Tag Archives: Securities

SECURITIES MARKET – WHAT CHANGED IN 1992?


Guest Post Author: TRISHA SHREYASHI

1992 is a germane year in the history of the Indian securities market but why? That’s something we’ll get to know further in this article paper. From the situation before SEBI Act was legislated to the infamous Harshad Mehta case that led to this legislation to the era post that; all of it has been briefly discussed to give the reader an overview of SEBI Act with regard to (hereafter “w.r.t.”) securities market. Before letting the readers into the details, let’s first get an overview of securities market:-

Continue reading

Stock Exchanges and Listed Entities


The Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015 was notified on 2nd September 2015 and will come into force from 1st December 2015. In this post we will discussion definition of Stock Exchanges, Listed Entities and other related terms.

Continue reading

Designated Securities


The Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015 was notified on 2nd September 2015 and will come into force from 1st December 2015. In this post we will discussion definition of Designated Securities.

Continue reading

DEMATERIALISATION, REFUND AND COMMISSION


In this post, we will discuss dematerialisation of shares, Refund of application money and payment of commission on issue of share capital.

DEMATERIALISATION OF SECURITIES

Section 29 of the Companies Act 2013, say every company making public offer; and such other class or classes of companies as may be prescribed shall issue the securities only in the dematerialised form. This section was discussed in detail earlier on this blog here.

Rule 9 of the Companies (Prospectus and Allotment of Securities) Rules 2014 prescribes that the promoters of every public company making a public offer of any convertible securities may hold such securities only in dematerialized form. The entire holding of convertible securities of the company by the promoters held in physical form up to the date of the initial public offer shall be converted into dematerialized form before such offer is made and thereafter such promoter shareholdings shall be held in dematerialized form only.
Continue reading

PRIVATE PLACEMENT


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.

Continue reading

RETURN OF ALLOTMENT


As we discussed earlier here, sub – section (4) of Section 39 of the Companies Act 2013 says, “Whenever a company having a share capital makes any allotment of securities, it shall file with the Registrar a return of allotment in such manner as may be prescribed”. Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules 2014 prescribes this manner.

Whenever a company having a share capital makes any allotment of its securities, the company shall, within thirty days thereafter, file with the Registrar a return of allotment in Form PAS – 3, along with the fee as specified in the Companies (Registration Offices and Fees) Rules, 2014.

Continue reading

ALTERATION OF SHARE CAPITAL


Every business run on finance and share capital is base finance, hence life blood of a company.

PUBLICATION OF CAPITAL (SECTION 60):

Where any communication or publication of a company contains a statement of the amount of the authorise capital of the company, it shall also contain a statement in an equally prominent position and in equally conspicuous characters of the amount of the capital which has been subscribed and the amount paid – up.

Continue reading

TRANSFER AND TRANSMISSION OF SECURITIES


Free transferability of share is one essential condition for Company form of business, subject to some restrictions under private companies. New Act, deals with substantially.

TRANSFER AND TRANSMISSION OF SECURITIES (SECTION 56):

A company shall register a transfer of securities or interest of members only when such a proper instrument of transfer; duly stamped, dated and executed by or on behalf of the transferor and transferee and specifying the name, address and occupation has been delivered to the company by either party within a period of sixty days from date of execution, along with the certificate of security or the letter of allotment of securities.

Continue reading

MAJOR CAUTIONS UNDER PUBLIC OFFER (COMPANIES ACT, 2013)


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.

Continue reading

ALLOTMENT OF SECURITIES (Companies Act 2013)


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;

  1. Every company making public offer; and
  2. Such other class or classes of companies as may be prescribed

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.

Continue reading

VARIANTS OF PROSPECTUS (Companies Act, 2013)


In our last blog post Prospectus (Companies Act 2013) , we discussed provisions related to prospectus. We will continue our study in this post.

ADVERTISEMENT OF PROSPECTUS (SECTION 30):

When a company issue an advertisement of prospectus, the advertisement shall specify contents of its memorandum; the objects, the liability of members, amount of share capital, name of signatories, and number of shares subscribed for by these signatories and its capital structure.

SHELF PROSPECTUS (SECTION 31):

Any class of company may file a shelf prospectus with the Registrar of Companies at the stage of first offer of securities.

Continue reading

PROSPECTUS (Companies Act 2013)


In last post, public offer and private placement we have discussed public offer. In this post we will discuss Prospectus under Companies Act, 2013

Clause (70) of Section 2 of this Bill define “prospectus” means any document described or issued as a prospectus and includes a red herring prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a body corporate.

Section 26 deals with matters to be stated in prospectus.

Continue reading

PUBLIC OFFER AND PRIVATE PLACEMENT


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.

Continue reading