Share Capital and Debentures (Sec 43-72)

Core concepts

1. 01Kinds: equity (with/without DVR) and preference (cumulative/non-cumulative, participating, convertible).
2. 02Issue at premium (Sec 52) — use restricted; issue at discount (Sec 53) generally prohibited.
3. 03Bonus issue (Sec 63) from free reserves, securities premium, capital redemption reserve.
4. 04Buy-back (Sec 68) — up to 25% of paid-up capital + free reserves in a year, max debt-equity 2:1.
5. 05Debentures: secured/unsecured, convertible/non-convertible, redeemable/irredeemable.

Exam-critical pointers

• ⭐Sec 73 — acceptance of deposits regulated; private companies have specific exemptions.
• ⭐Preference shares max tenure 20 years; for infrastructure projects, 30 years (Sec 55).
• ⭐Sweat equity (Sec 54) — to directors/employees for know-how / IPR / value addition.
• ⭐ESOP discount on FV is treated as employee compensation expense in P&L.