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Unit 10: Share Capital

With regard to shares allotted for consideration other than cash, the Department of Notes
Company Affairs has instructed that the original contract together with a copy thereof duly

verified by an affidavit should be sent along with the Return of Allotment to the Registrar.

The affidavit has to be made on a stamp paper by a responsible officer of the company

stating that the copy is a true copy of the contract. Where, in terms of a contract, shares
are allotted to the nominees of the parties to the contract, a letter or letters from each such
party should be obtained, addressed to the company to allot such shares to the nominees.

Copies of such letter should be duly verified by an affidavit by a responsible officer of the

company.
(c) Where bonus shares have been issued, a return must be field with the Registrar stating:

(i) the number and nominal amount of such shares comprised in the allotment; (ii)
the names, addresses and occupation of the allottees; and (iii) a copy of the resolution
authorising the issue of such shares.
(d) Where the shares have been issued at a discount, a copy of the resolution passed by the
company authorising such issue and a copy of the order sanctioning the issue must be fi led
with the Registrar. If rate of discount exceeds 10%, the relevant order of the Tribunal must

also be filed with the Registrar.
Other requirements:

(i) Return to be signed and dated: The Return of the Allotments must be duly dated and signed
by a director or the secretary.
(ii) Penalty: If default is made in complying with the provisions of s. 75, every officer of the

company who is in default shall be punishable with fine which may extend to ` 5,000
for every day during which the default continues. However, where the default relates to
contravention of showing in the return that shares have been allotted for cash, when such
is not the case, every promoter and the company who is guilty of contravention shall be
punishable with fine which may extend to ` 50,000.

(iii) Re-issue of forfeited shares: No return of allotment is required to be filed with regard to

the re-issue of forfeited shares [s.75(5)]. Re-issue of forfeited shares does not amount to
allotment within the meaning of s.75(1). It is only an issue of existing shares.

10.4 General Meetings and Proceedings

Need for Meetings

A company is an artificial person and therefore, cannot act itself. It must act through some

human intermediary. The various provisions of law empower shareholders to do certain things.
They are specifically reserved for them to be done in company’s general meetings. Section 291

empowers the Board of Directors to manage the affairs of the company. In this context meetings
of shareholders and of directors becomes necessary. In this Part meetings of shareholders are
taken up and later in Part 14, meetings of directors are discussed. The Act has made provisions
for following different types of meetings of shareholders:
(i) Statutory Meeting;
(ii) Annual General Meeting;
(iii) Extraordinary General Meeting; and
(iv) Class Meetings.

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