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PURE INSTRUMENTS: EQUITY SHARES

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Characteristics of Equity Shares

(a) The Equity shareholders have voting rights at all the general meetings of the company.

(b) The Equity shareholders have the right to share the profits of the company in the form of dividend and Bonus Shares.

(c) In case of liquidation, the payment to the equity shareholders is made after satisfying all the claims of the other parties. 

Note: The Equity shareholders cannot demand declaration of dividend by the company which is left to the discretion of the Board of Directors. 

Rights of the Equity Shareholders (The Companies Act, 2013)

(a) The right to vote on every resolution placed before the company.

(b) The rights to subscribe to shares at the time of rights issue by the company (i. e. Pre- emptive Right).

(c) Right to appoint proxy to attend and vote at the meeting on his behalf.

(d) Right to receive copy of annual accounts of the Company.

(e) Right to receive notice of the meeting of members.

(f) Right of inspection of various statutory registers maintained by the company.

(g) Right of requisition extraordinary general meeting of the company. 

SHARES WITH DIFFERENTIAL VOTING RIGHTS

Section 43 of the Companies Act, 2013 & Rule 4 of Companies (Share Capital and Debentures) Rules, 2014. 

No company (whether unlisted or listed public company) shall issue equity shares with differential rights as to dividend, voting or otherwise, unless it complies with the following conditions:- 

(a) Authorization in AOA: The articles of association (AOA) of the company authorize the issue of shares with DVR; 

(b) Special Resolution: The issue of equity shares with DVR is authorized by a special resolution. 

Note: In case of a listed company, the issue of equity shares with DVR shall be approved by the shareholders via postal ballot (including e – voting) or a poll at a general meeting. 

(c) Issue of Maximum Number of Equity shares with DVR: A Company shall not issue more than 26% of the total post – issue paid – up equity share capital including equity shares with differential rights issued at any point of time. 

(d) Distributable Profits: The Company having consistent track record of distributable profit for the last 3 years. 

(e) No default of Annual Compliances: The Company has not defaulted in filling financial statements and annual returns for 3 financial years immediately preceding the financial year in which it has decided to issue such shares. 

(f) No default in payment of dividend & deposits: The Company has not defaulted in the payment of a declared dividend or repayment of its matured deposits or redemption of its preference shares or debentures. 

(g) No default in transfer of unpaid fund to IEPF or Statutory dues i. e. payment towards employee statutory dues in Provident Fund, Bonus, Gratuity & Employee State Insurance. The company has also not defaulted in transfer of unpaid dividends or Interest to crediting the amount in Investors Education and Protection Fund of CG. 

(h) No Offence: The Company has not been penalized by Court or Tribunal during the last 3 years of any offence under the RBI Act, 1934, SEBI Act, 1992, SCRA Act, 1956, the FEMA Act, 1999 or any other special Act.

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