m


Prakash Kumar 10927921

Saurabh Surana 10927865
Rohit Nerurkar 10927806
Sachin Singh 10927862
Abhishek Moharana 10927912
Sushant Omer 10927871
Agenda
  are Capital

Section 82 to 107
Pertaining to types of share and right of shareholders.

Section 82- Nature of share

‡ The [shares or debentures] or other interest of any member in a company shall be movable
property, transferable in the manner provided by the articles of the company.

Section 84 ² Issue of certificate of shares

‡ Issued under common seal, evidence for the member for the shares
‡ Renewed in case of lost or destroyed or defaced or torn .
‡ Prevents duplication of certificate.
  are Capital Contd
Section 85 ² Types of Shares
‡ Preference Share, Participating preference share, Nonparticipating
preference share.
‡ Equity Share.
Section 86 ² Types of equity share capital
‡ With Voting rights.
‡ With differential rights as to dividend, voting or otherwise in
accordance with such rules and subject to such conditions as may be
prescribed.
Section 87- Voting Rights
‡ Preference Shareholder votes on resolution which affects ´Directlyµ.
‡ Cumulative preference share.
‡ Non cumulative preference share.
  are Capital Contd

§ 

  
  


§ Úimited company having a share capital, may, if so authorised by its articles, alter the
conditions of its memorandum as follows, that is to say, it may ²
§ Increase its share capital by such amount as it thinks expedient by issuing new shares;
§ Consolidate and divide all or any of its share capital into shares of larger amount than its
existing shares;
§ Sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the
memorandum, so however, that in the sub-division the proportion between the amount
paid and the amount, if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived;
§ Cancel shares which, at the date of the passing of the resolution in that behalf, have not
been taken or agreed to be taken by any person, and diminish the amount of its share
capital by the amount of the shares so cancelled.
 ïransfer of  ares
§ Movable property
§ Selling
§ Death
§ Vodafone vs. Income Tax Dept.

§ Process
§ Úondon Founders Association vs. Clarke
§ R. Mathalone vs. Bombay Úife Insurance Co.
§ Sections
§ 108A->108I
§ 111 -111A
 AZZILFI FINLEAE & INVEï ENï (P.) Lï
. Vs
A ALAL ARAAI ENïERPRIE Lï
.

§ Petitioner·s argument:
§ 30,17,767 shares bought by petitioner
§ Rights not transferred by the respondent
§ Respondent·s argument:
§ Violation Substantial Acquisition of Shares and Takeover
§ Sun Pharma and parties involved in concert
§ Same broker & same personnel who were Sun Pharma Employees
§ Sun Pharma was a competitor
 AZZILFI FINLEAE & INVEï ENï (P.) Lï
. Vs
A ALAL ARAAI ENïERPRIE Lï
.
§ Petitioner·s Reply:
§ No evidence of parties being in concert
§ No right to deny membership even to a competitor
§ SEBI can reverse if it finds any wrong doings
§ DP Act
§ Court·s Ruling:
§ No evidence of concert over 10%
§ Protection of Investors under section 111A
§ Provision for Rectification by Section 111A (3)

epository Act, 1996
§ Depository, Participants, Dematerialization.
§ Process of Transfer of shares
§ Simultaneous transfer and registration
§ DP responsible for transfer
§ Company to raise exception

IRECïR
´A company is a distinct legal person but it is not
capable of thinking or acting on its own
´The person is only in the contemplation of law
´Hence there are people associated with the company
who are directing mind and will of the company
´They are the DIRECTORS of the company
´!



  and    

 
binds and define the powers of Directors, regulated
by Companies act
   

oard of
irectors !


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§ Directors meet as a body which is called the ¶Board of

Directors·
§ Responsibilities of Management of the Company
§ Tussle of power between the General body (shareholder)
and the Board of Directors. General body cannot usurp
power of directors. ë
  
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irector as Agents
§ The relationship between company and director is like
principal and agent
§ Directors contract in the name of and on behalf of
company to form a valid contractual relation between
the company and the other party
§ It is the company that is liable to the breach of the
contracts and damages, not the directors (only if they
act within the scope of their authority)
§ Directors are liable only when they exceed their powers
defined by law, articles of association or other
delegation from the general body
§ % %%&%

irectors as ïrustees
Meaning of ¶trustee·
§ vhen owner of the company transfers the ownership of
company to the trustee
§ Trustee would maintain the property and would pass the
benefits from company to the beneficiaries (he cannot use
the property for his own benefits)
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irectors as ïrustees
§ Technically directors are not the trustees of the company as
the ownership of the property is NOT transferred to the
directors.
§ It is only an analogy to describe the work responsibility of
directors. Following principles of trust are applicable to
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 Appointment of
irectors
§ A company can never, right from its incorporation, be
without director/s. Following laws are made to make specific
provision for their existence:
 
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 Company

Private Public

Private Private Public

Placement Placement Issue

Úeast Regulated, No ¶Statement in Úieu of Prospectus· SEBI Registrar

¶Statement in Úieu of to Registrar under Section 70,
Of Companies
Prospectus· is required Schedule III of Companies Act
Information Red Herring
Memorandum Prospectus

Contract Formation

Invite Public Offer to

To Offer Public
 Public Issue

Bonus Issue Rights Issue IPO/FPO

Public Issue under

Section 67

No prospectus
required under
Section 56 (5)

Section 55(A) gives power to SEBI to regulate public issues by companies.

Section 56 & Schedule II of the Companies Act provide the format for
preparing a prospectus.
Section 60 requires that prospectus must be shared with Registrar of
Companies before it is issued.
Section 56(3) requires that an application for shares should contain ù&" $%$
'%(.

Section 62 and Section 63 provide the information on penalty in case of an untrue statement in a
prospect.

Submit Red-Herring Final prospectus

SEBI (Submit
Memorandum put to Prospectus to submitted to SEBI &
Information
Memorandum) the notice of public Registrar of Registrar of companies
Companies after offer is closed.
erdillia Unimers Ltd vs Arun ansal
 Allotment, Listing And Refund
§ Section 69 provides that no allotment of shares will be made if
the declared minimum subscription is not received by public issue
§ But this eventuality is insured by SEBI recognized underwriters
§ Section 73 requires every company making public issue to list the
shares with at least one recognized stock exchange for the shares
to be traded, along with a draft prospectus
§ If the exchange do not grant the permission within ten weeks of
closing of subscription list, the allotment would become void
§ Moreover, successful applicants would be finally sold at the cut-
off price and excess amount needs to be refunded
 Case verview And Analysis
§ Herdillia Unimers Útd came out with public issue of shares and
debentures in 1992
§ Issue opened on 1st June and ended on 11th June
§ The issue oversubscribed; as per the law Herdillia Útd, on closure of
public issue, filed a return before the SEBI with the details of who given
allotments and whose deposit money was refunded
§ Arun Bansal and his wife, who were not allotted the shares/debentures,
the company refunded their money of Rs 3000 each by cheques.
§ Company found that the cheques were not enchased, hence company
sent DD of Rs 3675 each via registered post, immediately.
§ Section 73 prescribes a time period for refund. Under sub-section
(2A), the company is liable to pay interest not less than 4% and
more than 15% if the company doesn·t refund the money in eight
days.
§ Sub-section (2B) states that the company and officers are punishable
if refund is not done within 6months of expiry.
§ The Bansal couple filed a case in Jaipur claiming a violation of
Section 73.
§ The case was quashed as the company complied with Section 73 and
under Companies Act Section 621 which states that offences on Act
to be cognizable only on complaint by shareholder, registrar and
government
 ecurities Regulation
° Securities refers to shares, debentures, bonds, units, derivatives etc

° In 1925, Bombay Securities Contracts Control Act was passed by state government to
regulate and control the trading of securities in Mumbai and its presidency

° This act made provision for recognition and regulation of Stock Exchange and different modes
of dealing in shares

° Failed to address two concerns :

i. wagering aspects of securities transactions
ii. Regulate the working of Stock Exchange

° Securities Contracts Regulation Act, 1956 attended both these aspects

 ecurities Contracts Regulation Act,
1956
§ The Act provides mechanism of recognizing, supervising and controlling stock exchanges

§ Government has been given the following power to :

§ Alter the working of any exchange
§ Ask for any information from an exchange
§ Withdraw the recognition of a stock exchange
§ Scrutiny any transaction
§ Prohibit trading in notifies securities

§ Úaw to regulate the different instruments of a securities market like company, agents, brokers,
specialists
 EI and EI Act, 1992
§ The securities and exchange board of India (SEBI) was set up on April 12, 1988

§ The World Bank and the International Monetary Fund (IMF) have introduced a benchmark
i.e., Financial Services Assessment Programme (FSAP) to strengthen the monitoring of
financial systems

§ The FSAP is designed to help countries enhance their resilience to crisis and cross-border
contagion, and to foster growth by promoting financial system soundness and financial sector
diversity

§ SEBI was set up as a non-statutory body. Securities and Exchange Board of India (SEBI) is a
autonomous body created by the Government of India and given statutory form in 1992 with
the SEBI Act 1992

§ Before the introduction of SEBI, under the Capital Issue Act, 1947 , government had the
control over the issue of capital, pricing of the issues, fixing of the premium and the rate of
interest on the debentures
 Functions of EI ² ec 11(2)
The SEBI Act empowers SEBI to take following measures for the purpose of performance
of its duties:

1) Regulating the business in stock exchanges and any other securities markets

2) Registering and regulating the working of stock brokers, sub brokers, share transfer
agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant banker,
underwriters, portfolio managers, investment advisers and such other intermediaries who
may be associated with securities markets in any manner.

3) Registering and regulating the working of the depositories, participants, custodians of

securities, foreign institutional investors, credit rating agencies and such other
intermediaries as the Board may, by notification, specify in this behalf.

4) Registering and regulating the working of venture capital funds and collective investment
schemes, including mutual funds.
 Functions (contd«)
5) Promoting and regulating self-regulatory organizations.

6) Prohibiting fraudulent and unfair trade practices relating to securities markets.

7) Promoting investors' education and training of intermediaries of securities markets.

8) Prohibiting insider trading in securities.

Insider Trading means any person who is connected with company and who reasonably expected to have access to
unpublished price-sensitive information in respect of securities of a company or who has received or has had access
to such unpublished price sensitive information.

9) Regulating substantial acquisition of shares and take-over of companies.

10) Calling for information from, undertaking inspection, conducting inquiries and audits of
the stock exchanges, mutual funds, other persons associated with the securities market
intermediaries and self-regulatory organizations in the securities market.