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Accounts Ch-7 Class 12th (Company - Issue of Share)
There are number of limitations of the Partnership such as:
1. Unbalanced Management
2. Limited Resources
3. Unstable Existence
4. Unlimited Liability
5. Restriction on transfer of Share
Meaning
of Company – Company is an
association of persons whose sole aim is to earn profit through the running of
lawful business.
Definition
of Company –
According to Prof. Henry, Company is an artificial person created by law having
separate entity with perpetual succession and a common seal.
Types of Company –
1.
2. Company Limited by Guarantee
3. Company Limited by Shares
a.) Private Company
b.) Public Company
c.) One Person Company
A)
Private Company – As
per the Section 2 (68) of the Companies Act 2013
1. Restricts the rights to transfer of shares.
2. Limit of members to 200 (excluding the present and
past employees which are members also)
3. Prohibits
the invitation to public for subscription of securities i.e. Shares, Debentures
etc.
4. Use the word Private Ltd. At the end of its name.
5. Limited paid up Capital 1 lakh.
6. Minimum Directors are 2.
B) Public Company -
As
per Section 2(71) of the companies Act 2013, a public company means that
company which is not a private company.
1.) No restrictions about the transfer of shares.
2.) Limit of members are unlimited.
3.) A public company can invite the public for
subscription of securities.
4.) Use the word Ltd. at the end of its name.
5.) Limit of paid up Capital is 5 lakh.
6.) Minimum
directors are 3.
C.) O.P.C. (One Person Company) –
As
per the Section 2 (62) of the companies Act, 2013 One Person Company is a
private limited company with one person as its member.
1. Members of O.P.C. – A natural person who is citizen and
resident of India become the member of O.P.C.
2. Resident Of India – One person must spend 182 days in
calendar year in India.
3. One person can form only one O.P.C.
4. Paid up Share Capital should not be more than 50 lakh.
5. Average annual turnover of three years should not be
more than 2 Crore.
Shares – The total
capital of the company is divided into units of small denomination. The value
of each unit is called share.
10,00,000 / 10 = 1,00,000 Units
1,00,000 Shares @ 10 Rs Each.
Nature of Shares -
❇️ Shares are movable
property of the company which is transferable as per the articles of association of company.
❇️ Shares
are treated like goods so Sales of Goods Act 1930 is applicable on it.
❇️ Shares
can be bought, Sold, hypothetical and bequeathed
Types of Shares -
A. Preference Share
B. Equity Shares
A. Preference Share -
1. They
receive fixed rate of dividend before the Equity Shares.
2. On
the Liquidation of company they have right to get their capital before the
Equity Shares.
3. It includes two types of shares i.e. Cumulative
Preference Share and Non - Cumulative Preference Share.
B. Equity Shares -
1. Such
share holders have the right to costing the vote and Elect the directors.
Directors who run the company.
2. On
the Liquidation of company they have no right to get their capital before the
Preference Share holders.
Share Capital - Share
Capital refers to that capital which is raised by issue of shares.
Kinds of Share Capital
1. Authorized Capital / Registered Capital /
Nominal Capital : -
❋ It
refers to that amount which is stated in the M.O.A. (Memorandum Of Association).
❋ It is the maximum capital which a company had
authority to issue the shares during its life time.
1,00,000 Shares @ Rs 10 each = 10,00,000
2. Issued Capital :-
Ø Issued capital is the part of Authorized Capital which
is actually offered to the public for subscription. The remaining part of
authorized capital is called unissued capital which can be issued later on.
Issued Capital 50,000 Shares @ Rs 10 each = Rs 5,
00,000
3. Subscribed Capital :- –
Subscribed Capital is that part of issued capital which has been subscribed by
the public.
There
are three types of Subscription.
a) Full
Subscription –> Applied Shares = Issued Shares
b) Over Subscription
–> Applied Shares > Issued Shares
c) Under Subscription
–> Applied Shares < Issued Shares
Special Note:-
A company
can allot the maximum up to Invited (Issued) shares.
Minimum
Subscription = 90% of Issued Shares
Subscribed Capital can be present in the
Balance Sheet in two ways:-
1. Subscribed and Fully paid up – When the entire Face value of per share is called up
by the company and Shareholder also paid the same is called Subscribed and fully
paid up.
2. Subscribed but not fully paid up --
a.) When the full face
value of per share is called by the company but shareholder has not paid same
part of it.
b.) When the full face value of per share is not called up by the company.
4. Called up Capital - It refers to that part of subscribed capital which has been called up
by the company from shareholders for payment.
The remaining
part of subscribed capital is called uncalled up capital.
5. Paid up Capital – The term paid up is the question of called up
Capital which has been actually paid actually paid by the shareholder.
Called up Capital 20,000 X 6 = 1,20,000
Less: Calls in Arrears 20,000 X 1 = 20,000
Paid up Capital = 1,00,000
Calls in Arrears – When a Shareholder has not been paid
the amount of Allotment or Calls made by the company till the last date fixed
for payment so that is called Calls in Arrears.
Reserve Capital – According
to Section 65 of the companies Act 2013, A company may, by passing a special
resolution a portion of uncalled up capital shall be called up only on the
winding up of the company.
In
this case such part of subscribed capital is called Reserve Capital.
This Capital is not being present in
the Balance Sheet.
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