Shares & Debentures

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

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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

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SHARES WITH DIFFERENTIAL RIGHTS Companies amendment act 2000 permits shares with different rights regarding voting, dividend etc - for this there must 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

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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

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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

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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

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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

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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

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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

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Debenture trustee As per SEBI regulations 1993, a trustee can be any of these :  bank, insurance company financial institution  body corporate 5 DECEMBER 09

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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

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