In this post, we
will discuss dematerialisation of shares, Refund of application money and
payment of commission on issue of share capital.
DEMATERIALISATION OF
SECURITIES
Section 29 of the
Companies Act 2013, say every company making public offer; and such other class
or classes of companies as may be prescribed shall issue the securities only in
the dematerialised form. This section was discussed in detail earlier on this blog here.
Rule 9 of the Companies (Prospectus and Allotment
of Securities) Rules 2014 prescribes that the promoters
of every public company
making a public offer of any convertible securities may hold such securities
only in dematerialized form. The entire holding of convertible securities of the
company by the promoters held in physical form up to the date of the initial
public offer shall be converted into dematerialized form before such offer is
made and thereafter such promoter shareholdings shall be held in dematerialized
form only.
REFUND OF
APPLICATION MONEY
According to
Rules 11 of these Rules, if the stated minimum amount has not been subscribed
and the sum payable on application is not received within the period specified
therein, then the application money shall be repaid within a period of fifteen
days from the closure of the issue and if any such money is not so repaid within
such period, the directors of the company who are officers in default shall
jointly and severally be liable to repay that money with interest at the rate of
fifteen percent per annum.
The application
money to be refunded shall be credited only to the bank account from which the
subscription was remitted.
PAYMENT
OF COMMISSION
Sub – Section (6)
of Section 40, a company may pay commission to any person in connection with the
subscription to its securities subject to such conditions as may be prescribed.
Section 40 was
discussed earlier here on this blog.
According to Rule
13 of these Rules, a company may pay commission to any person in connection with
the subscription or procurement of subscription to its securities, whether
absolute or conditional, subject to the following conditions, namely:
-
(a) the payment
of such commission shall be authorized in the company’s articles of
association;
(b) the
commission may be paid out of proceeds of the issue or the profit of the company
or both;
(c) the rate of
commission paid or agreed to be paid shall not exceed, in case of shares, five
percent of the price at which the shares are issued or a rate authorised by the
articles, whichever is less, and in case of debentures, shall not exceed two and
a half per cent of the price at which the debentures are issued, or as specified
in the company’s articles, whichever is less;
(d) the
prospectus of the company shall disclose -
(i) the name of
the underwriters;
(ii) the rate and
amount of the commission payable to the underwriter; and
(iii) the number
of securities which is to be underwritten or subscribed by the underwriter
absolutely or conditionally.
(e) there shall
not be paid commission to any underwriter on securities which are not offered to
the public for subscription;
(f) a copy of the
contract for the payment of commission is delivered to the Registrar at the time
of delivery of the prospectus for registration.
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