Category Archives: Chapter IV – CA2013

SHARE CAPITAL AND DEBENTURES

SH – 7


Notice to Registrar of any alteration of share capital
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RETURN IN RESPECT OF BUYBACK OF SECURITIES


The company is required to file a return of buyback as discussed earlier here. The Return shall be filed in Form SH – 11.

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REGISTER OF BOUGHT-BACK SECURITIES


The Register of shares and other securities bought back shall in Format given in
Form SH – 10. We have discussed rules related to Register of bought back securities earlier here.

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DECLARATION OF SOLVENCY FOR BUYBACK


Form SH – 9 is a declaration for solvency related to buyback of securities. We have discussed rules related to declaration of solvency earlier here. Here, we will discuss contents of the declaration.

Following information is required to be given in this form:

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FORMAT FOR LETTER OF OFFER FOR BUYBACK


Letter of offer for buyback is a E – form to be filed with the Registrar of Companies as discussed by this blog earlier here. Form SH – 8 is format for Letter of offer.

The company need to fill in this form following important information:

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LETTER OF OFFER FOR BUY-BACK OF SHARES OR OTHER SECURITIES


Buyback is an important provision related to Share Capital of a company. We discussed provisions related to buyback under the Companies Act 2013 earlier here. In last post, we have discussed approval of the company through Special Resolution for buyback.

Rule 17 of the Companies Act set out norms for buyback of securities by the private companies and unlisted public companies. Rule 17 shall read with Section 67 – 70 of the Companies Act 2013.

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RESOLUTION FOR BUY-BACK OF SHARES OR OTHER SECURITIES


Buyback is an important provision related to Share Capital of a company. We discussed provisions related to buyback under the Companies Act 2013 earlier here.

Rule 17 of the Companies Act set out norms for buyback of securities by the private companies and unlisted public companies. Rule 17 shall read with Section 67 – 70 of the Companies Act 2013.

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DEBENTURE TRUST DEED


 

In last post we discussed Debenture Trust. Now we will discuss format for debenture trust deed as given in Form SH -12.

The debenture trust deed shall, inter alia, contain the following:-

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DEBENTURE TRUST AND TRUSTEES


In last post here, we discussed some provisions relating to Debentures. Now, we will study other provisions related to Debenture Trust under the Companies (Share Capital and Debentures) Rules 2014.

Debenture Trustee:

The company shall appoint debenture trustees, after complying with the following conditions, namely:-

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DEBENTURES


A Company may raise a debt capital, which is not a nature of Deposits, by issue of debentures under Section 71 of the Companies Act 2013 as we discussed earlier here.

Debenture under the Companies Act 2013 is wide and inclusive terms and considered to Promissory Notes also. This is play of mind, imagination and requirement to design a debenture within boundaries of law.

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NOMINATION BY SECURITIES HOLDERS


We have discussed Section 72 of the Companies Act, 2013 dealing with power to nominate by a security holder earlier here.

Rule 7 of the Companies (Share Capital and Debentures) Rules 2014 makes detailed provision for this purpose.

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MULTIPLE DIRECTOR IDENTIFICATION NUMBERS


Recently, Subramanian Swamy had filed complaint against Priyanka Vadra for possessing multiple DINs. Subramanian Swamy had also complained against Karti Chidambaram. This put social media on storm during elections but storm is not over with elections. Daily, social media teams of all parties unearth some new names with multiple DINs.

After new government sworn in centre, name of many ministers is open over twitter. This was discussed over social media that Nitin Gadkari has six DINs as well. Piyush Goyal who himself is a Chartered Accountant, has two DINs.

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MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES


According to Section 67 of the Companies Act, 2013, No public company shall give any financial assistance for the purpose of or in connection with a purchase or subscription made. This restriction on financial assistance shall not apply to the purchase of or subscription for the shares held by trustees for the benefit of the employees or such shares held by the employees of the company. The Provision has been discussed earlier here. The Rule 16 of the Companies (Share Capital and Debentures) Rules 2014 makes detailed provision for this purpose.

Conditions:

The company shall not make a provision of money for the purchase of, or subscription for, shares in the company or its holding company, for the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company, unless it complies with the following conditions, namely:-

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NOTICE TO REGISTRAR FOR ALTERATION OF SHARE CAPITAL


According to Section 64 of the Companies Act, 2013 as discussed earlier here, Where—

(a)  a company alters its share capital in any manner specified in sub-section (1) of section 61;

(b) an order made by the Government under sub-section (4) read with sub-section (6) of section 62 has the effect of increasing authorised capital of a company; or

(c)  a company redeems any redeemable preference shares,

the company shall file a notice the prescribed form with the Registrar within a period of thirty days of such alteration or increase or redemption, as the case may be, along with an altered memorandum.

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ISSUE OF SHARES ON PREFERENTIAL BASIS


Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares may be offered to any persons, if it is authorised by a special resolution, either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may be prescribed [Section 62(c) of the Companies Act, 2013]. These persons may include equity shareholders of the company referred to in clause (a) or employees of the company referred to clause (b). Section 62 of the Companies Act 2013 was discussed earlier here,

Rules 13 of the Companies (Share Capital and Debentures) Rules 2014 give us detailed procedure. Before discussing provisions in details, we may understand expression “Preferential Offer”.

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ISSUE OF EMPLOYEE STOCK OPTIONS


According to Section 62 of the Companies Act 2013 as discussed earlier here, where a company having share capital propose to increase its subscribed share capital by issue of further shares, such shares maybe offer to employees under a scheme of employees’ stock options to special resolution passed by company and subject to such conditions as may be prescribed.

A company, other than a listed company which is not required to comply with Securities and Exchange Board of India Employee Stock Option Scheme Guidelines shall not offer shares to its employees under a scheme of employees’ stock option (hereinafter referred to as “Employees Stock Option Scheme”), unless it complies with Rule 12 of the Companies (Share Capital and Debentures) Rules 2014.

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INSTRUMENT OF TRANSFER


A company shall register a transfer of securities or interest of members only when a proper instrument of transfer is delivered as per Section 56 of the Companies Act, 2013 as we have already discussed earlier here.

Rule 11 of the Companies (Share Capital and Debentures) Rules 2014 describe detail procedure.

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ISSUE AND REDEMPTION OF PREFERENCE SHARES


Section 55 deals with issue and redemption of preference shares and we have already discussed it earlier here.

Rules 9 of the Companies (Share Capital and Debentures) Rules 2014 explain procedure for issue and redemption of preference shares supplemented by Rule 10 thereof.

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ISSUE OF SWEAT EQUITY SHARES


In my earlier post here, I have discussed conditions given in Section 54 of the Companies Act, 2013 for issue of sweet equity shares.

Rule 8 of the Companies (Share Capital and Debentures) Rules 2014 laid down procedure for issue of sweet equity shares.

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SHARE CERTIFICATES AND RELATED BOOKS


We have discussed Section 46 of the Companies Act, 2013 which deals with Share Certificates earlier here.

Rule 7 of the Companies (Share Capital and Debentures) Rules 2014 makes detailed provision for this purpose.

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