1. Before issue their share capital with derivative rights as to profits, otherwise or voting check the following:
(a) your company must be a company limited by shares;
(b) the articles of association(AOA) of your company must authorize the issue of shares with derivative rights.
(c) the issue of shares by your private limited company is approved by an common declaration is passed at a general meeting of the shareholders. If company shares are listed on a accepted stock exchange is authorize by the shareholders through a postal ballot.
(d) the shares with derivative rights proposed to be issued by you shall not exceed twenty-five percent of their interests. The share capital containing the equity shares with derivative rights issued by your company at any time.
(e) your company must have consonant track record for the last three financial years of distributable profits preceding the year in which you resolve to issue such shares.
(f) the filing financial statements has not been defaulted by your public limited company. The three financial years of your annual returns instantly preceding the financial year. Which you decide to issue such shares.
(g) your company has not been neglected in the payment of the profits on preference shares. If any issued or state level financial institution or scheduled bank or repayment of any terms loan from a public financial institution.
(h) If an private limited company has been tribunal or penalized by court of during the last 3 years under the reserve bank of India act, 1934. The exchange board and securities of india act 1992. The Regulation Act, 1956 of securities contract .
2. In case the articles of association of your company does not authorize the issue of such shares then complete proceedings to alter them accordingly.
3. Convene a board meeting after issuing not less than seven’ days’ notice“ to every director of the company at his address registered with their company at Coimbatore and Salem offices. The issue of share capital with derivative rights as to voting, dividend or otherwise and to fix up the date, time, place and agenda for convening. A general meeting and to pass an ordinary or special resolution as the case may be for the same registration prospectus. Such notice shall be sent by hand delivery or by post or by electronic means.
4.The entire company officer is whose duty is to give notice on the same board meeting and who fails have to be punishable at a fine of (Rs.25,000).
5.If the shares of your company are listed with any of the recognized stock exchange. Then immediately within 15 minutes of the closure of the aforesaid board meeting intimate to the concerned stock exchange by email or directly uploading on the web-site of the stock exchange short particulars of the proposed increase of shares with derivative rights as to voting, dividend or otherwise.
6. Issue notices“ in writing or through electronic mode in ‘the manner prescribed under Rule 18(1) and 18(2) of The Companies (Management and Administration) Rules, 2014 not less than twenty-one clear days. Before the date of the meeting for the general meeting with suitable explanatory statement. If your private limited company or a company is listed or is a company having not less than 1,000 shareholders, your company shall also provide to exercise their private limited company members to vote their general meetings by electronic means.
7. Beware that every promoter,Manager,Director or other key Managerial personnel shall be punishable with fine which may extend (Rs.50,000).
8.If your company is a listed public company then ensure that it obtains the approval of its shareholders through postal ballot.
9. Ensure that the aforesaid notice of the general meeting. The declaration is passed with an explanatory statement in the following:
(a) the total number of shares to be issued with derivative rights;
(b) the details of an private limited company has differential rights
(c) the assets of the shares with derivative rights to the entire post issue paid up interests share capital containing equity shares with various rights published at any time.
(d) the reasons or justification are the same registration;
(e) the price at which such shares are declared to be issued either at at premium or par ;
(f) the price has been joined at on the basis ;
(g) in case of preferential issue or private placement , the information of entire number of shares suggested to be assigned to directors,promoters and key managerial personnel. The informations of the entire shares declared to be assigned to persons other than promoters and their relationship. If any with any promoter, director or key managerial personnel.
(h) the reservation if any for various classes of applicants involving promoters, key managerial personnel or directors ;
(i) the voting right percentage of the equity share capital with derivative voting right. It shall have the entire voting right of the collective equity share capital;
(j) the proportion or scale in voting rights of type of shares or such class registration shall vary;
(k) the company that may come incidental to the shares with derivative voting rights
(l) the reduced earnings per share pursuant to the content of such shares calculated with the relevant accounting regulations.
(m) the post and pre issue shareholding form with voting rights as per Clause 35 of the standard listing agreement entered into with the stock exchanges.
10. Your company cannot convert its active equity share capital with derivative voting rights and vice-versa.
11. Hold the General Meeting and pass the Ordinary Resolution“ by simple majority or the Special Resolution“ by three fourths majority as the case may be as required under Item 3 above. If an private limited company has to be placed these resolutions, it may take time for their registration prospectus.
12. If the company shares are listed with any of the accepted stock exchange, then forward three copies of the notice“ and a copy of the proceedings of the general meeting to the stock exchange.
13. If the resolution passed is a special resolution, file the same with the relative explanatory statement with the concerned ROCKIES in MGT-1416 within thirty day. After paying the requisite fees 7 is prescribed under rule 12 of the companies (Registration Offices and Fees) Rules, 2014.
14. Ensure that the said Form is filed electronically and the copy of the special resolution. The explanatory statement are filed with the said e-Form as attachments.
15. Ensure also that the said Form is digitally signed by the Managing Director or Manager or Secretary of the company duly authorized by the board of directors. They have the rules of change their company name into new registration.
16.Further, ensure that the said Form is certified by a Chartered Accountant or a Cost Accountant or a Company Secretary in whole-time practice by digitally signing the said e-Form.
17. Remember that if default is made in complying with the aforesaid requirement of filing the Special Resolution before the expiry of the period specified under Section 403 with additional fee. The company shall be punishable with a fine which shall not be less than Rs.5,00,000. But which may extend to Rs.25,00,000. Every officer in a company pay with fine which shall not be less than Rs.1,00,000 but which may extend to Rs.5,00,000.
18. Make necessary changes in every copy of the memorandum and articles of association and in all other papers and documents immediately after the paid-up share capital is increased.
19. Note that if at any time the company issues any copies of the memorandum and articles of association without making the necessary changes therein. The company and every officer of the company is punishable with fine up to Rs. 1,000 for each copy so issued.
20. Keep in mind that the offenses mentioned in Item Nos. 4, 17 and 19 above are compoundable by the Tribunal or any officer authorized by the central government as the case may be under Section 441 of the 2013 Act (yet to be notified).
21. The Board’s Report for the financial year. The issue of equity shares with differential rights was completed, shall contain the following details:
(a) the total number of shares allotted with differential rights;
(b) the details of the differential rights relating to voting rights and dividends;
(c) the percentage of the shares with derivative rights to the total- post issue equity share capital with partial rights issued at any point of time. The percentage of voting rights which the equity share capital with derivative voting right shall have the entire voting right of the aggregate equity share capital;
(d) the price at which such shares have been issued;
(e) the particulars of promoters, directors or key managerial personnel to whom such shares are issued;
(f) the change in control, if any, in the company consequent to the issue of equity shares with derivative voting rights for their registration on with their voting rights.
(g) the diluted earnings per share pursuant to the issue of each class of shares. It is calculated in accordance with the applicable accounting standards.
(h) the pre and post issue shareholding pattern along with voting rights as per clause 35 of the standard listing agreement have proper registration prospectus.
22. The holders of the equity shares with derivative rights shall enjoy all other rights such as bonus shares, rights shares, etc. to which the holders of equity shares are entitled to, subject to the differential rights with which such shares have been issued. The company equity shares have proper registration of such shares.
23. The register of members maintained under section 88 shall contain all the relevant particulars of the shares. So issued along with the details of the shareholders.The registration office is situated in Coimbatore and Salem for their relevant registrations.
24. If your Company has already issued any shares carrying differential rights under Companies Act, 1956. The registration of your shares has been identified by your registrar in the Coimbatore registered office. The differential rights attached shall continue till such differential rights are converted into differential rights in accordance with the provisions of the companies act, 2013.