1. SHARE , DEBENTURE
AND MEETINGS OF COMPANY

2. GROUP MEMBERS
AJAY YADAV
ANIL SHARMA
NIKHIL BISHT

3. What is company
• A company is an association or collection of individuals,
whether natural persons, legal persons, or a mixture of both.
Company members share a common purpose and unite in
order to focus their various talents and organize their
collectively available skills or resources to achieve specific,
declared goals
What is company law
• Corporate law (also "company" or "corporations" law) is the
study of how shareholders, directors, employees, creditors,
and other stakeholders such as consumers, the community
and the environment interact with one another. Corporate
law is a part of a broader companies law (or law of business
associations).

4. Type of company

5. DIFFERENCE BETWEEN PUBLIC AND PRIVATE COMPANY
1.Minimum Paid-up Capital : A company to be Incorporated as a Private Company
must have a minimum paid-up capital of Rs. 1,00,000, whereas a Public Company
must have a minimum paid-up capital of Rs. 5,00,000.
2. Minimum number of members : Minimum number of members required to form
a private company is 2, whereas a Public Company requires at least 7 members.
3. Maximum number of members : Maximum number of members in a Private
Company is restricted to 50, there is no restriction of maximum number of members
in a Public Company.
4. Transerferability of shares : There is complete restriction on the transferability of
the shares of a Private Company through its Articles of Association , whereas there
is no restriction on the transferability of the shares of a Public company
5 .Issue of Prospectus : A Private Company is prohibited from inviting the public for
subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas
a Public Company is free to invite public for subscription i.e., a Public Company can
issue a Prospectus.

6. 6.Number of Directors : A Private Company may have 2 directors to manage the
affairs of the company, whereas a Public Company must have at least 3 directors.
7. Consent of the directors : There is no need to give the consent by the directors
of a Private Company, whereas the Directors of a Public Company must have file
with the Registrar a consent to act as Director of the company.
8. Commencement of Business : A Private Company can commence its business
immediately after its incorporation, whereas a Private Company cannot start its
business until a Certificate to commencement of business is issued to it.
9. Shares Warrants : A Private Company cannot issue Share Warrants against its
fully paid shares, Whereas a Private Company can issue Share Warrants against its
fully paid up shares.
10. Special privileges : A Private Company enjoys some special privileges, which
are not available to a Public Company.
11. Statutory meeting : A Private Company has no obligation to call the Statutory
Meeting of the member, whereas of Public Company must call its statutory Meeting
and file Statutory Report with the Register of Companies.

8. WHAT IS SHARE, SHARE HOLDER
AND SHARE CERTIFICATE
• SHARE :
A “share” means a share in the share capital of the company
share is a unit by which the share capital is divided. Share is a small unit
of the capital of a company. The total capital of the company is divided into
small parts and each such part is called ”share”
• SHARE HOLDER :
A person can purchase any number of shares as he wishes. A person who
purchases shares of a company is known as a shareholder of the company
shareholders are the owners of a limited company.
• SHARE CERTIFICATE :
A share certificate is a written document signed on behalf of a corporation,
and serves as legal proof of ownership of the number of shares indicated.

9. KINDS OF SHARES
SHARE
EQUITY SHARES PREFERENCE SHARES
(i) Equity shares with (i) Cumulative preference shares
normal voting right (ii) Non cumulative preference shares
(ii) Equity shares with differential right (iii) Participating preference shares
(iv) Non participating preference shares
(v) Convertible preference share
(vi) Non convertible preference share
(vii) Redeemable preference shares
(viii) Non redeemable preference shares

10. EQUITY SHARES :
Equity shares are also known as “ordinary shares”. Companies act1956
defines equity shares as “those shares which are not preference shares”
 FEATURES:
• Permanent capital
• Fluctuating dividend
• No preferential rights
• Rights
• Risk
• Residual claimants
• Face value
• Market value
• Bonus and right issue
 TYPES:
(i) Equity shares with normal voting rights: voting right of such equity holders
shall be in proportion to his share of paid up equity capital
(ii) Equity shares with differential rights: right of such equity holders shall be
as to dividend, voting or otherwise in accordance with companies rule 2001

11. PREFERENCE SHARES:
Preference shares are those, which enjoy the following two preferential rights:
1. Dividend at a fixed rate or a fixed amount on these shares before any
dividend paid to equity shares.
2. Return of preference share capital before the return of equity share capital at
the time of winding up of the company.
 FEATURES :
• Preferential dividend
• Prior repayment of capital
• Fixed return
• Nature of capital
• Voting rights
• Risk
• Face value
• Right or bonus share

12. KINDS:
1. CUMULATIVE PREFERENCE SHARES:
Cumulative Preference Shares are those shares on which dividend goes on accumulating
Until it is fully paid. This means, if the dividend is not paid in one or more years due to
inadequate profit, then such unpaid dividend gets accumulated. The accumulated
dividend is paid when company performs well.
2. NON-CUMULATIVE PREFERENCE SHARES:
Non-cumulative preference shares are those type of preference shares, which have right to
get fixed rate of dividend out of the profits of current year only. They do not carry the
right to receive arrears of dividend. If a company fails to pay dividend in a particular
year then that need not to be paid out of future profits.
3. PARTICIPATING PREFERENCE SHARES:
Those preference shares, which have right to participate in any surplus profit of the
company after paying the equity shareholders, in addition to the fixed rate of
their dividend, are called participating preference shares.
4. NON-PARTICIPATING PREFERENCE SHARES:
Preference shares, which have no right to participate on the surplus profit or in any surplus
on liquidation of the company, are called non-participating preference shares.

13. 5. CONVERTIBLE PREFERENCE SHARES:
Those preference shares, which can be converted into equity shares at the option of the
holders after a fixed period according to the terms and conditions of their issue, are
known as convertible preference shares.
6. NON-CONVERTIBLE PREFERENCE SHARES:
Preference shares, which are not convertible into equity shares, are called non-
convertible preference shares.
7. REDEEMABLE PREFERENCE SHARES:
Those preference shares, which can be redeemed or repaid after the expiry of a fixed
period or after giving the prescribed notice as desired by the company, are known
as redeemable preference shares. Terms of redemption are announced at the time of
issue of such shares.
8. NON-REDEEMABLE PREFERENCE SHARES:
Those preference shares, which can not be redeemed during the life time of the
company, are known as non-redeemable preference shares. The amount of
such shares is paid at the time of liquidation of the company.

14. FORFEITURES OF SHARES
Share forfeiture is the process by which the directors of a company
cancel the power of shareholder if he does not pay his call money when
the company demands for it.
• Share forfeiture is the process by which the directors of a company cancel the
power of shareholder if he does not pay his call money when the company
demands for it. Company will give 14 days' notice; after 14 days if shareholder
does not pay then company will forfeit his shares and cut off his name from the
register of shareholder. Company will not pay his received funds from
shareholder. In order to do a share forfeiture the Articles of Association of the
company should contain provision for that.
• EXAMPLE
• Suppose Mr. A buys 100 shares of a company but for the time being the company
asks him to pay only 50% amount. The company makes a deal with Mr. A that
whenever needed the rest of the money will be asked for. Now some months later
when the company asks for the remaining 50% amount, Mr. A says that he is
incapable of paying. The company gives him some more time to pay but he still
can't pay. So the company seizes his shares and he no longer remains a
shareholder of the company! He even loses the 50% amount that he had paid. This
seizure of shares is called share forfeiture

15. POINTS EQUITY SHARES PREFERENCE SHARES
Definition
Shares who do not enjoy any preference as
regards payment of dividend and
repayment of capital
Shares which enjoy preference as regards
payment of dividend and repayment of capital
Rate of
Dividend
Fluctuating rate of dividend depending
upon the profits of the company
Preference shares holders get Fixed rate of
dividend
Voting Rights Yes, in all matters Only in special circumstances
Nature of
capital
Equity shares capital is permanent capital.
It is known as ‘risk capital’
Preference shares capital is
‘safe capital’ with stable return
Face Value Generally lesser Generally higher
Risk higher risk bearers Comparatively less risk involved
Benefits of
right shares and
bonus shares
Equity shareholder is entitled to get right
shares and bonus shares
Preference shareholders are not eligible for
right shares and bonus shares
Investor Profile For bold, high risk taking investors For cautious and conservative investors
Premium on
Redemption
No right to receive premium on redemption Entitled to receive premium on redemption
Classification
(i) Equity shares with
(ii) Equity shares with differential right
· Cumulative/Non-cumulative
· Convertible/Non-convertible
· Participating/Non-participating
· Redeemable/Irredeemable

16. DEBENTURES:
Debentures represent borrowed capital. The debenture holder are the creditors of the
company. The debenture holder gets a fixed rate of interest as return on his investment
“a debenture is a document given by the company as evidence of debt to the holder, usually
arising out of loan and most commonly secured by charge”
 FEATURES:
 Promise
 Face value
 Time of payment
 Interest
 Assurance of repayment
 Rights of debenture holder
 Parties to debentures

17. TYPES OF DEBENTURES:
1.TYPES OF DEBENTURES ON THE BASIS OF RECORD POINT OF VIEW
• REGISTERED DEBENTURES:
These are the debentures that are registered with the company. The amount of such
debentures is payable only to those debenture holders whose name appears in the register
of the company.
• BEARER DEBENTURES:
These are the debentures which are not recorded in a register of the company. Such
debentures are transferable merely by delivery. Holder of bearer debentures is entitled to get
the interest.
2. TYPES OF DEBENTURES ON THE BASIS OF SECURITY
• SECURED OR MORTGAGE DEBENTURES:
These are the debentures that are secured by a charge on the assets of the company. These
are also called mortgage debentures. The holders of secured debentures have the right to
recover their principal amount with the unpaid amount of interest on such debentures out
of the assets mortgaged by the company.
• UNSECURED DEBENTURES:
Debentures which do not carry any security with regard to the principal amount or unpaid
interest are unsecured debentures. These are also called simple debentures.

18. 3. TYPES OF DEBENTURES ON THE BASIS OF REDEMPTION
• REDEEMABLE DEBENTURES:
These are the debentures which are issued for a fixed period. The principal amount of such
debentures is paid off to the holders on the expiry of such period. These debentures can be
redeemed by annual drawings or by purchasing from the open market.
• NON-REDEEMABLE DEBENTURES:
These are the debentures which are not redeemed in the life time of the company. Such
debentures are paid back only when the company goes to liquidation.
4. TYPES OF DEBENTURES ON THE BASIS OF CONVERTIBILITY
• CONVERTIBLE DEBENTURES:
These are the debentures that can be converted into shares of the company on the expiry of
pre-decided period. The terms and conditions of conversion are generally announced at the
time of issue of debentures.
• NON-CONVERTIBLE DEBENTURES:
The holders of such debentures can not convert their debentures into the shares of the
company.

19. POINTS SHARE DEBENTURE
Status Share holders are the owner of the
company.
Actually they are not owners but are considered
as creditors of the company.
Voting rights Shareholders being owner enjoys voting
rights
Debenture holder being company creditor does
not have voting rights
Participation Participate in the management of the
company
Debenture holder cannot participate in the
management of the company
Nature It is a permanent capital. It is not repaid
during the life time of the company
It is temporary capital. Generally it is repaid
after specific period
Return on
investment
No certainty of return in case of loss for
the shareholder.
Debenture-holder receives the interest even if
there is no profit.
Convertibility Shares can not be converted into
debentures
Debentures can be converted into shares.
Identity Person holding share is known as
shareholder.
person holding debenture is known as
debenture-holder.
Records position The rights and powers of the share
holders are laid down in Article of
Association.
The rights and powers of the debenture holder
are mentioned in the certificate issued at the
time of accepting loan.
Position on
liquidation
Share holders have got second right in
regard to repayment of capital if there is
any balance at time of winding up of the
company.
In case of liquidation debenture holder have first
right to get back their amount from the
company.
Nature of
securities
As the shares are not issued against the
charge of any property of company so
the are considered in secured.
As the assets of the company may be charged
against the loans, so debentures are regarded
secured security.

20. MEETINGS
• Meeting:
Get together of individuals or persons with some plan
is known as meeting.
• Business meeting:
When two or more persons gathered as per given
notice to discuss some business matters is known as
business meetings.
• Company meeting:
When the members of a company gather at a certain
time and place to discuss business affairs it is
called company meeting

21. KINDS OF MEETINGS:
1. SHAREHOLDERS MEETINGSTATUTORY (LEGAL) MEETING:
DEFINITION:
Statutory meeting is the first meeting of the members of a public company. It is held once in the
life of a public company. Statutory means legal so this meeting is totally based on law. Law
enforced the company to call this meeting.
OCCASION:
This meeting must be held after 3 months, but before 6 months of obtaining the certificate of
commencement of business.
NOTICE OF MEETING:
The directors will send a notice of the meeting to all the members of the company at least 21 days
before the meeting. And also send statutory report to the shareholders.
OBJECTIVES OF THE MEETING:
To win Confidence:
To Provide Latest Information
To Discuss Statutory Report
To Discuss Future Plans
To Inform About the Property
To Inform Where the Money Used
PENALTY:
In default in filing statutory report and in holding the statutory meeting, every responsible officer
and the company shall be liable to a fine.

22. 2. ANNUAL GENERAL MEETING:
DEFINITION:
Every public company will hold Annual General Meeting of its members every year. This
meeting is to be call and held by the directors of the company.
OCCASION:
The first annual general meeting must be held within 18 months from the date of its
incorporation. The next meeting must be held once in every calendar year within 4 months
after closing of its financial year. The interval between the two meetings must not exceed than
15 months.
NOTICE OF THE MEETING:
The directors will send a notice of the meeting to all the members of the company at least 21
days before the meeting. It should also be published in newspaper.
OBJECTIVES OF THE MEETING:
To check Annual Accounts
Declaration of Dividend
Election of Directors
Appointment of Auditor
PENALTY:
If the company fails to hold this meeting the company and every officer of the
company shall be liable to fine.

23. 3. EXTRA ORDINARY GENERAL MEETING:
DEFINITION:
All general meetings other than annual general meeting and statutory meeting
are known as Extra-Ordinary General Meetings. This meeting is held on the special
occasions or you can say in the emergency situations when directors think that it
necessary. For example; at the plan of merger etc
OCCASION:
This meeting is held on the special occasion and in the emergency situation.
NOTICE OF THE MEETING:
The directors will send a notice of the meeting to all the members of the company at
least 21 days before the meeting.
OBJECTIVES:
i. Special Business :
In case of special business this meeting is held for example; a case of 10 billion rupees
of export is at the door. In this case it can be called.
ii. In Some Innovative Cases :
In some innovative cases this meeting can be called for example; an idea of launching a
new product or launching a new setup etc

24. Essentials of a valid meeting /
Conditions of valid meeting
• Right convening authority
• Proper notice:
• Proper publicity of agenda:
• Legal purposes
• Requisite quorum
• Presence of right persons:
• Proper presiding officer
• Conducting meeting according to the agenda:

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