COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014

1 · [Application.

1 · [Provided that a company may issue equity shares with differential rights upon expiry of five years from the end of the financial year in which such default was made good . ]

2 · [Explanation.—For the purposes of this rule it is hereby clarified that equity shares with differential rights issued by any company under the provisions of the Companies Act, 1956 (1 of 1956) and the rules made thereunder, shall continue to be regulated under such provisions and rules.]

5 · (1) Where a company issues any share capital, no certificate of any share or shares held in the company shall be issued, except—

4 · [ the secretary or any person authorised by the Board for the purpose :

7 · (1) All blank forms to be used for issue of share certificates shall be printed and the printing shall be done only on the authority of a resolution of the Board and the blank form shall be consecutively machine -numbered and the forms and the blocks, engravings, facsimiles and hues relating to the printing of such forms shall be kept in the custody of the secretary or such other person as the Board may authorise for the purpose; and the company secretary or other person aforesaid shall be responsible for rendering an account of these forms to the Board.

8 · (1) A company other than a listed company, which is not required to comply with the Securities and Exchange Board of India Regulations on sweat equity, shall not issue sweat equity shares to its directors or employees at a discount or for consideration other than cash, for their providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called, unless the issue is authorised by a special resolution passed by the company in general meeting. Explanation.—For the purposes of this rule—

1 · [Provided further that a startup company, as defined in notification number GSR 180(E) dated 17 th February, 2016 issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of lndia, may issue sweat equity shares not exceeding fifty per cent of its paid

9 · Issue and redemption of preference shares.

10 · Issue and redemption of preference shares by company in infrastructural projects.

11 · Instrument of transfer.

12 · Issue of employee stock options.

8 · [Provided that in case of a startup company, as defined in notification number GSR 180(E), dated 17 th February, 2016 issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry Government of India, the conditions mentioned in sub -clauses (i) and (ii) shall not apply up to five years from the date of its incorporation or registration . ]

13 · (1) For the purposes of clause (c) of sub-section (1) of section 62, if authorized by a special resolution passed in a general meeting, shares may be issued by any company in any manner whatsoever including by way of a preferential offer, to any persons whether or not those persons include the persons referred to in clause (a) or clause (b) of sub-section (1) of section 62 and such issue on preferential basis should also comply with conditions laid down in section 42 of the Act:

8 · [Provided that in case of any preferential offer made by a company to one or more existing members only, the provisions of sub-rule (1) and proviso to sub-rule (3) of rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014 shall not apply : ]

1 · Indian :

2 · Foreign Promoters

9 · [Explanation.—For the purposes of these rules, it is hereby clarified that, till a registered valuer is appointed in accordance with the provisions of the Act, the valuation report shall be made by an independent merchant banker who is registered with the Securities and Exchange Board of India or an independent Chartered Accountant in practice having a minimum experience of ten years.]

9 · [(3) The price of shares or other securities to be issued on preferential basis shall not be less than the price determined on the basis of valuation report of a registered valuer.]

8a · Clause (c) omitted by the Companies (Share Capital and Debentures) Third Amendment Rules, 2016, w.e.f. 19-7-2016. Prior to its omission, said clause read as under :

14 · The company which has once announced the decision of its Board recommending a bonus issue, shall not subsequently withdraw the same.

15 · Where a company alters its share capital in any manner specified in sub-section (1) of section 61, or an order is passed by the Government increasing the authorized capital of the company in pursuance of sub -section (4) read with sub-section (6) of section 62 or a company redeems any redeemable preference shares, 1 [or a company not having share capital increases number of its members] the notice of such alteration, increase or redemption shall be filed by the company with the Registrar in Form No. SH.7 along with the fee.

16 · (1) The company shall not make a provision of money for the purchase of, or subscription for, shares in the company or its holding company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company, unless it complies with the following conditions, namely:—

17 · Unless stated otherwise, the following norms shall be complied with by the private companies and unlisted public companies for buy-back of their securities—

1 · [Provided that where the audited accounts are more than six months old, the calculations with reference to buy back shall be on the basis of un-audited accounts not older than six months from the date of offer document which are subjected to limited review by the auditors of the company . ]

2 · [Provided that where all members of a company agree, the offer for buy-back may remain open for a period less than fifteen days . ]

18 · (1) The company shall not issue secured debentures, unless it complies with the following conditions, namely:—

10 · [Provided that the following classes of companies may issue secured debentures for a period exceeding ten years but not exceeding thirty years,

10a · [ 'Infrastructure Debt Fund Non-Banking Financial Companies' as defined in clause (b)

11 · [

11a · [ (i) any specific movable property of the company or its holding company or subsidiaries or associate companies or otherwise . ]

12 · [Provided further * that in case of any issue of debentures by a Government company which is fully secured by the guarantee given by the Central Government or one or more State Government or by both, the requirement for creation of charge under this sub-rule shall not apply :

15 · [ (9) Nothing contained in this rule shall apply to any amount received by a company against issue of commercial paper or any other similar instrument issued in accordance with the guidelines or regulations or notification issued by the Reserve Bank of India.

16 · [ (11) Nothing contained in this rule shall apply to rupee denominated bonds issued exclusively to

10a · Sub -clause (iii) substituted by the Companies (Share Capital and Debentures) Third Amendment Rules, 2015, w.e.f. 6-11-2015. Prior to its substitution, said sub-clause read as under :

11a · Sub -clause (i) substituted by the Companies (Share Capital and Debentures) Third Amendment Rules, 2016, w.e.f. 19-7-2016. Prior to its substitution, said sub-clause, as amended by the Companies (Share Capital and Debentures) Amendment Rules, 2013, w.e.f. 18 -3 -2015, read as under :

14a · Substituted for "of the value of debentures" by the Companies (Share Capital and Debentures) Third Amendment Rules, 2016, w.e.f. 19-7-2016.

19 · (1) Any holder of securities of a company may, at any time, nominate, in Form No. SH.13, any person as his nominee in whom the securities shall vest in the event of his death.

16 · Substituted for "Form No. SH.14" by the Companies (Share Capital and Debentures) Amendment Rules, 2015, w.e.f. 18-3-2015 .