Re-issue of forfeited shares - listed company!
This query is : Resolved
16 May 2012
Sir,
Please guide on below matter.
My company listed on The Bombay Stock Exchange had forfeited certain shares after complying all the requirements & had informed the exchange.
Now the company has re-issued the forfeited shares to its existing shareholders after complying with pricing rules as laid down in Preferential issue guidelines.
On making an application, for listing of the said re-issued shares, the stock exchange says that the company ought to have passed a share holder's resolution in a General meeting.
I am of the opinion that as the shares are offered to existing shareholders of the company, shareholders approval is not required.
Also clause 23(a) of the listing agreement states as follows,
The Company agrees - - -
(a) to issue or offer in the first instance all shares (including forfeited shares, unless the Exchange otherwise agrees), securities, rights, privileges and benefits to subscribe to pro rata to the equity shareholders of the Company unless the shareholders in the general meeting decide otherwise.
Please guide.
Please guide on below matter.
My company listed on The Bombay Stock Exchange had forfeited certain shares after complying all the requirements & had informed the exchange.
Now the company has re-issued the forfeited shares to its existing shareholders after complying with pricing rules as laid down in Preferential issue guidelines.
On making an application, for listing of the said re-issued shares, the stock exchange says that the company ought to have passed a share holder's resolution in a General meeting.
I am of the opinion that as the shares are offered to existing shareholders of the company, shareholders approval is not required.
Also clause 23(a) of the listing agreement states as follows,
The Company agrees - - -
(a) to issue or offer in the first instance all shares (including forfeited shares, unless the Exchange otherwise agrees), securities, rights, privileges and benefits to subscribe to pro rata to the equity shareholders of the Company unless the shareholders in the general meeting decide otherwise.
Please guide.
17 May 2012
BSE is right.
Reissue of forfeited shares shall be governed by Section 81 of the Companies Act that deals with "further issue of capital". 1A of S81 requires a special resolution to be passed by the company in general meeting. Please go through teh details.
Reissue of forfeited shares shall be governed by Section 81 of the Companies Act that deals with "further issue of capital". 1A of S81 requires a special resolution to be passed by the company in general meeting. Please go through teh details.
23 May 2012
But sir there was no further issue of Share capital.
The initial capital of the company which was fully listed, a part of it was forfeited and subsequently re-issued.
On what basis can we assume that it is further re-issue of capital.
The initial capital of the company which was fully listed, a part of it was forfeited and subsequently re-issued.
On what basis can we assume that it is further re-issue of capital.
23 May 2012
I may be mistaken, and your contention may be right.
The way I thought was on forfeiture equity share capital account is credited and on reissue of the forfeited shares it is debited again with the sale proceeds of the forfeited shares. To that extent further capital is being issued, and it is akin to issuing shares which were authorized and not issued so far. However S75 (5) makes it distinct from new issue. Right now I do not recall any authority supporting either view; and as I said I may be mistaken in making the earlier assertion. (Please however note that even offering of shares to exiting members is covered under teh special resolution requirement. )
The way I thought was on forfeiture equity share capital account is credited and on reissue of the forfeited shares it is debited again with the sale proceeds of the forfeited shares. To that extent further capital is being issued, and it is akin to issuing shares which were authorized and not issued so far. However S75 (5) makes it distinct from new issue. Right now I do not recall any authority supporting either view; and as I said I may be mistaken in making the earlier assertion. (Please however note that even offering of shares to exiting members is covered under teh special resolution requirement. )
19 February 2019
Dear Tapaji
You were right in 2012 when you asked query. All forefeited shares are the shares already issued so for re issue of the said share does not mean that the issue is fresh.For re issue of the Forefeited shares the Board had the power and resolution of the General meeting was not require.In light of this the demand of the Bombay stock Exchange was WRONG.
You were right in 2012 when you asked query. All forefeited shares are the shares already issued so for re issue of the said share does not mean that the issue is fresh.For re issue of the Forefeited shares the Board had the power and resolution of the General meeting was not require.In light of this the demand of the Bombay stock Exchange was WRONG.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- GST on export of services and Input Credit
- TDS U/S. 194NF
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- ITC temporary reversal and reclaim
- Applicable TDS rate for sale of property in Nov 2024
- Donation Receipt u/s 80G
- MIS MATCH OF INVOICE NUMBER
- VERIFICATION OF REFUND RELATED
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
