On 1st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In 3rd post on this report, we will discuss recommendations of the committee related to Incorporation and allotment of capital securities.
Ministry of Corporate Affairs recently introduced amendment to the Companies (Share Capital and Debentures) Amendment Rules 2015.
These Amendments shall come into force on publication on official gazette i.e.
Application of these Rules:
Rule 3 related to applicability of these rules have been substituted as under:
The provisions of these rules shall apply to –
(a) all unlisted public companies:
(b) all private companies: and
(c) listed companies so far as they do not contradict or conflict with any other regulation framed in this regard by the Securities and Exchange Board of India.
Posted in Chapter IV - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Debenture, India, MCA, Ministry of corporate affairs, Preferential Allotment, Private Placement, Registrar of Companies, right issue, the Companies (Share Capital and Debentures) Amendment Rules 2015, The Companies Act 2013
Section 42 of the Companies Act, 2013 allows any company, whether private or public, to make private placement of securities through issue of a “Private Placement Offer Letter” (PPOL). We have discussed provision of the Section earlier here.
In addition of Section 42, Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules 2014 prescribes all fine prints of the private placement.
Share capital of a company is all about financing for its operations. Company issues its share to raise capital. On allotted shares, company may receive all money against premium and face value of share in one go or in instalment. In present post, we will discuss; call on shares, unpaid share capital, dividend, share premium, shares at discount, sweet equity and preference shares.
Posted in Chapter IV - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Bonus Issue, Bonus Shares, call on shares, Capital Redemption Reserve Account, Companies Bill 2012, Debentures, Discount in shares, ESOPS, India, issue of preference shares, Other Securities, Preference Shares, Preferential Allotment, Private Placement, Public Offer, redemption of preference shares, right issue, SEBI, Securities, Securities Premium Account, Share premiums, Shares and Securities, Sweat Equity, sweat equity shares, Tribunal, unpaid share capital
We have discussed earlier post The Company under the Companies Bill 2012 which is still relevant when the bill become Act; all companies do not have share capital. Only companies limited by shares have share capital.
KIND OF SHARE CAPITAL (SECTION 43):
The share capital of companies limited by share shall be of two kinds, namely;
(a) equity share capital;
(b) Preference share capital.
Here, use of two terms “Shall be” and “and” denote this is a requirement to have both kind of share capital but, according to further reading, company may have zero equity or preference share capital.
Posted in Chapter IV - CA2013, Companies Act 2013, Governance and Responsibility
Tagged Bonus Issue, Companies Bill 2012, Debentures, Duplicate Share Certificates, Equity Shares, ESOPS, Other Securities, Preferential Allotment, Private Placement, Public Offer, right issue, Share Capital, Share Certificates, Shares, Shares and Securities, Special Resolution, Sweat Equity, Tribunal, Variation, Voting Rights
In recent posts, we discussed provisions of Chapter III of the Companies Act, 2013. This is time to discuss major penal provisions in this chapter.
CRIMINAL LIABILITY FOR MIS-STATEMENT IN PROSPECTUS (SECTION 34):
Where a prospectus, issued, circulated or distributed:
a) includes any statement which is untrue or misleading in form or context in which it is included; or
b) where any inclusion or omission of any matter is likely to mislead;
Every person who authorises the issue of such prospectus shall be liable under section 447 i.e. fraud.
Posted in Chapter III - CA2013, Companies Act 2013, CorpGov, CSR, Governance and Responsibility
Tagged Abridge Prospectus, Advertisement of Prospectus, Allotment of Securities, Application Form, Board of Directors, Bonus Issue, Business, Companies Act, Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Debentures, Deemed Prospectus, Dematerialise securities, Dematerialise Shares, Depositories, ESOPS, Fraud, Further Public Offer, GDR, Global Depository Receipt, India, Information in Prospectus, Information Memorandum, Initial Public Offer, IPO, Issue of Securities, Issue of Securities by Company, Issue of Securities by Private Company, Issue of Securities By Public Company, Legal liability, Legal Reforms, Listed Companies, Listing, Listing of Securities, Ministry of corporate affairs, Offer for Sale, Offer for Sale of Securities to the Public by an existing Shareholder, Offer Letter, Offer of Securities for Sale, Other Securities, Preferential Allotment, Private Placement, Private Placement Offer Letter, Prospectus, Public Issue, Public Offer, Red Herring Prospectus, Reforms, Registration of Prospectus, Reports with Prospectus, Return of Allotment, right issue, SEBI, Securities, Securities and Exchange Board o India, Securities and Exchange Board of India, Security (finance), Shares, Shares and Securities, Shelf Prospectus, Statement of Compliance, Statement of Expert, Stock exchange, Sweat Equity
In recent posts, we have discussed matters related to prospectus. In this post we will discuss, matters related to issue and allotment of securities following public offer.
SECURITIES IN DEMATERIALISED FORM (SECTION 29):
Under this section;
shall issue the securities only in the dematerialised form.
When any company issue its securities in dematerialised form, provisions of the Depositories Act, 1996 and regulations made under that Act shall be applicable.
There is no bar for any other company to issue its securities in any form. Any other company may convert its securities into dematerialised form.
Posted in Chapter III - CA2013, Companies Act 2013, CorpGov, CSR, Governance and Responsibility
Tagged Allotment of Securities, Bonus Issue, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Debentures, Dematerialise securities, Dematerialise Shares, Depositories, ESOPS, GDR, Global Depository Receipt, India, Initial Public Offer, Issue of Securities, Legal Reforms, Listing, Listing of Securities, Other Securities, Preferential Allotment, Private Placement, Prospectus, Public Company, Public Issue, Public Offer, Reforms, Registrar of Companies, Return of Allotment, right issue, Securities, Securities and Exchange Board, Security (finance), Shares, Shares and Securities, Stock exchange, Sweat Equity
Any business cannot run without funds. In case of an incorporated company, initial capital always come from subscribers to the memorandum. As we have discussed in earlier post Commencement of Business, company should commence its business within 180 days by filing some documents with Registrar of Companies. This is legal requirement of Section 11, all subscribers should paid the value of shares agreed to be taken by him and company should receive that money before filing document for filing for commencement of business. But this initial capital may not be sufficient for running a business. [UPDATE: This portion stand deleted due to the Companies (Amendment) Act, 2015.] Public funding is a fundamental proposition for legal structure called company.
Posted in Chapter III - CA2013, Chapter IV - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Companies Bill 2012, CorpLaw, Corporate Law, Further Public Offer, India, Initial Public Offer, IPO, Issue of Securities by Company, Issue of Securities by Private Company, Issue of Securities By Public Company, Legal Reforms, Listed Companies, Ministry of corporate affairs, Offer for Sale, Offer for Sale of Securities to the Public by an existing Shareholder, Offer Letter, Offer of Securities for Sale, Private Placement, Private Placement Offer Letter, Prospectus, Public Issue, Public Offer, Reforms, SEBI, Securities, Securities and Exchange Board o India, Shares, Shares and Securities
Writer of this blog, Aishwarya Mohan Gahrana is Practicing Company Secretary and Insolvency Professional working with M/s Aishwarya M Gahrana & Associates, a New Delhi based peer reviewed firm of company secretaries having pan India presence through friends and associates. This blog is a knowledge sharing initiative. Views expressed here is of writer; not of the organization(s) he is working with.
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