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1 SHARES - ALLOTMENT ALLOTMENT OF SHARES & DEBENTURES: The general principles are : 1) Proper authority - Board resolution, 2) Within reasonable time, 3) Communication, 4) Absolute and unconditional 5) Revocation – can be done by the applicant before letter of allot. is posted. PUBLIC OFFER & FIRST ALLOTMENT: Registration of Prospectus, Shares in Demat form, Minimum subscription : 90%, Application money – shall not be less than 5% of the nominal amount of shares, Amount collected should be deposited in a separate Bank a/c., Opening of subscription list – allotment can be made only after beginning of the 5th day from the date of issue of prospectus, shares must be listed in SE, to return of excess amount, Return of allotment. 2. SHARES IRREGULAR ALLOTMENT: Any allotment made : when the issue is not 90% subscribed, not collected application money 5% of the nominal amount, Not kept the amount in a separate Bank a/c, Co. has not issued prospectus or fails to file a Statement in lieu of Prospectus 3 days before allotment. Allotment is voidable. UNDERWRITTING: Means guaranteeing. Underwriter agrees to subscribe an agreed number of shares of the Company if public fails to subscribe. It is not mandatory under the Act. Brokerage cannot exceed 5% of the price of shares and for Deb. 2.5% of the price. Minimum underwriting obligation will be 5% of the issue or Rs.25 lacs whichever is less. Outstanding commitments of an underwriter should not exceed 20 times his networth. PROMOTERS CONTRIBUTION: The promoters should contribute NOTLESS than 20% of post issue capital. The entire amount including the premium must be received at least one day prior to the issue opening date and kept in escrow a/c. The shares are subjected to lock in period. 3 MARKET INTERMEDIARIES MERCHANT BANKER: Means any person engaged in the business of issue management. DUTIES: Managing public issues, underwriting, private placements, stock broking, syndication of loan etc.. CONDITIONS : SEBI registration, must be body corporate, has necessary infrastructure, 2 persons with MB experience, not involved in any litigation, have professional qualification, net worth. REGISTRAR: Means a person appointed to do: collecting application for the issue, keeping proper records of them, finalising allotment, despatch of allotment letters, refund orders etc.. CONDITIONS: Similar to MB for Registrar and Bankers to issue. BANKERS TO ISSUE: Means a scheduled bank registered with SEBI which collects the applications and amounts from public during issues, accepts call money, makes refund of application money, distributes dividend, etc.. CODE OF CONDUCT: Maintain high standards of integrity, protect the interest of investors, prompt, due diligence, shall not discriminate amongst its clients, no misrepresentation, avoid conflict of interest, appropriate disclosure, maintain confidential information, no unfair competition, not to make untrue statements, proper internal control systems, good corporate polices etc.. ISSUE OF SHARES AT PREMIUM AND AT DISCOUNT AT PREMIUM: An equal amount of premium should be transferred to Securities premium account. This amount can be used for 1) issue of bonus shares, 2) writing off preliminary expenses, 3) premium payable on redemption of redeemable preference shares. CAN DIFFERENT PREMIA BE CHARGED: Normally uniform premium is charged from all applicants. But if all parties concerned agree different premium can be charged. AT DISCOUNT: Subject to following conditions it can issue: 1) shares issued must be of class already issued, 2) Resolution and sanction of Central Govt., 3) Max. discount shall not exceed 10 %, 4) Company working for a year, 5) must issue shares within 2 months of sanction. BUY BACK OF SHARES: CONDITIONS: Authorised by AOA, Special resolution, buy back should not be more than 25% of paid up capital and free reserves, debt owned is not more than twice the capital , free reserves after buy back, share are fully paid, shares listed in SE, proper notice of the meeting. 5. BUY BACK / TRANSFER & TRANSMISSION MODES OF BUY BACK: From the shareholders, from open mk. from odd lots, from the employees. Buy back to be completed with in 12 months from the date of passing special resolution. Filing of declaration of solvenvy : Must file with ROC and SEBI in the prescribed form verified by the Board . EXTINGUISHMENT & PHYSICAL DESTRUCTION OF SHARES: Such shares must be physically destroyed within 7 days of the last date of completion of buy back. Company cannot issue further shares of that kind in the next 6 months. TRANSFER OF SHARES: As prescribed in Act and AOA. Board of Directors are given the powers. Co. to maintain proper records and file necessary returns. PROVISIONS: 1) Properly executed transfer form and share certificate to be submitted, 2) Application for transfer 3) If refused, can appeal. TRANSMISSION OF SHARES: On the death of member, his regal rep. shall send to Co. share certificate, death certificate and notice in writing signed by him for transmission. NOMINATION / STOCK OPTION SINGLE HOLDER: On the death of the shareholder, nominee will be entitled to the rights. JOINT HOLDERS: On the death of ALL the joint holders nominee is entitled to the rights. If a minor is nominated, should appoint a person to hold the shares. Nomination facility is available only to natural persons who can die. Individual can be appointed as nominee. EMPLOYEES STOCK OPTIONS : Option given to employees to purchase shares of the Co., at a pre determined price. It is a kind of reward. Normally 5% of equity is reserved and is nontransferable for 3 years. SWEAT EQUITY SHARES : Equity shares issued at a discount or for consideration other than cash for providing know-how or for intellectual property right - patent or copy right.
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