Share Capital - Part 1

The Articles of Association of a private limited company state that the company may issue preference shares which will have preference with respect to payment of dividend only but no preference as to the repayment of capital, in the case of winding up. Is it possible for the company to issue such preference shares?

• No; as per section 43 preference shares should have both preferences.

• No; this will become an equity share as per section 43.

• Yes; because Articles of Association of the company allow issue of such preference shares and the issuing company is a private limited company.

• Yes; because as per section 43 preference shares should have any one preference

Rajesh Infrastructure Limited wants to issue preference shares for a period exceeding 20 years for financing its proposed infrastructure project. On the basis of which statement, company can do so?

• Yes, the company can issue irredeemable preference shares by passing a special resolution

• Yes, company can issue preference shares for a period exceeding 20 years with the prior approval of Central Government

• Yes, the company can issue irredeemable preference shares for infrastructure project

• Yes, the company can issue preference shares for financing an infrastructure project for a period exceeding to 20 years.

Swagat Hospitality Limited defaulted in the repayment of last two instalments of term loan availed from National Commercial Bank. On 30th September, 2019, they cleared all the dues by repaying it. When can it issue equity shares with differential voting rights?

• Upon expiry of five years from the date on which the default was made good

• Upon expiry of three years from the end of the financial Year in which the default was made good

• Upon expiry of five years from the end of the financial Year in which the default was made good

• Upon expiry of seven years from the end of the financial Year in which the default was made good

Vanita Watches Limited has proposed to issue sweat equity shares to five of its employees for the ‘value additions’ made by them in term of economic benefits which proved beneficial to the company. The period for which the employees who have been allotted the said sweat equity shares cannot transfer them is:

• One year from the date of allotment

• Three years from the date of allotment

• Five years from the date of allotment

• Six months from the date of allotment

A general meeting of the company is to be held on 30th August, 2020. The company has not paid dividend in respect of its preference shares for the financial year 2018-19 as well as 2019-20. In such case preference shareholders:

• will not have the right to vote because preferential shareholders have no right to vote

• will have the right to vote because dividend has not been paid for the last two years

• will not have the right to vote because only equity shareholders can vote in general meetings

• will have right to vote because preference shareholders have the right to vote in general meetings

Where there is a change in the rights of one class of shareholders of a company that also affects the rights of another class therein, then:

• A special resolution should be passed at a general meeting in this regard

• The company need not to do anything further

• the consent in writing of three-fourths of such other class of shareholders shall also be obtained

• A resolution at a joint meeting of both the classes should be passed

Radha, the original allottee of 2000 equity shares in Murti Mechanical Toys Private Limited has transferred the same to Ruchi. The instrument of transfer dated 21st August, 2020, duly stamped and signed by Radha was handed over to Ruchi. Advise Ruchi regarding the latest date by which the instrument of transfer along with share certificates must be delivered to the company, to register the transfer in its register of members.

• 21st August, 2020.

• 20th September, 2020

• 20th October, 2020.

• 19th November, 2020

Shreem Lakshmi Jewellery Store Private Limited was incorporated on 27th August, 2020 with 30 persons as subscribers to the Memorandum  of Association and with an Authorised share capital of Rs. 1 crore divided into equal number of shares of Rs. 1 each. Each subscriber subscribed for Rs. 1.00 lac shares. Advise the company about by what date it needs to deliver the share certificates to the subscribers

• 17th September, 2020

• 30th September, 2020

• 27th October, 2020.

• 27th November, 2020

Shares issued by a company to its directors or employees at a discount or for a consideration other than cash for their providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name is called as

• Equity Shares

• ESOPs

• Sweat Equity Shares

• Right Issue

Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than ------------ of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class:

• 1/4th

• 50%

• 3/4th

• 75%