Classification of

shares

Introduction of shares

The capital of the company usually divided into a number of indivisible unit of specified amt. Each of such unit is called share.

Definition of share

Acc. to sec 82 of company act “a share of any member in a company is movable property transferable in the manner provided by the article of the company.

Types of shares

Preference shares Equity or ordinary shares Deferred shares

1. Type of preference shares

Cumulative pref. shares Non-cumulative pref. shares Participating pref. shares Non-participating pref. shares Convertible pref. shares Non-Convertible pref. shares

cont…..

Redeemable pref. shares Irredeemable pref. shares Guaranteed pref. shares

2. Equity shares

3. Deferred shares

Difference b/w equity and pref. shares

Right of dividend Return on capital Rate of dividend Certainty of dividend Redemption Voting rights Risk Necessity Type

Issue of shares

1. Issue of shares at par 2. Issue of shares at premium 3. Issue of shares at discount

Conditions to issue shares at discount

Restriction of first issue Time issue Rate of discount Ordinary resolution in general

meeting Sanction by CLB Duration of issue Penalty

Other forms of shares

Sweat equity shares (sec 79A) Bonus shares Right shares

Diff. b/w Bonus shares and Right shares

Meaning Purpose Cost Provision Authority Necessity

Stock

Stock is the aggregate of fully paid-up shares of a member merged into one fund of equal value. It is a set of shares.

Characteristics of stock

Cannot be issued originally Only fully paid-up shares Provision in article Reconverted into shares

Underwriting agreement

It is a device used by companies for making sure that the necessary cap. will come even if the proposed issue gets a poor response of the public.

Underwriting commission Advantages

Share capital

Share capital means the capital raised by a company by the issue of shares.

Forms of capital

Authorized or registered cap. Issued cap. Subscribed cap. Called-up cap. Uncalled cap. Paid-up cap. Reserve cap. Fixed cap.

cont….

Floating cap. Working cap.

Alteration procedure of share capital

Authorised by articles Resolution in general meeting Notice to registrar Changes by registrar Penalty Effect of conversion of shares into

stock Information of increase of share

capital

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