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Companies Act, 2013

Companies Act, 2013. B K SHARMA ACA, FCS, LL.B. B K Sharma & Associates Company Secretaries Former Chairman, NIRC of ICSI bksharma162@yahoo.co.in M-9314517929. Issue of Securities and other matter incidental thereto. Under the Companies Act, 2013 & Companies Rules, 2014.

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Companies Act, 2013

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  1. Companies Act, 2013 B K SHARMAACA, FCS, LL.B.B K Sharma & AssociatesCompany SecretariesFormer Chairman,NIRC of ICSIbksharma162@yahoo.co.inM-9314517929

  2. Issue of Securities and other matter incidental thereto Under the Companies Act, 2013 & Companies Rules, 2014

  3. Share Capital and Debentures Kinds of Share Capital : • Equity Share Capital • With voting rights; or • With differential rights as Dividend, voting or otherwise • Preference Share Capital Others: • Shares/ Debentures are Transferable/ Movable Property • Every Share in a company has its distinctive Number (Not Required in case of Demat Form) • Certificate of Share shall be the prime facie evidence of the title of the person. • Shares held in Demat Form - the Record of Depository is Prime Facie evidence of the interest of BO.

  4. Voting Rights • Every Member of a Company shall have right to vote. • Preference share holders have a right to vote only on resolutions- • Which directly affect their rights. • For winding up of the company . • For re-payment or reduction of equity or preference share Capital. • Proportion of voting rights of equity share holders and preference share holders shall be in the proportion of paid up share capital. • Preference Shares holder can exercise right to vote on all the Resolutions if Dividend Payable to them are in arrear for a Period of two years or more.

  5. Equity Shares with Differential Voting Rights • Conditions to be complied with : • AOA authorised the company to do so • Authorized by Ordinary Resolution in General Meeting • In case of listed company Resolution by Postal Ballot • Max. Limit share with differential voting right – 26% • Co. Having consistent Track Record of Profits for 3 years • Co. has not defaulted in filing FS and Annual Returns • Co. has no default in payment of Declared dividend • Co. has not defaulted in payment of Pref. Dividend or repayment of Term Loan from Fis/Bank • Co. has not been penalised by Court/ Tribunal in Last 3 years under RBI Act, SEBI Act, SCRAct, FEMA

  6. Issue of Securities (S.23) • A Public Company may issue securities:- • To Public through Prospectus • Through Private Placement • Through a Right Issue or Bonus issue • A Private Company may issue Securities:- • By way of Right issue of Bonus issue • Through Private Placement

  7. Issue of Securities by Private Placement (S. 42) • A Company may make Private Placement through issue of Offer Letter in Form No. PAS.4 • Offer of Securities or invitation to subscribe securities shall be made to such number of persons not exceeding 200 (excluding Qualified Institutional Buyers &Employees of the Co. under ESOP) in a Financial Year. • All Moneys payable towards Subscription –Not by Cash. • Allotment shall be made within 60 days from the date of receipt of Application Money. • If Co. fails to allot shares within 60 days then Refund of Application Money within 15 days otherwise Interest @ 12% p.a. from expiry of 60th day.

  8. Private Placement (S. 42) • Money received on Application shall be kept in a Separate Bank Account . • All offers shall be made only to such persons whose names are recorded by the Co. prior to invitation. • Such persons shall receive the offer by Name. • A Complete record of such offers shall be maintained by the Co. (Form PAS-5) • Complete information of such Offer shall be filed with ROC within 30 days of circulation of Offer Letter.

  9. Private Placement (S. 42) • Offer Letter shall be accompanies by an Application Form serially numbered and addressed specifically to the Person to whom offer is made. • No other Person shall be allowed to apply . • Special Resolution has been passed in General Meeting for Further issue of Shares. (Sec. 62) • Minimum Subscription amount – Rs. 20,000/- • On Allotment of Securities, Company shall file a Return of Allotment with ROC. (Form PAS-3) with details Full Name, address, PAN and E-mail ID of Security Holder.

  10. Private Placement (S. 42) Punishment on Contravention • The Company, its promoters and Directors shall be liable for Penalty which may extend to: • The amount involved in the Offer or invitation; or • Rs. Two Crores Whichever is Higher. • The Co. shall refund all the money to Subscribers within 30 days of the order of imposing Penalty.

  11. Prohibition on issue of shares at Discount (S.53) • Co. shall not issue shares at Discount • Sweat Equity Shares can be issued at Discount • If co. issued Shares at Discount shall be void • Punishment in case of contraventions: • Co. shall be punishable with fine not less than Rs. One Lakh but may extend to Rs. Five Lakh • Every Officer in default shall be punishable: • With imprisonment which may extend to 6 Months; or • With fine not less than Rs. . One Lakh but may extend to Rs. Five Lakh; or • With both

  12. Issue of Sweat Equity Shares (S. 54) • Issue of shares is authorized by SR • Resolution specifies No. of Shares, the Current Market Price, consideration (if any), and class or classes of Directors or Employees to whom such shares are to be issued. • One year has elapsed since date of Commencement of Business by Co. • In case of Listed Co., the share shall be issued as per Regulations of SEBI • In case of unlisted Co. – as per Rules • Such shares shall rank paripassu with existing shares

  13. Issue of Sweat Equity Shares (S. 54) In case of Unlisted Company:- • Special Resolution to be passed at General Meeting. • Explantory Statement shall contain the specific particulars. • SR shall be valid for making allotment within 12 Months • Co. shall not issue Sweat Eq. Shares more than 15% of existing paid up Equity Capital in a year or Shares of issue value of Rs. FIVE Crores, whichever is higher. • Issuance of Sweat Equity Shares shall not exceed 25% of Paid up Equity Capital. • Share in Lock-in period of THREE Years • Issue Price determined by Registered Valuer

  14. Issue and redemption of Preference Shares (S.55) • Company may issue Preference Shares for a Period exceeding Twenty Years but not exceeding Thirty Years for Infrastructure Projects as per Schedule VI. • Redemption of such Preference Shares may be done on Annual Basis (minimum 10%) at the option of such Preferential Shareholders from Twenty First Year • In case Co. is not in position to redeem any Preference Shares or to pay dividend on such shares:- • With the consent of Three-fourth Shareholders; and • With approval of the Tribunal Co. may issue further Redeemable Preference Shares.

  15. Transfer & Transmission of Securities (S.56) • Instrument of Transfer of Securities held in Physical Form shall be in Form No. SH.4 duly stamped, dated and executed . • Form No. SH.4 shall be delivered to Co. within 60 days from date of execution. • In case of Transfer of partly paid Shares: • Application for Transfer is made by Transferor. • the Co. shall give Notice in Form No. SH.5 to Tansferee and Transferee has to give No Objection within Two weeks

  16. Delivery of Certificates of Securities by Co. • Within Two Months from the date of Incorporation • Within Two Months from the date of Allotment of Shares. • Within One month from the date of Receipt by the Company of the Instrument of Transfer (Form SH.4) • Within Six Months from the date of Allotment of Debentures. • In case of Securities are dealt with in a Depository, the intimation of allotment of securities to Depository immediately on allotment of such securities. • Punishment in case of contraventions: • Co. shall be punishable with fine not less than Rs. 25,000/- but may extend to Rs. Five Lakh • Every Officer in default shall be punishableWith fine not less than Rs. 10,000/- but may extend to Rs. One Lakh; or

  17. Further Issue of Share Capital (S.62) • Applicable to Private Limited Cos. Also • A Company, proposes to increase its Subscribed Capital by issue of further shares at any time whenever it plans to increase. • Such Shares shall be offered :- • To existing Equity share holders in proportion to the paid-up share capital. (Right Shares) not lees than 15 days and not exceeding 30 days. • To Employees under a Scheme of ESOP, subject to SR • To any person, if authorized by SR either for cash or for consideration other than Cash. (on Preferential Basis).

  18. Issue of Employees Stock Option (Rule 12) • ESOP Scheme approved by Special Resolution. • Employee means:- • A permanent employee of the Co. • A Director of the Co. (excluding Independent Director) • An Employee of a Subsidiary or Holding Co. • Does not include:- • An Employee who is Promoter or from Promoter Group • A Director holds more than 10% of Equity Shares • The Company shall maintain a Register of Employee Stock Option in Form No. SH.6

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