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Company law sections series III Capital

As all of you aware capital is the scarce resource for a corporate entity. It is not that easy to raise capital. The investors should be confident about your entity, if they have to part with your hard earned money.

Capital can be

1. Equity capital

2. Debt capital

Equity capital is the owners funds which is interest free and maturity free investments in the company. If your company is successful , transparent, profitable, having great future, equity may not be a constraint. But your company is in early stage, need capital for short term projects, do not want to lose control of the company etc, you can look for fixed interest bearing or cost bearing, fixed maturity investments from outsiders, it is called debts.

As the capital market started booming, more and more companies started tapping the capital market and luring investors. Some of them have become great corporations, but some of them vanished with the capital. To safeguard to possible extent the investors, Companies Act 2013 provides for some laws, rules .

The sections in Companies act, which explains, what is capital , how issue it and if it is debts, how the security need to be created. Also there are sections which will explain deposits and its terms.

For company secretary students or any corporate profession students the sections of relevant law is important.

Share capital and debentures - Sec 43-72

43. Kinds of share capital

44. Nature of shares or debentures

45. numbering of shares

46. Certificate of shares

47. Voting rights

48. Variation of shareholders’ rights

49. Calls on to be made on uniform basis

50. advance call

51. Payment of dividend in proportion to amount paid-up

52. premiums received on issue of shares

53. Prohibition on issue of shares at discount

54. Issue of sweat equity shares

55. Issue and redemption of preference shares

56. Transfer and transmission of securities

57. Punishment for personation of shareholder

58. Refusal of registration and appeal against refusal

59. Rectification of register of members

60. Publication of authorised, subscribed and paid-up capital

61. Power of limited company to alter its share capital

62. Right issue

63. Issue of bonus shares

64. Notice to be given to ROC of share capital

65. Unlimited company to provide for reserve share capital on conversion into limited company

66. Reduction of share capital

67. Restrictions on purchase by company or giving of loans by it for purchase of its shares


69. Transfer of certain sums to CRR

70.Prohibition for Buy back in certain circumstances

71. Debentures

72. Power to nominate

DEPOSITS (Sections 73-76A)

73. Prohibition on acceptance of deposits from public

74. Repayment of deposits, etc., accepted before commencement of this Act

75. Damages for fraud

76. Acceptance of deposits from public by certain companies

76A. Punishment for contravention of section 73 or section 76

CHARGES (Sections 77-87)

77. Duty to register charges, etc

78. Application for registration of charge

79. Section 77 to apply in certain matters

80. Date of notice of charge

81. Register of charges to be kept by Registrar

82. Company to report satisfaction of charge

83. Power of Registrar to make entries of satisfaction and release in absence of intimation from company

84. Intimation of appointment of receiver or manager

85. Company’s register of charges

86. Punishment for contravention

87. Rectification by Central Government in register of charges

Important sections under each head is marked bold.

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