Share Capital & Debenture Rules (Rule 2-9)
The Companies (Share Capital and Debentures) Rules, 2014 lay down a comprehensive framework governing the issue, management, and regulation of a company’s share capital and related instruments under the Companies Act, 2013.
These rules define key terms, specify the formats and procedures for issuing share certificates, and establish detailed requirements for differential voting rights, renewed and duplicate certificates, and the maintenance of registers and related documents.
They also regulate specialised forms of equity such as sweat equity shares, and provide conditions for the issue and redemption of preference shares, including disclosures, valuation requirements, accounting treatments, and shareholder approvals.
Share Capital & Debenture Rules (Rule 10-15)
These rules set out the conditions under which preference shares may be issued and redeemed by companies engaged in infrastructural projects, including timelines, redemption terms, and compliance requirements specific to such companies.
The rules also prescribe the mandatory format and proper execution of the instrument of transfer.
Additionally, the rules establish the detailed regulatory framework for Employee Stock Option Schemes (ESOPs).
The rules further lay down the procedure and safeguards for issuing shares on a preferential basis, covering valuation, disclosures, shareholder approvals, restriction periods, and the filing requirements necessary to maintain transparency.
Share Capital & Debenture Rules (Rule 16-19)
These provisions of the Companies Act deal with a company’s share capital and securities framework.
They cover matters such as alteration of share capital, issue of debentures, and buy-back of shares, and prescribe the manner in which these actions are to be carried out.
The Act also permits companies to support employee ownership by allowing financial assistance for the purchase of their own shares, subject to prescribed conditions.
Further, the Act recognises the rights of security holders through provisions such as nomination. Nomination allows securities to pass to a chosen person upon the holder’s death, reducing procedural complications.