Management and Administration

Dividend on Paid up Capital – Sec. 51 Company is permitted to pay dividends in proportion to the amount paid-up on each share, if so authorized by articles.

Important Questions Q. No. 3: Moon Star Machineries Limited is authorised by its articles to accept the whole or any part of the amount of remaining unpaid calls from any member even if no part of that amount has been called up by it. Anand, a shareholder, deposits in advance the remaining amount due on his partly paid-up shares without any calls being made by company. Whether Company is permitted to accept the advance amount received on unpaid calls from Anand? HINT: Refer Sec. 50. Company is permitted to accept the advance. Q. No. 4: Coriander Masale Limited has issued 10,00,000 equity shares of ₹ 10 each on which ₹ 6 per share has been called till allotment and the first and final call of ₹ 4 is yet to be made. Reena holds 10,000 shares on which she had paid whole of ₹ 10 per share. In the upcoming extra-ordinary general meeting of the company, she wants to exercise her voting right as owner of fully paid-up shares. Where Company can permit? HINT: Refer Sec 50. Company cannot permit voting right in respect of advance amount.

4.8 - Issue of securities at a Premium (Sec. 52) Credit to Securities Premium Account Where a company issue shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to a “securities premium account”. The provision of Companies Act, 2013 relating to reduction of capital of company shall, except as provided in this section, apply, as if the securities premium account were the paid-up share capital of the company.

Utilisation of Securities premium account The securities premium account may be applied by the company: (a) towards the issue of unissued shares of the company to the members of the company as fully paid bonus shares; (b) in writing off the preliminary expenses of the company; (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; (d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company; or (e) for the purchase of its own shares or other securities under section 68.

Important Question Q. No. 5: Walnut Foods Limited has an authorized share capital of 2,00,000 equity shares of ₹ 100 per share and an amount of ₹ 2 crores in its securities Premium account as on 31.03.2021. The Board of Directors seeks your advice about the application of Securities Premium Account for its business purposes. Please give your advice. [RTP-May 19] HINT: Refer Sec 52. Company can utilize the amount of securities premium for the purpose specified u/s 52.