SHARES
At the end of this topic, students should be able to: Explain what are shares; and Describe the legal implications of shares in an organization
MEMBER OF A COMPANY A person may become a member of a company when: 1)He is allotted shares in the company (i.e. the company is issuing new shares to a particular person) 2)A person who wants to be a member of the company may purchase the company’s shares from anyone who holds the shares.
Issuance or allotment of shares from company to the applicant.
Transfer of shares between shareholder and purchaser.
SHARE SECTION 2 COMPANIES ACT 2016: “Share” means issued share capital of a corporation and includes stock except where a distinction between stock and share is expressed or implied
NATURE OF SHARE
Section 70 : A share or other interest of a member in a company is personal property and transferable in accordance with section105
TYPES OF SHARE CAPITAL UNDER COMPANIES ACT 1965 When shares were issued at a price higher than their par value, the shares were issued at a premium. The premium must be credited into the company’s share premium account & used for the purposes prescribed in the section.
BUT UNDER SECTION 74 OF THE COMPANIES ACT 2016: ‘ALL SHARES ISSUED BEFORE OR UPON THE COMMENCEMENT OF THIS ACT SHALL HAVE NO PAR OR NOMINAL VALUE’
TYPES OF SHARES Section 69 CA 2016: Subject to the constitution of the company, shares in a company may – a)Be issued in different classes; b)Be redeemable in accordance with section 72; c)Confer preferential rights to distributions of capital or income; d)Confer special, limited or conditional voting rights; or e)Not confer voting rights
SECTION 71 COMPANIES ACT 2016: RIGHTS AND POWERS ATTACHED TO SHARES