6 th June, 2014 1. Kinds of Share Capital (sec. 43) 2

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<ul><li>Slide 1</li></ul> <p>6 th June, 2014 1 Slide 2 Kinds of Share Capital (sec. 43) 2 Slide 3 Voting Rights &amp; Variation Of Rights (sec. 47) Equity Share holders Right To Vote On Every Resolution 3 Resolutions which Directly affects The Rights * Winding Up Of The Company *Repayment / Reduction Of Its Equity Or Preference Share Capital Preference Shareholders Slide 4 Equity with differential rights (sec. 43) 4 Authorised by the AOA Ordinary resolution (for listed companies through postal ballot)Shall not exceed 26% of the total post-issue paid up equity share capital at any point of time Should have 3 years track record of distributable profits No default in payment of declared dividend, repayment of matured deposits or redemption of preference shares/debentures, if any including interest there on No default in filing Financial Statement &amp; Annual Return for preceding 3 years Not be penalized by Court or Tribunal of any offence under RBI, SEBI, SCRA,FEMA and any other special act where such cos., are regulated, if any Conversion into share with differential rights and vice versa is not allowed Slide 5 Continued 5 Structuring different economic rights for different class of equity shareholders may become difficult given the conditions that companies have to comply with under the Companies (Share Capital and Debentures) Rules, 2014. However, it is important to note that the rules issued under this chapter specifically mention that existing equity shares issued with differential rights will continue to have the rights provided at the time of their issuance Slide 6 Kinds of Issues of share capital (sec. 62, 42, 63, 54, 23 etc.) 6 Slide 7 Rights Issues sec. 62(1)(a) 7 Slide 8 Rights Issues -Procedure 8 Conduct a Board Meeting and pass resolution for right issue and approve the letter to offer Issue of Letter of Offer which shall specify the no. of shares offered. Time Limit is 15 to 30 days Offer to be accepted If not accepted with in time, deemed to be declined Can be renounce within the time to any other person Slide 9 Section 42. Part II Private Placement "private placement" means any offer of securities or invitation to subscribe securities to a select group of persons by a company (other than by way of public offer) through issue of a private placement offer letter and which satisfies the conditions specified in this section No Invitation shall be made to such number of persons not exceeding 50 or such higher number as may be prescribed in a financial year (i.e., 200) and on such conditions in the form and manner of Private Placement as may be prescribed Excluding: QIBs Employees Such concept was not there in the Companies Act, 1956. 9 Slide 10 Private Placement Rules No fresh offer of Private Placement is allowed unless the previous offer, either have been completed or withdrawn or abandoned If the Private Placement is turned to be a public offer the provisions of SCRA and SEBI should be complied with The allotments must be completed within 60 days, failing which the amount should be refunded within 15 days form the date of completion of 60 days. Otherwise it shall be liable to repay that money with interest @ 12% per annum from the expiry of the 60 th day The subscription money should be kept in a separate bank account in a scheduled bank The company shall maintain a Register and should keep all the offers received in such manner as may be prescribed and complete information about such offer shall be filed with the Registrar within a period of 30 days of circulation of relevant private placement offer letter No advertiseme nt shall be released 10 Slide 11 Max allotment to 200 number of Investors (excl. QIBs &amp; ESOP) in one FY Cash Payment prohibited Allotment to be made within 60 days, else refund @ 12% interest p.a. Share application money to be kept in Separate Account key points 11 Slide 12 Preferential Offer sec. 62 12 Special Resolution Comply with Private Placement Rules Valuation of Shares Disclosures in explanatory statementFully Paid Up Shares shall be allottedOffer should be completed with in 12 months Slide 13 Employee Stock Option Scheme sec. 62 13 Issued to Directors and Employees including Subsidiary &amp; Holding Co Passing by Special ResolutionFreedom to fix price and lock in period Same definition, but excludes - independent directors, promoter/PG, director directly or indirectly holds &gt; 10% of outstanding equity shares and includes employee of associated company minimum one year gap between grant of options and vesting of optionsAmount forfeited by the company if the option is not exercised by the employees within the exercise periodOptions not transferableOptions not be pledged, hypothecated, mortgaged Slide 14 Employee Stock Option Scheme 14 Legal heirs or nominees are entitled in case of death of employee Disclosure in the board's report In the event of resignation or termination, options not yet vested will expire and options vested can exercise as per the terms at the time of grant of options Same definition, but excludes - independent directors, promoter/PG, director directly or indirectly holds &gt; 10% of outstanding equity shares and includes employee of associated company listed companies regulated by SEBI Slide 15 Bonus Issue sec. 63 15 Existing Members Out of Free Reserve, Security Premium, Capital Redemption Reserve Authorized by Articles Recommended by Board and Authorize in General Meeting No default in payment in interest or principal amount in FDs or Debt Securities No default in payment of Statutory dues of employees (PF, Bonus &amp; Gratuity) Partly paid shares shall be made fully paid up. Once issued should not be withdrawn Slide 16 Sweat Equity Shares sec. 54 16 Issued to Directors and Employees including Subsidiary &amp; Holding Co. Can be issued at discount or for consideration other than cash For providing Technical Know How, Intellectual Property Rights or Value addition Authorised by a special resolution one year should have elapsed since the commencement of business listed companies are regulated by SEBI Offer should be completed with in 12 months Shall not issue more than 15% of Paid up Capital Shares shall be locked in for 3 years Valuation of Equity Shares &amp; Know How, Intellectual Property shall be done by RV Slide 17 Comparative analysis Companies Act, 1956 Companies Act, 2013 ParticularsPrivatePublic Rights Issue No provisions were prescribed. Sec. 81 Preferentia l Allotment No provisions were prescribed. Sec. 81(1A) ESOPsNo provisions were prescribed. Sweat Equity Sec. 79A Bonus Issue No provisions were prescribed. ParticularsPrivatePublic Rights IssueSec. 62(1)(a) Preferential Allotment Sec. 62(1)(c) ESOPsSec. 62(1)(b) Sweat Equity Sec. 54 Bonus IssueSec.63 17 Slide 18 Issue of Preference Shares sec. 55 18 Irredeemable Preference Shares are not allowed to issue Maximum redemption period shall not exceed 20 years &amp; Infrastructure projects 30 years Passing by Special Resolution Explanatory statement to be annexed to the notice listed companies are regulated by SEBI Slide 19 Redemption of Preference Share 19 Shall be redeem out of Profit or Proceeds of fresh issue No such shares redeemed unless fully paid up Slide 20 A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption. Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting. No company shall issue any debentures carrying any voting rights. Where debentures are issued by a company under this section, the company shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend and the amount credited to such account shall not be utilised by the company except for the redemption of debentures. 20 Issue of Debentures sec. 71 read with sec. 42 &amp; 62 Slide 21 Deposits secs 73-76 read with (Acceptance of Deposits Rules by Companies) 21 Deposit means Any receipt of money by way of deposit or loan or in any other form, by a company. Depositor meansAny member who has made deposit with the Company Slide 22 What is not a Deposit Amount received from CG, SG or guarantee provided by them Amount received from Foreign Govt., Banks, FI, ADB, IFC, etc., Amount received from any Banking Co. or SBI or its Subsidiaries Amount received from Banks, Public Financial Institutions, Insurance Co. etc., Amount raised through Commercial Paper Amount raised from one Co. to other Co Amount received from Subscription of Securities Amount received from Director Amount raised by issue of secured bonds &amp; debentures or issue of CCDs convertible into shares within 5 years Amount received from Employee under Contract Any non-interest bearing amount held in trust Advance received for Supply of Goods Security deposit for performance of contract Advance consideration received for transfer of Property Loan bought in by Promoters as stipulated by Banks and FI Amount accepted by Nidhi Co 22 Slide 23 From whom to accept 23 Eligibility Criteria Public Co. in order to accept from other than members (Eligible Co.) Net worth 100 Cr or more Turnover 500 Cr or more Every other Co. only from Members Slide 24 Tenure of Deposit 24 Deposits shall be accepted Minimum for 6 months Maximum for 36 months If accepted for less than 6 months Such deposits shall not be more than 10% of paid up capital + free reserves Minimum 3 months shall elapse before repayment of deposits Slide 25 Threshold limits 25 Threshold limits for accepting or renewal of Deposits by various Co. Eligible Co. from members only, then till 10% of Paid up Capital + free reserves from other than members, then till 25% of Paid up Capital + free reserves Govt. Eligible Co. till 35% of Paid up Capital + free reserves Other than Eligible Co. from members only, then till 25% of Paid up Capital + free reserves Slide 26 About existing Deposits File within a period of 3 months from commencement of this act Form DPT 4 Shall repay all the deposits within one year or on the date on which deposits are becoming due whichever is earlier 26 Slide 27 Insurance In default to repay and if amount is more than Rs. 20,000/-, the Insurance Co. shall repay not less than Rs. 20,000/- for each depositor Contract to be entered with insurance agency before 30 days of issuing Circular Its mandatory 27 Slide 28 Every new beginning comes from some other beginnings end 28 Thank You Every new beginning comes from some other beginnings end </p>