Page 133 - DCOM106_COMPANY_LAW

Company Law

Notes of Companies is made by way of filing the E-form 5, E-form 23 and E-form 21 as may be
required according to the alteration made. Stamp duty is also to be paid in case of increase
which is to be paid as per the relevant State Stamp Act. The said E-Forms are to be filed
with the concerned Registrar of Companies.
4. Approval of the said Change: Mere intimation to the Registrar of Companies is not sufficient
if alteration is to be made. The form needs to be approved by the concerned Registrar of
Companies. Hence, it is always advisable to keep a check on the status of the E-form filed.

Task The capital of X Ltd., is 50 lakhs, consisting of equity share capital of 40 lakhs and
redeemable preference share capital of 10 lakhs. The preference share capital is to be
redeemed before 31st December, 2005. The company is running in losses and its accumulated
losses aggregated to 15 lakhs. The company wants to borrow 20 lakh from a financial
institution to improve its working and also to redeem the preference share capital. Advise.
[Hint: Refer to s. 80. The preference shares can be redeemed out of only two sources and no
other. The borrowing from financial institution for redemption of preference shares is not
provided for. The amount may, however, be borrowed for improving its working capital.]

9.4 Share Capital

It means the capital of a company, or the figure in terms of so many rupees divided into shares
of a fixed amount, or the money raised by the issue of shares by a company.
As mentioned above, a public company and its subsidiary can issue only two kinds of shares,
viz., preference and equity. Therefore, such a company can have only two kinds of share capital
by issue of preference shares and equity shares, viz., preference share capital and equity share
capital. The expression “Preference Share Capital” and “Equity Share Capital” are used in the
following five different senses:
1. Nominal, Authorised or Registered Capital: This is the sum stated in the memorandum as
the share capital of a company, with which it is proposed to be registered. This is the
maximum amount of capital which it is authorised to raise, by issuing shares and upon
which it pays stamp duty. As we shall see later, when the original amount of the authorised
capital is exhausted by issue of shares, it can be increased by passing an ordinary resolution.
2. Issued Capital: It is that part of the authorised capital which, the company has issued for
subscription. The amount of issued capital is either equal to or less than the authorised
capital.

3. Subscribed Capital: It is that portion of the issued capital which has been subscribed for by
the purchasers of the company’s shares. The amount of subscribed capital is either equal to
or less than the issued capital.

4. Called-up Capital: The company may not call up full amount of the face value of the
shares. Thus, the called-up capital represents the total amount called-up on the shares
subscribed. The total amount of called-up capital can be either equal to or less than the
subscribed capital.

Thus, uncalled capital represents the total amount not called-up on shares subscribed, and
the shareholders continue to be liable to pay the amounts as and when called. However,
the company may reserve all or part of the uncalled capital, which can then be called in the
event of the company being wound up. For this purpose, a special resolution is

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