Introduction to Shares Under Company law
Share means the proportion of the interest of the share -holders or we can say that the amount that is being invested by the shareholders. It is the measurement of the company’s asset.
Allotment of shares
The allotment of shares is the authorization of the shares to a person.
For the allotment of shares following thigs are necessary:
- Authority: the allotment to the share for whosoever must be authorized by the board of directors
- Minimum subscription: the minimum subscription must be made according to the prospectus. The amount paid should not be less than 5% of nominal value of the share.
The amount must be received and deposited in the bank.
- The subscription list must be issued after the five days.
- Listing must be issued. The prospectus should specify the stock exchange.
- The allotment must be completed within a reasonable time.
- The allotment must be communicated to the applicant.
- If the person who is purchasing shares has put some condition, then that must be fulfilled. Raman Bhai V. Ghasiram
Any allotment of shares without following a statutory condition must be irregular.
Calls of payment
The shareholder must pay the amount when such amount has called. The call must be valid and must be recognized by the board of directors. The resolution of such call should be:
- Uniform
- Must be by the board of directors
- Must state the time and the amount of money to be paid.
If the calls ae unanswered the shares can be forfeit.
Forfeiture of shares
The forfeiture must be by the authority who has the power according to the articles of associations.
Resolution and notice:
The resolution for the forfeiture must be made and the notice by the authority must be served to the defaulters. And at least 14 days’ time should be given to the defaulters.
Good faith:
The power of forfeiture must be genuine and must not involve any personal grudges.
Surrender of shares:
The one who is not able to pay the money after the call may also surrender his shares. The surrender will only be valid when the directors accept such surrender provided that the call and the default must be valid.
Share capital in Company Law
Share capital is the capital that has been raised by issuing shares and preferred shares and equity shares. In order to expand the business all companies need capital and hence they sell their shares and assets of the company.
Types of share capital
Nominal, authorized and registered capital:
The capital that has been authorized by the memorandum Is called authorized capital.
Issued capital:
The capital that the company issue from time to time for subscription. It is prescribed by the company which offers shares at a nominal amount. The company may raise this type of capital.
Subscribed capital:
The capital which for the time being is subscribed by the members of the company and which is accepted by the public in lieu of that shares.
Paid up share capital:
It is the amount that the company has received in the exchange of shares. It is the amount which has been paid by the shareholders when they are called up by the company. It is arrived at from two funding sources:
- the par value of stock and
- excess capital
Kinds of shares in Company Law
- Preferential shares They come with presences rights over the ordinary shares and hence they are not given to any shareholders they are being provided for some preferential purposes only.
- Equity shares they are the most common shares and hence are the most prevalent one and are available to anyone of the shareholders. Holders have the voting rights in the company of these shares.
