations 1993, a trustee can be

any of these : any of these : bank, bank, insurance company insurance company financial institution financial institution body corporate body corporate

(11)

DRR (debenture redemption

reserve) – sec. 117 C

As per rules of 2000, out of proifts every year As per rules of 2000, out of proifts every year can be used only for redemption of debentures can be used only for redemption of debentures

(12)

THANKS....

GIVE YOUR SUGGESTIONS AND JOIN GIVE YOUR SUGGESTIONS AND JOIN AFTERSCHOOOL NETWORK / START AFTERSCHOOOL NETWORK / START

AFTERSCHOOOL SOCIAL AFTERSCHOOOL SOCIAL ENTREPRENEURSHIP

ENTREPRENEURSHIP NETWORK NETWORK ININ YOUR CITY

YOUR CITY

[email protected]

PGPSE – WORLD'S MOST PGPSE – WORLD'S MOST

COMPREHENSIVE PROGRAMME IN COMPREHENSIVE PROGRAMME IN