Yogesh Shah (Managing Corporate Finance) (1051 Points)
27 March 2010
Hye Folks,
“The amt. of share cap. with which the Producer Co. is to be registered & division thereof into shares of a FIXED AMOUNT”.
Now my question is whether Producer Co. can issue shares with a different nominal value?
e.g. First issue with shares of Rs. 10/- each and second issue with shares of Rs. 100/- each?
CourseCart.in
(Mentor at SHAYVIDZ Academy)
(3756 Points)
Replied 27 March 2010
581ZB. Share capital.
(1) The share capital of a Producer Company shall consist of equity shares only.
(2) The shares held by a Member in a Producer Company, shall as far as may be, be in proportion to the patronage of that company.
581ZR. Application of provisions relating to private companies.
All the limitations, restrictions and provisions of this Act, other than those specified in this Part, applicable to a private company, shall, as far as may be, apply to a Producer Company, as if it is a private limited company under this Act insofar as they are not in conflict with the provisions of this Part.
The Companies ((Issue of Share Capital with Differential Voting Rights) Rules, 2001
Conditions:
Every company limited by shares may issue shares with differential rights as to dividend, voting or otherwise, if-
1. the company has distributable profits in terms of Section 205 of the Companies Act, 1956 for * three financial years preceding the year in which it was decided to issue such shares.
2. the company has not defaulted in filing annual accounts and annual returns for three financial years immediately preceding * the financial year in which it was decided to issue such share.
3. the company has not failed to repay its deposits or interest thereon on due date or redeem its debentures on due date or pay dividend.
4. The Articles of Association of the company authorises the issue of shares with differential voting rights.
5. the company has not been convicted of any offence arising under, Securities Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, Foreign Exchange Management Act, 1999.
6. the company has not defaulted in meeting investors’ grievances.
7. the company has obtained the approval of share holders in General Meeting by passing resolution as required under the provision of sub-clause (a) of sub-section (1) of section 94 read with sub-section (2) of the said section.
8. the listed public company obtained approval of share holders through Postal Ballot.
9. the notice of the meeting at which resolution is proposed to be passed is accompanied by an explanatory statement stating –
(a) the rate of voting rights which the equity share capital with differential voting right shall carry;
(b) the scale or in proportion to which the voting rights of such class or type of shares will vary;
(c) the company shall not convert its equity capital with voting rights into equity share capital with differential voting rights and the shares with differential voting rights into equity share capital with voting rights;
(d) the shares with differential voting rights shall not exceed 25% of the total share capital issued;
(e) that a member of the company holding any equity share with differential voting rights shall be entitled to bonus shares, right shares of the same class;
(f) the holders of the equity shares with differential voting rights shall enjoy all others rights to which the holder is entitled to excepting right to vote as indicated in (a) above.
So, in my opinion, Producer Co. can issue ONLY EQUITY SHARES with a different nominal value.
bijal shah
(company secretary)
(21 Points)
Replied 07 January 2016
I had a query, I have incorporated a producer company and now company wants to issue shares to existing member? Can i know what is the limit of members? Is it 200 like private limited companies?? If i want to issue to more than 200 members what is the solution for that?
CAclubindia
