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Share carries with it certain rights and liabilities

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Sharecarries with it certain rights and liabilities while thecompany is a going concern or while the company is beingwound up.In this sense,it may be defined as ‘bundle of rights andobligations’.When thecapital of a company is split in to certain units , eachunit is called share.
Shares ……..[cont’d].A share is evidenced bya share certificate:A share certificate is issued by a company under it’s commonseal.It specifies the shares held by a member and is prima facieevidence of the title of the member to the shares [Sec.84].Each share is distinguished by a appropriate number. [Sec.83].Nature of share:The shares of any member in a company are amovable property.They are transferable in the manner, provided bythe Articles of the company[Sec.82].
SHARE AND STOCK-Distinction:Stock is the aggregate of fully paid shares.Only fully paid shares can be converted in to stock.1. A Share may be partly paidor fully paid.2. Shares can be directlyissued to the public.3. Shares always beardistinctive numbers.4.A share has a nominalvalue.1.Stock is always fully paid.2.stock cannot be directlyissued to the public.3. stock do not bear anydistinctive numbers.4.Stock has no nominal value.
Kinds of sharesUnder the Companies Act,1956, a companycan issue two types of shares,viz.,(1)Preference Shares, and(2)Equity Shares.
Cont’d………Types of Preference Shares:1. Cumulative-Preference Shares2. Non-Cumulative- Preference Shares3. Participative -Preference Shares4.Non-Participative-Preference Shares5.Convertible-Preference Shares6.Non-Convertible -Preference Shares7.Redeemable-Preference Shares
Application and allotment of shares:Application for shares is anofferby aprospective share holder to a company totake shares ; allotment is theacceptancebythe company of the offer.[Agreement = offer plusacceptance],[an agreement enforceable by law is a contract]Allotment results in a binding contractbetween the company and outsiders.
Rules as to allotment1.Minimum Subscription:No allotment shall be made of acompany offered to the public for subscription unless—a] the amount stated in the prospectus as theminimumsubscriptionhasbeensubscribed,&b] the sum payable on application for such amounthas beenpaidto and received by the company,whether in cash or bya cheque or otherinstrument which has been paid [sec.69(10)]
Cont’d……………….A company makingany rights /publicissueof shares/debenturesmust receive at least90% subscription of theentire issuebefore making the allotmentof shares/debenturesto the public.If this amount is not received, the entire amount collected shallbe refunded to the applicants at the end of 120 days from theopening of the subscription list.An allotment of shares made without applicationmoneybeing paidis invalid and the directors are guilty ofmisfeasance.
Rules as to allotment……….

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Term
Spring
Professor
N/A
Tags
Corporation, Share capital

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