12-11-2012, 05:43 PM
Allotment of shares
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A company may issue shares at par, premium or discount.
Issue of share at premium
Ex…
The Companies Act, 1956 imposes conditions regulating the utilization of the amount collected as premium.
1.The premium cannot be treated as profit and cannot be distributed as dividend.
Issue of shares at a discount
Section 79 provides for certain conditions to be complied with
Resolution in general meeting and sanction by company law board.
The issue must be of a class of shares already issued
The maximum rate of discount must not exceed 10 per cent or such higher rate as prescribed by Company Law Board.
Bonus Share
Shares issued by the company to its existing shareholders free of charge.
Issue of bonus when company has large accumulated profits or capital reserve and do not distribute in the form of cash dividends.
All form of reserves like revenue reserves such as general reserves and capital reserves such as share premium or asset revaluation reserves can be utilized to issue bonus share.
Rights Shares
Further issue of share capital has to be first offered to the already existing shareholdersRights issue two years from the date of incorporation or one year from the IPO whichever is earlier.