Page 195 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes
10.7 Management of a Company
10.7.1 Managerial Personnel
10.7.2 Directors and their Legal Position
10.7.3 Legal Provisions as Regards Directors

10.7.4 Managing Director
10.7.5 Manager
10.8 Compensation to Directors for Loss of Offi ce
10.9 Summary

10.10 Keywords
10.11 Self Assessment
10.12 Review Questions
10.13 Further Readings

Objectives

After studying this unit, you will be able to:

Discuss the meaning of share capital
Explain the allotment of shares
Describe the inspection and investigation

Discuss management of company
Introduction

In earlier unit you have studied about the formation of company and prospectus. As you all

know that Promoters have been described to be in fiduciary relationship with the company.
A prospectus, as per s.2 (36), means any document described or issued as prospectus and includes
any notice, circular, advertisement or other document inviting deposits from the public or inviting
offers from the public for the subscription or purchase of any shares in or debentures of a body
corporate. In this unit you will study about sharte, share capital and allotment of share .

10.1 Meaning of Share Capital

It means the capital of a company, or the figure in terms of so may 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 different senses:
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.

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