Definition of Share capital and debentures in Company Bill 2011
Equity share capital has now been defined as:
Equity share capital, with reference to any company limited by shares, means:
· All share capital which is not preference share capital and preference share capital with reference to any company limited by shares, means that part of the issued share capital of the company which carries or would carry a preferential right with respect to—
o payment of dividend, either as a fixed amount or an amount calculated at a fixed rate, which may either be free of or subject to income-tax; and
o repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company [clause 43].
If a company with intent to defraud, issues a duplicate certificate of shares, the company shall be punishable with fine which shall not be less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or Rs.10 crores whichever is higher. Stringent penalties have also been imposed for defaulting officers of the company [Clause 46(5)].
Where any depository has transferred shares with an intention to defraud a person, it shall be punishable under clause 447 [Clause 46(6)].
Security Premium Account may also be applied for the purchase of its own shares or other securities [Clause 52(2)(e)].
A company can not issue share at a discount. Any share issued by a company at a discounted price shall be void [Clause (53)].
A company limited by shares can not issue any preference shares which are irredeemable. However, a company limited by shares may, if so authorized by its articles, can issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue. This period of twenty years may, however, be excluded in case of such infrastructural projects as may be prescribed [Clause 55].
Every company shall deliver Debenture Certificate issued by the company within six months of allotment [Clause 56(4)(d)].
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