Islamshah Department of Law & Sharia University Of Swat

1. Share capital

2.  Presented by : ISLAM SHAH
 Topic: SHARE CAPITAL
 Presented to: SIR IFTIKHAR AHMAD KHAN
 Roll no : 11236
 Department : LAW & SHARIA
 9th semester
 UNIVERSTY OF SWAT

3.  Share capital:
 Definition :- It mean a particular amount of
money subscribed by the share holders for
the purposes of the company.
 The capital share is collected by a joint stock
company for its business operation.
 Capital share is the amount of capital
collected from its share holder for achieving
the common goal of the company as stated in
memorandum of association.

4.  According to sec 90 of company ordinance a
company have different kinds and classes of
share capital as provided by its memorandum
and Article of Association.

5. Share
capital
Authorized
capital
Paid-up-
capital
Called-up-
capital
Uncalled
capital

6.  1. Authorized capital or nominal
capital:-
It is the nominal value of the share which a
company is authorized to issue by its
memorandum.
2. Paid-up- capital:- It means the amount
paid up on the shares issued.
3. Uncalled capital:- it mean the amount of
money on the issued capital that has not been
called in or which the subscriber are not required
to pay within a specified time

7. 4. Called up share capital:- It mean the
amount of money that the company has
called-up on the issued capital which the
subscriber are required to pay within a
specified time.
5. Reserve capital:- It is the part of the
share capital that the company has decided
with only be called up if the company is being
wind up and for the purpose of it being
winding up.

8.  Under sec 90 of company ordinance 1984,
company which is limited by share have
different classes of share capital as provided
by its memorandum and articles.
 Capital share is mostly divided into four
classes of shares:
 1. Preference shares
 2. Ordinary shares

9.  3. Deferred shares
 4. Redeemable preference shares.
(1). Preference shares:- The holder of
preference share is entitled to a fix dividend
before any dividend is paid up on the
ordinary share. The article may grant
additional rights to such holder.

10. (2).Ordinary shares:- Generally it is the
large part of net profits of a company, after
paying the fixed dividends on the preference
shares, if any is paid as dividend on the
ordinary shares.
(3)Deferred shares:- These shares are
usually allotted to the promoter and
underwriters,
a) To the promoters in consideration of the
services rendered by them,

11. b) To the underwriters in consideration of the
commission due to them.
According to Sec.53, the particulars of such
contract shall be filed with registrar and the
number of such shares must be stated in the
prospectus.
4. Redeemable preference shares: Sec
85
A preference share which must be bought back
by the company at an agreed date and for the
an agreed price.

12. So this type of share issued on the condition that
the company will repay the amount of share
capital to the holder of this category of shares
after fixed period or even earlier at the discretion
of the company.
Issuing of shares: Company may requires
issuing of new shares for many reasons, such as
bringing in business partners, raising capital
from outside investor to fund expansion or pay
for a new project, to pay debts, to introduce a
bonus scheme for employees.

13.  According to sec 86, where the director
decide to increase the capital of the company
by issue of further shares, such shares shall
be offered to the members in proportion to
the existing shares held by each member,
because in case of issuing of shares the
existing share holders have a prem-emptive
right, so such offer shall be made by a notice
specifying the number of shares to which the
member is entitled and limiting a time within
which the

14. Offer, if not accepted so then the company is
free of liability, and after it the director will
offer it in similar manner as it deem to be fit
for the interest of the company.

15.  The power to alter and the manner in which
the alteration made is usually given by the
articles. If no such power is given by articles
then the company passed a special resolution
for alteration. The capital share may be
altered so as to increase or reduced shares.
 Increase of share capital:-
According to sec 92(1) A company limited by
shares, may increase its share capital in
general meeting if authorized by its articles.

16.  If the articles do not give the authority to
increase the capital, the articles must be altered
by special resolution so as to get such authority.
 The resolution notice will be must sent to the
registrar. Before issue of new share, it will be
offered to the existing shareholder on the
proportion of share which they already hold, and
if the shareholder decline to accept, so then the
director may dispose them in the manner as they
think most beneficial to the company.

17.  Reduction of share capital:-
According to section 96 the power to reduced
capital must given by the articles. If no such
power is given, the article may be changed by a
special resolution. The capital may be reduced by
passing a special resolution and subject to the
confirmation of the court.
 Procedure for reduction of capital (sec
97,99,100) :- where a company has passed a
resolution for reducing share capital, it may
apply by a petition to the court for an order
confirming the reduction

18.  The petition must by supported by affidavits
and a copy of the memorandum and article of
association and the original minute book of
the proceedings must be made an exhibit. So
then according to sec 102, if the resolution is
confirmed by the court , a certified copy of
the court order and the minute of the
resolution must be filed with the registrar.
The registrar then issue a certificate which is
conclusive evidence according to the
requirement of company ordinance.

19.  Transfer of share:- It mean a voluntary
passing of property in certain shares from
one person to another by presenting to the
company a duly stamped and executed
instrument of transfer, by or on behalf of the
transferor and the transferee, containing their
names, addresses and occupations along with
the shares certificates relating to the shares
to be transferred.

20.  Regulation 8 and 10 of table A (First Sched.)
contain the provisions regarding the transfer
of capital shares.
 According to regulation 8: the instrument of
transfer of shares in the company shall be
executed by both the transferor and
transferee, and the transferor will be remain
the holder unless the name of transferee is
entered in the register of members in respect
thereof.

21.  According to regulation 10, the director shall
not refuse to transfer fully paid shares unless
the transfer deed is defective or invalid.
 Procedure of transfer of shares:
According to sec 76 of company ordinance ,
an application for the registration of transfer
of shares may be made either by the
transferor or by the transferee. The company
shall not register a transfer if it is not duly
stamped and executed by the transferor and
transferee.

22.  Transmission of shares:- It mean the
passing of the title or property in shares by
operation of law on the happening of such events
as the death, insolvency or lunacy of a
shareholder.
 Regulation 11,12 and 13 of table A (First Sched.)
regulates procedure for transmission of share.
 According to regulation 11, the executors,
administrators, heirs as the case be of deceased
sole holder of a share be the only persons
recognised by the company as having any titles
to the share.

23.  According to regulation 12, any person
becoming entitled to a share in consequence
of the death or insolvency of a member shall
upon such evidence being produced as may
from time to time be required by the
directors, so then the director have the right
to register him as a member as respect of the
share, or to make such transfer of share as
the deceased or insolvent person had made
it.

24.  According to regulation 13, a person
becoming entitled to a share by reason of
death or insolvency of the holders shall be
entitled to the same dividends and other
advantages to which he would be entitled if
he were the registered holder of the share.
But before registered as a member he shall
not be entitled any right which is related to
the meetings of the company.

25.  Definition:- The repurchase of
outstanding shares by a company in order to
reduce the number of shares on the market.
 Companies will buy back share either to
increase the value of share still available or
to eliminate any threats by shareholders who
may be looking for a controlling stake.

26.  Explanation:- Generally buy back of
company share are not allowed, but it is
allowed in exceptional circumstances.
 According to sec 95 A of the companies
ordinance 1984 read with the company (buy
back of shares Rules 1999) allows the listed
companies to buy back their own shares with
the condition that such shares shall not be
retained as a treasury stock and shall be
cancelled forthwith.

27.  The purchase shall be authorized by the
permission of court, and the court will take
the opinions of all members and creditors,
and on the base of that opinions the court
will give the permission for buy back of
company share. The buy-back will be in good
faith, and it will be sure to the registrar that
the company is not becoming bankcrupt by
buy back of share.

28.  There will be special resolution placing before
the shareholders all material facts in
justification of purchase.

29. Thank you