SPCC 4 Marks Each

Share Dividend A company pays tax at the end of the year out of profit earned for a year.

• The amount of profit oft after the payment of tax is called divisible profit.
• A certain amount of the divisible profits is retained as a reserve by the company.
• The remaining profit is distributed among shareholders, and is called dividend.
• Thus dividend means, “The share of divisible profit distributed by the company among its shareholders on the basis of paid up share capital on shares held by them in form of cash or share or in any other form."
• Here it is important to note that as per the Indian Companies Act dividend can be paid only in cash.
• Dividend can be of two types :-(i) Interim dividend and (ii) Final or Annual dividend.
• Interim dividend is paid semi-annually during the year.
• Final or annual dividend is paid at the end of the year, out of profit for the year.
• Dividend is paid to equity shareholders, as well as, to preference shareholders.
• Dividend paid on preference shares, at a fixed rate of dividend, before paying dividend on equity shares is called preference dividend.
• As per provisions of The Companies Act, preference shareholders have prior right over equity shareholders in terms of receiving dividend.
• Therefore preference dividend is paid first and the then Board of Directors recommends how much of the profit can he distributed as equity dividend.
• The equity dividend recommended by the Board of Directors is approved by shareholders in the Annual General Meeting of the company.
• After the approval of equity dividend in the Annual General Meeting of the company, it is paid within 60 days of such approval.
• Equity dividend is based on the profits of the company and need of funds for the company in future.
• The Board of Directors decides the rate of equity dividend by taking into consideration the need of funds for the company.
• Thus, it is not legally necessary for a company to declare and equity dividend every year and its rate may be changed year to year.

Definition : "Share forfeiture is the process by which the directors of a company cancel the membership of share holder and remove the name of share holder from the list of members on non receipt of call money as asked by the company in accordance with the statutory procedure laid down in the articles of the company."

• Procedure of Share Forfeiture: Procedure of share forfeiture is given in the Articles of the company. The step, of the procedure are as under:

(1) Preparing List of Calls in Arrears: The Secretary prepares a list of calls on shares not paid by shareholders on the basis of pay in slips received from bank.
(2) Presenting List of Calls in Arrears before the Board of Directors: Once the list of calls in arrears is prepared, it is presented before the Board of Directors for further discussion and for taking decisions on share forfeiture.
(3) Sending Reminder to Members: Reminders are sent to those members who have not paid call money within the prescribed time limit and they are intimated to pay the amount of calls-in-arrears including interest within the time limit, now prescribed.
(4) Sending Final Reminder: If no response to first reminder is received, a final reminder is sent through registered post and such members are intimated to pay the due amount including interest within 14 days of receipt of the final reminder. They are also warned of forfeiture of shares on failure in paying the due amount.
(5) Resolution of Share Forfeiture: Shares of those members who do not pay the amount of call within 14 days are forfeited by passing a resolution in the meeting of Board of Directors.
(6) Sending notice of Share Forfeiture: The Secretary sends notices of share forfeiture on the basis of the resolution passed in the meeting of Board of Directors. A copy of resolution of share forfeiture is also enclosed the notice and Members are intimated to surrender the share certificate to the company.
(7) Issuing Public Notice: The Secretary gives a public notice in the newspapers indicating serial numbers of shares forfeited so no transaction is carried out on such shares.
(8) Making Entries in the Register of Members: After giving a public notice, the secretary makes entries in the Register of Members regarding share forfeiture and names of members, whose shares are forfeited, are cancelled from the list.

Duties of the secretary Regarding Share Call.

1. Verifying provisions in the articles of the company regarding making calls.
2. To get the resolution for making calls passed in the meeting of the Board of Directors.
3. Issuing notice in news papers 7 days before closure of Register of Members and Register of Share Transfer before making calls.
4. Preparing list of the members whose calls are in arrears and sending notice to each such share holder.
5. Opening a bank account for collecting amount of call on shares.
6. Making note of call money received in the Register of Members based on the pay in slips and preparing list of members from whom call money is not received and presenting the same before Board of Directors.

Point of Difference	Irregular Share Allotment	Illegal Share Allotment
Meaning	The company shares irregular shares in violation of the provisions made on regular share sharing.	Under the laws of the Indian Contract, the shareholding made by a legitimate contract or other legal shareholding in the company is not considered as illegal share sharing.
Circumstances:	Before submitting the statement of change in advertisement, before the minimum subscription is filled, the shareholding is done irregular share sharing before the scheduled amount is executed and shares are shared.	If the proposal is not submitted by the applicant or the proposal has not been accepted by the company 6 or the company is notified of the acceptance of the proposal or it is considered as an illegal share sharing when there is a lack of substance.
Effects:	Irregular shares may be canceled if the issuing share is received and they have to be processed.	The issuer has no action to cancel. Because the illegitimate share sharing is already considered void.
Impact on Membership:	If irregular shares are canceled, then the name of the shareholder is removed from the membership of the member.	The question of cancellation does not arise because unlawful membership is not received.
Responsibility:	Responsible officials in irregular shares are responsible for compensating losses and losses to the company and shareholders.	Illegal share allotment agreement is not considered. So no action is required to be taken.

Introduction: - The public invites the public to buy shares by the company's proposal.

• The company also gets out of the securities through public distribution.
• Besides this, shares of rights are shared by bonus shares.
• According to company firm, the company can issue its shares, which can be called Offer for Sale.
• Invites the public to apply to buy shares and other securities.
• It is given specific rituals.
• The procedure for sharing application can be shown as follows.
• Procedure of Share Application

(1) To open an account in the bank: - The filling bank is appointed to carry out transactions related to the issue of share capital by the company. • The company can open the current account in any scheduled bank. • Special accounts are opened only for the company to provide share capital transactions to the paying bank. • This account is called an escrow bank account.• This account is opened by introducing a copy of the resolution for opening the account in the meeting of the Board of Governors and by presenting other documents.
• In opening this account, the company insists that the amount of share wages will be deposited in this account and after the completion of the share exchange, the total amount including share capital and premium amount will be shared in the accounts of the company.
• This account will be closed after the completion of the share approval procedure.
• SEBI's final guidelines (1-1-2016) can be made by the application through ASBA (Application Supported by Blocked Amount).
• According to the ASBA function, the amount of city application which is blocked in the applicant's bank account until the approval of the share is approved, i.e., the amount of the share application is not transferred to the bank account of the company.
• The amount of shares that the applicant receives in the same amount after the expiry of the share approval process is changed from the applicant's account to the bank account of the company.
• Therefore, the question of refunding the nominal amount of money does not arise.
(2) Receiving of share Application: - After publication of a public advertisement advertisement, the company informs the newspaper about the dates in which the fare will be open during the tenure of the company.
• Usually this period is three to five days.
• During this time, all types of investors seeking to apply for shares, such as petals, stock brokers, stock exchanges, and ASBA received the application form from the bank's approved branch and submit their full details to the broker or sub-broker with the signature.
• Because banks have to block the share application amount in the applicant's account.
• The next procedure is based on the signature of the applicant's bank account and the signature of the demat account as per the sample of the bank account.
• After receiving the share applications, each applicant blocks the amount of the application in the account and informs the registrar of the company. And the shares of the share application are handed over to the bank manager's lead managers.
(3) Classification of share application: - After receipt of share requests, the roll is prepared and applications with incomplete details are rejected.
• Thereafter, the details of shared disputes of the shares are prepared.
• Distributor applications are classified based on different types of applicants.
• According to SEBI guidelines, the types of applicants are as follows.
1. Investors in retail
2. Non-institutional investors.
3. Investors with institutional high net worth
4. Applicants from the company's employees are classified as applications in four types of applicants.
• According to the SEBI guidelines, retail investors are required to reserve at least 10% share of the total loaded shares.
• Usually the company refers to how many certificates are reserved for share allocation for each type of applicant in all its advertisements.
(4) Preparation of share allotment and allotment sheet: - Applications from each applicant have been received and compared to how many shares are sanctioned in that category.
• Proportional allocation is made if the received applications are more than the number of shares allotted for that class.
• Fulfilling lead managers, company secretaries, and allotment of shares by the authorized share-market applicants for the registration of shares are finalized.
• The names of the applicants who have allocated shares, demat account number, number of allocated shares, ID of the Depository Participant. Etc. The form along with the information is prepared which is called Share Transfer Form.
• The number of shares allocated to them by the stock market as well as by the depository participants, is communicated to SMS and e-mail.
• Share sharing is also done by the company's registrar and SEBI by the company.
Conclusion:-
• Thus, various stages of the share application are carried out as stated above.
• Only after the passage of the share application process, the shares are allotted to the applicants according to the application they have made and further proceedings are carried out.

Introduction: - The company can call the balance amount of shares from shareholders following the provisions of the legal provisions and the regulation.
• For this, the company has to follow certain procedures.

1. Resolution regarding share call: -

• The settlement of shareholder ship is passed in the Board of Directors for inviting the share installments.

• It is said to be the sum of the premiums and the last date of the payment.

2. Closing of register of members: -

• Membership register is closed as members are prepared to send notice of bonus to shareholders.

• Notice has been issued in the newspaper seven days before the appointment of the member sheet and the changeover.

3. Preparing the list of installments: -

• After the closure of the member register, the shareholder list is prepared according to which the following details are given:

• Member Name Address
• Number of shares
• Amount of share call
• If there is a paid up payment in advance
• The amount to be paid by the member.
• Due date for payment of installment.

4. Reporting to the Bank: -

• After the list of installments is ready, the secretary submits his copy to the bank and informs the bank that the acceptance of the shareholders from the shareholders will be accepted on behalf of the company and the amount deposited in the share account.

5. Send Notice of share installment:-

• After the release list has been prepared, the letter informing each member about the payment of the installment is sent by the registered post, this letter is called a notice of premium.

• The Notice Members should be found 14 days prior to the due date of the installment.

6. Payment of Share Installment: -

• Share holders pay the amount to the bank within 14 days from the date of receipt of the installment.

• The amount received in this manner is credited to the shareholders account and the return is returned to the shareholders by issuing the notice and receipt of shares.

• Bank filling notes send the company together.

7. Recording Call Money Received in Call List:-

• The company's secretary records the nomination on the basis of the filling letter.

• How many members have been paid and where the installment is pending. Prepares the list and submits to the board of directors. So that further action can be taken.
Conclusion:-

• Thus, the company can invoke the amount by installment and the above procedure is followed for inviting the installment.
• The company gets the installment legitimately by the compliance of this law.

Introduction: - The entire amount of capital issued by the company is not taken together.
• The need for capital expansion, and modernization of the business increases.
• When the share application and approval at the time of settlement invites the rising amount of money, which is called shareholders.
• When the applicant makes an application to buy the shares and the shareholder is bound to pay the outstanding amount after paying the fixed amount at the time of sanction of the share.

• Provisions of the company regarding share installment: -

1. There should be provision in the Regulatory Department regarding inventory of securities.
2. The amount of the remaining sum of shares of the same type should be equally solicited without discrimination on equal basis.
3. Before inviting surveillance, it should be decided to arrange for the installment of the installment in the meeting of the Board of Directors.
4. The amount of premiums, bank name, date, date etc. should be shown in the Payee and Demand form.
5. Replacement of shares and member suffrage can be stopped until stock installment is completed.
6. The amount received from the shareholders is deposited in the bank by opening a "Shareholder" account.
7. The period between the two installments should be at least one month.
8. If the time is not filled in time, then the company can charge interest at the rate fixed by law, if the administrators feel appropriate, then such interest can partly or completely forgive.

Conclusion:-• It is thus very important to see that the provisions regarding the above shareholders are complied with.
• There are other provisions in this regard too.
• Any company or organization invites the sum of the premiums as per the provision of shareholders.