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Premium member Presentation Transcript Alteration of Share Capital : Alteration of Share Capital Alteration of Share Capital: Alteration of Share Capital Alteration of share capital – S 94 (1) Increase in the share capital Consolidation of share capital Conversion of shares into stocks and stocks into shares Splitting of shares – subdivide into small amounts Cancellation of shares which are not issued Reduction of shares Alteration of Share Capital: Alteration of Share Capital Procedure for increase of share capital Board Resolution and approval Notice of general meeting Ordinary/special resolution Intimation to the stock exchange Three copies of notices Six copies of resolution Filing of special resolution E-23 Form to the Registrar within 30 days Filing of e-form No. 5 Within 30 days of the general meeting Duly stamped Noting the memorandum and articles Alteration of Share Capital: Alteration of Share Capital Notice to Registrar of consolidation of share capital, conversion of shares in stocks – 95 Notice of increase of share capital -97 File notice of increase with the registrar within 30 days after passing the resolution Details of class of shares Default is punishable with a fine extending to five hundred rupees per day of default Merger of authorized capital during amalgamation Tribunals approved scheme Stating the share capital in its memorandum Merger resulting in increasing the share capital File notice of increase with the Registrar Alteration of Share Capital: Alteration of Share Capital Reduction of Share Capital Reduction of uncalled capital Reduction of capital on suffering loss Conditions for reduction of share capital – 100 Company’s articles should permit the reduction Shareholders approval by a special resolution Confirmation by the Tribunal for reduction Reduction of shares by Extinguish or reduce the liability on any of its shares not paid Either with or without extinguishing or reducing liability - pay off paid up share capital which is in excess of requirement Share capital lost Alteration of Share Capital: Alteration of Share Capital Types of companies eligible for reduction Company limited by shares Company limited by guarantee and having a share capital Reduction of share capital by Buy back of shares – 77A Apply the share premium account for a purpose other than purposes authorized For capital redemption account for a purpose other than for the issue of bonus shares Reduction of share capital: Reduction of share capital Motives of reduction of capital Over capitalization Writing off of losses and assets Acquisition of shares which are not in optimum lots Separation of a shareholder or a group of shareholders Distribution of accumulated profits by payment to shareholders Family arrangement Reorganization of capital or quasi capital as part of scheme of compromise or arrangement or amalgamation Revival of a sick company or company in windingup Reduction of Capital: Reduction of Capital Reduction of securities amount Utilization of share premium Principles governing reduction of capital Company has the power to reduce its capital Confirmation by the court Protection to the minority Reduction in part or whole Registration of order and minute of reduction of share capital Liability of members in respect of reduced shares – 104 Penalty for concealing name of creditors – 108 One year imprisonment or fine or both Reduction of Capital: Reduction of Capital Procedure Board meeting and approval General meeting Intimation to stock exchange Special resolution Filing of special resolution Application to Tribunal Confirmation from Tribunal Creditors consent to the reduction Buy Back of Securities: Buy Back of Securities Law applicable S 77 A of Company Law SEBI (Buy-Back of Securities ) Regulations 1998 Private Limited Company and Unlisted Public Limited Company ( Buy-Back of Securities) Rules 1999 Factors for Buy-back of shares Increase the underlying value of shares Enhancing the earning per share (EPS) Reduce the excess share capital Pay off surplus cash not required for the business Prevent takeover bid Part of compromise agreement Rationalize the capital structure Benefits of Buy-Back: Benefits of Buy-Back Improved return on investment Reduced shareholders and better service Good management control Greater liquidity to the shareholders Avoiding unpaid shares and fractional shares Buying of shares from discontented shareholders Limitations Lock-in-period Non-transferability conditions in the agreements Regulations of RBI, other regulators Listing requirements and conditions in agreement Reduction of free reserves Debt equity ratios, other financial ratios Interest rates from financial institutions Buy Back of Securities: Buy Back of Securities Company Law provisions – 77 B Prohibition from buying their own shares Objective is put checks and balances in the process – 77 A(1) Permitted by the Tribunal and other laws Company ltd by shares are permitted to buy back Company buy its own shares from Its free reserves Securities premium account Proceeds of any other shares or securities Buy Back of Securities: Buy Back of Securities Conditions Authority in articles –’ unless authorized by articles’ Limit upto which the securities can be bought Maximum limit 25% of its total paid up capital and free reserves according to last audited balance sheet Paid capital include equity and preferential shares Maintenance of post buy-back debt-equity ratio Not more twice the capital and free reserves Buy back of shares from -5 existing security holders Open market Odd lots Securities issued to employees - stock options or sweat equity Only fully paid shares are to be purchased Buy-Back of Securities: Buy-Back of Securities Transfer to capital redemption reserve account – 77 AA Sanction by special resolution of General Meeting No sanction is required if the buy back is less than 10% Such buy back is authorized by the Board Special resolution and explanatory statement Disclosure about the scheme of buyback in the general meeting Filing of a copy of resolution with SE and RoC Methods of buy back From existing share holders Open market – book building process or stock exchange Odd lots No negotiated deals Buy- Back of Securities: Buy- Back of Securities Declaration of solvency Board of directors resolution about solvency Filing with RoC and SEBI – Form 4 A Filing of affidavit No filing with SEBI – for unlisted company shares Time Limit for completion of buy back Twelve months from date of resolution Restriction on issue of new securities after buyback – upto six months -8 No further issue No private placement or right issue Bonus shares and conversion of securities are permitted Buy-back of Securities: Buy-back of Securities Register of shares bought from the scheme Return of shares bought -10 With RoC , SEBI e- Form 4 C No filing for unlisted company Destroying of the physical securities within seven days of last date of conclusion of buy back -7 Penalty for default of compliance – two years imprisonment or fine up to fifty thousand or both Prohibition for buy back – 77 B Through any subsidiary Through any investment company No default in payment of deposits or redemptions No buy back of shares when the company has not filed the annual returns, or paid the dividend or file the financial statements with RoC Buy-Back of Securities: Buy-Back of Securities Process – Open market – tender offer Conducting the Board Meeting – information to SE – 7 days before meeting Special resolution and other approvals in the GM – File Resolution with RoC , SE and SEBI Public announcement and offer File offer letter and solvency certificate with SEBI with fee and RoC – immediately – one day Dispatch of letters of offer Specified date - dates of offer and close Opening of escrow account and transfer money to special account Finalize the list of the applicants – advertisement in news paper Payments to applicants Destroy the physical securities File report with RoC – 110 days total Buy-back of Securities: Buy-back of Securities Through SE route Board meeting date and information to SE Board meeting – special resolution and other approval Public announcement Filing papers with SEBI and RoC and SE Commencement of purchases Inform the particulars of purchase to SE Verify the securities and payments to applicants Reporting to SEBI and SE Advertisements in national daily File report with RoC Buy-Back of Securities: Buy-Back of Securities Buyback of securities by unlisted company From existing security holders on proportionate basis From the employees of the company – Esops or Sweat equity Board Meeting – Special Resolution Disclosures and explanatory statements Declaration of solvency Letter of offer to target and filing with RoC – Rule 6(1) Acceptance of offer and related procedures - R 6(2) Verification of offer application received – within 21 days – R 6 (3) Payment of consideration within 7 days – R 7(2) Compilation of other obligations – R 8 Buy-Back Securities: Buy-Back Securities Buy Back should be completed within 12 months – 77A(4) Filing of returns with RoC and SEBI – 77 A Extinguishment and destroy of physical certificates –R 10 – within 7 days Furnish certificate to RoC duly signed by the Two directors and Company Secretary – R 10 Register of Securities bought back You do not have the permission to view this presentation. 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