Page 139 - DCOM106_COMPANY_LAW

Company Law

Notes 9.6.1 Issue of Shares to existing Shareholders

The capital is also raised by issue of rights shares to the existing shareholders (s.81). In this case
the shares are allotted to the existing equity shareholders in proportion to their original
shareholding, e.g., one share against every two shares held by a member.

9.6.2 Public Issue of Shares

Public issue of shares means the selling or marketing of shares for subscription by the public by
issue of prospectus. For raising capital from the public by the issue of shares or debentures, a
public company has to comply with the provisions of the Companies Act, the Securities Contracts
(Regulations) Act including the Rules made thereunder and the Guidelines and instructions
issued by the concerned Government authorities, the Stock Exchange and SEBI, etc. Management
of public issue involves coordination of activities and cooperation of a number of agencies such
as managers to the issue, underwriters, brokers, registrars to the issue, solicitors/legal advisors,
printers, publicity and advertising agents, financial institutions, auditors and other Government/
Statutory agencies such as Registrar of Companies, Reserve Bank of India, stock exchange,
SEBI, etc.
It is advisable to keep in mind the guidelines issued by SEBI with regard to issue of shares
termed as “Guidelines for Disclosure and Investor Protection” before issuing shares to the
public.
Share application form to seek permanent account number. In respect of applications for value
of 50,000 or more, the applicant or in case of applications in joint names, each of the applicant,
shall mention his/her permanent account number/GIR number and income-tax circle, ward,
district or the fact of non-allotment of PAN/GIR number, as the case may be and applications
not complying with the provisions are liable to be rejected.

Self Assessment

8. A company must inform the registrar about redemption of preference shares within
(a) 21 days (b) 15 days

(c) 30 days (d) None of the above
9. The capital which is part of the uncalled capital of the company which can be called up
only in the event of its winding up is called

(a) Issued capital (b) Nominal capital
(c) Authorised Capital (d) Reserve capital
10. XYZ Co. is a holding of XZ Pvt. Company. XZ Co. issued deferred shares. The issue is valid
or void
(a) Valid (b) Void
(c) Situation does not arise (d) None of the above
11. What is the maximum period for redemption in case of preference shares issued by the
company
(a) 10 years (b) 15 years
(c) 20 years (d) None of these

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