Share certificate and Share warrant | Aster Classes

HSC SP (SECRETARIAL PRACTICE) Question Paper WITH SOLUTION 2020 – BOARD QUESTION PAPER : FEBRUARY 2020 Std 12th Commerce – Maharashtra Board.

Q.1. (A) Select the proper option from the options given below and rewrite the sentences:

(1) During the period of boom in the share market _______ are issued to raise capital.

(a) bonds

(b) debentures

(c) equity shares

(2) ‘Global Depository Receipt’ enables it to raise more capital in the _______ market.

(a) national

(b) international

(c) local

(3) If a share of ` 100 is issued at ` 100, it is said to be issued at _______.

(a) par

(b) discount

(c) premium

(4) Dividends should be distributed within _______ days from its declaration.

(a) 45

(b) 21

(c) 30

(5) The oldest stock exchange in Asia is _______. 

(a) National Stock Exchange (NSE)

(b) Bombay Stock Exchange (BSE)

(c) Calcutta Stock Exchange (CSE)

(B) Match the correct pairs of words from group ‘A’ and group ‘B’ :

Group ‘A’Group ‘B’
a. Financial management
b. Overdraft facility
c. Transmission of shares
d. Depository Act
e. Debenture holders
1. Savings Account
2. Sale or gift shares to another person
3. Management of business funds
4. Owners of the company
5. 1992
6. Management of business activities (1)
7. Current Account (2)
8. 1996 (4)
9. Transfer of shares due to operation of law (3)
10. Creditors of the company (5)

(C) Write a word / term / phrase which can substitute each of the following statements:

(1) A type of shares which have preferential rights over equity shares in respect of dividend and repayment of capital.

Sol: – Preference Shares.

(2) Dividend declared by a company between two annual general meetings.

Sol: – Interim Dividend

(3) A letter informing the applicant that shares have not been allotted to him.

Sol: – Regret Letter

(4) An institution which controls and regulates activities of the stock exchange.

Sol: – SEBI

(5) An organization which holds shares in security in electronic form.

Sol: – Dematerialization

Q.2. Distinguish between the following (Any THREE):

(1) Fixed capital and Working capital

 Fixed CapitalWorking Capital
Fixed capital refers to any kind of physical capital. i.e. fixed assets.
It stays in business almost permanently i.e. for more than one accounting year.
It is not used up in production of product but invested in fixed assets such as land, building, equipments, etc.
Fixed capital fund can come from selling shares, debentures, long term loans, bonds, etc.
Objective of investment
Investor invests money in fixed capital hoping to make future profit.
Risk Involved
Investment in fixed capital implies a risk.

Working capital refers to current assets minus current liabilities.

Working capital is circulating capital.

Working capital is invested in short term assets such as cash, account receivable, inventory, etc.

Working capital can be funded with short term loans, deposits, trade credit, etc.

Investor invests money in working capital for getting immediate return.

Investment in working capital is less risky.

(2) Shareholder and Debenture Holder

A Companies owned capital which is spilt into large number of equal parts each such part is called as shares.
Return on investment
Monetary return on shares is called as dividend and it is paid at fluctuating rate.
Voting rights
The Shareholders have voting rights through which they can participate in the management.
Status of holders
The shareholders are the owners of the company.
Equity shares are not redeemed throughout 7 the life of the company.
Priority claims
Shareholders do not have any priority while receiving return on investment or return of capital.
Market Value
Market values of the shares keep changing as per the financial condition of the company.
Security offered
No security is offered for investing money in share capital.
Debenture is an acknowledgement of debt. It is a source of borrowed capital.

Monetary return on debentures is called as interest and it is paid at a fixed rate.

The Debenture holders do not enjoy normal voting rights, except on those matters which affect their interest

Debenture holders are the Creditors of the company.

Redeemable debentures are paid back after its maturity.

Debenture holders have prior claims for repayment of capital and for receiving interest on their investments.

Market value of the debentures remains constant.

Company can offer any asset as a security to debenture holder

(3) Final dividend and Interim dividend

Interim dividend is the dividend which is declared between two annual general meetings of a company.
When declared?
Interim dividend is declared when the company makes good profit in the first half of the financial year. I.e. declared before the end of the financial year.
Who declares?
Interim dividend is declared by the Board by passing a resolution if they are authorised by articles.

Rate of Dividend
The rate of interim dividend is less than final dividend.

Legal Aspects
Declaration of interim dividend becomes risky and illegal, if company incurs loss at the end of the year.

Authorization of Articles
Authorization of Articles is necessary for declaration of interim dividend. 

Sources for declaration
An interim dividend is declared on the basis of the better financial prospective results may it to be quarterly, half yearly etc.

Final dividend is the dividend which is declared at the annual general meeting of the company.

Final dividend is declared at the completion of financial year in Annual General Meeting of the company.

Final dividend is recommended by the Board and declared by the shareholders by passing ordinary resolution (decision) at Annual General Meeting.

The rate of final dividend is generally more than interim dividend.

Declaration of final dividend is always legal, as it is declared only after ascertaining (discover) the correct profit on the basis of the audited accounts.

Authorization (approval) of Articles is not necessary for the declaration of final dividend.

There are number of sources available for declaring the final dividend. It can be declared out of current profits or profits of the previous years or out of reserves or out of capital profits out of the financial assistance specifically provided by Government for dividend.

(4) Share certificate and Share warrant

A share certificate is the registered document of title to the shares, issued by the company under its common seal.
Who issue the document?
It is issued by public as well as private company.
Nature of Shares as regards paid up value?
A share certificate can be issued for fully paid as well as partly paid shares.
Time of Issue
A company initially (at first) has to issue share certificate.
Sanction of government
Central Government’s sanction is not required to issue share certificate.
Provision in the Articles
Provision to issue share certificate is not necessary in Articles.
Stamp Duty
The stamp duty on issuing share certificate is nominal.
Share Certificate is not a negotiable (transferable) document.
A share warrant is a document issued under a common seal of a public company stating that the bearer of instrument has the title of the shares mentioned there in.

Only Public limited companies can issue Share warrants.

It is issued only in case of fully paid shares.

After collection of the amount if the shareholder wishes, company can issue share warrant against the share certificate.

The Sanction of Central government is required to issue share warrant.

Articles must provide for issue of share warrant.

Heavy stamp duty is to be paid on the issue of share warrant.

Share Warrant is a negotiable document. Anyone holding the instrument can get the ownership of shares

(5) Primary market and Secondary market

The market is utilized for raising fresh capital in the form of shares and debentures.
The function is to raise long term funds through fresh issue of securities.
The participants are financial institutions, mutual fund, under writer, individual investor.
Listing Requirements
Listing is not required in the case of primary market.
Determinants of Prices
The prices are determined by the management of the corporate houses with due compliances with the SEBI requirements for new issue of securities.

It is a market where existing securities are resold or traded.

The function is to provide continuous and ready market for existing long term securities.

The participants of primary market as well as the stock brokers and the members of the stock exchange are the participants.

Only listed securities can be dealt in the secondary market.

in case of secondary market the prices are determined by forces of demand and supply in the market and they keep on fluctuating.

Q.3. Write notes on the following (Any THREE):

(1) Capital structure and its components

Meaning: -Capital structure constitutes two words i.e. capital and structure. Capital refers to investment of funds in the business while structure means arrangement of different components in proper proportion. Thus capital structure means’ mix-up of various sources of funds in desired proportion’.

Definition: -” The long term sources of funds employed in a business enterprise.” (R.H. Wessel)

Components / parts of Capital Structure

 There are four basic components of capital Structure. They are as follow:

1.       Equity Share capital: -It is the basic of financing activities of business. Equity share capital is provided by equity shareholders. They buy equity shares and help a business firm to raise necessary funds. They bear ultimate risk associated with ownership. Equity shares carry dividend at fluctuating rate, depending upon profit.

2.       Preference Share Capital: –Preference shares carry preferential right as to payment of dividend and have priority over equity shares for return of capital when the company is liquidated. These shares carry dividend at a fixed rate. They have limited voting rights.

3.       Retained earnings: -it is an internal source financing. It is nothing but ploughing back of profit.

4.       Borrowed Capital: –

(a)       Debentures: –A debenture is an acknowledgement of loan raised by company. Company has to pay interest at an agreed rate.

(b)       Term loan: -Term loans are provided by bank and other financial institutions. They carry fixed rate of interest.

To understand above concept thoroughly, we shall consider following balance sheet.

Share Capital
5000 Equity Shares of Rs 10 each fully paid
1000, 10% Preference Shares of 100 each

Fixed Assets
Plant & Machinery
Reserves & Surplus
General Reserves & Surplus
20,000Current Assets
Cash in hand
Cash at bank
sundry Debtors
Inventories (stock)

1000, 12% Debentures of Rs. 100 each fully paid
Sundry Creditors40,000
Bank Overdraft20,000
Bills Payable10,000

(2) Need and importance of institutional financing

Meaning: – Financial Management is a specialised function of general management. It refers to management of business funds. It is mainly concerned with raising of finance and its effective utilization for achievement of goals of the organization.

Definition: -“financial Management is concerned effective use of an important economic resource, namely capital funds.”

Function of Financial Management: The functions of financial management can be divided into two:

(A)    Routine functions                      

(B) Executive FunctionRoutine functions

1.       Record keeping and reporting…Preparation of various financial statements…Cash planning…Credit management

2.       Providing information to Board of Directors on current financial position for making decisions of purchases, marketing, pricing, etc.

(B)    Executive Function

1.       Forecasting Financial requirements: –Financial needs have to be carefully estimated in business. Money may be required for long term purpose i.e. fixed capital and for short term purpose i.e. working capital. Forecasting is not only concerned with amount of money required for a programme but also includes:

a)       Duration of funds (5 years, etc)

b)       Timing of supply of funds.

c)       Kinds of funds (owned or borrowed, etc)

2.        Deciding sources of funds: –Once the need of finance is revealed, various sources of funds must be considered. Different type of securities like shares, debentures, etc. can be issued to raise funds. Funds may also be borrowed from financial institutions and lenders. There should be a proper balance between long term funds and short term funds.

3.       Investment decisions: –Investment decisions refer to the decisions regarding utilization of funds raised by the firm. It relates to the selection of assets in which funds are to be invested. The funds can be invested in two types of assets, mainly

a)       Long term assets or Fixed assets                       

b) Short term assets or current assets

4.       Dividend Policy: –A business firm is basically a profit earning organization. The earnings of a firm depend upon efficient utilization of funds. Financial management is also concerned with the decision to declared dividend. A finance manager has to decide what portion of profit is to be retained in the business and balance is to be distributed among shareholders.

5.       Checking and analysis of financial performance: –The checking and analyzing financial performance is very essential to carry out financial functions smoothly. For this various financial statements are prepared and analysed. This is of great value in improving techniques of financial control.

6.       Advising Board of Directors: A finance manager provides advice to Board of Directors in respect of financial matters. He suggests various solutions for any financial difficulty; normally finance manager gives advice on important matters such as pricing, expansion, acquisition (gaining), dividend policy, etc. 

(3) Bonus shares

Meaning: – A company following conservative dividend policy accordingly shall transfer a large portion of divisible profits to the reserves every year. The accumulation of such retained may enable the company to capitalise its profits so as to establish proper balance between the paid-up capital and reserves. However, the capitalisation of profits is termed as issue of bonus shares.

Bonus shares can be defined as shares issued by the company to its existing equity shareholders out of accumulated reserves. The bonus shares are equity shares that are issued to existing equity shareholders free of cost or as a gift by the company.

1.       The issue of bonus shares must be authorized by Articles of Association of the company. If it is not provided, the company should pass a resolution in its shareholders meeting making provision in the Articles for issuing bonus shares.

2.       It must be recommended by a board resolution and then approved by the shareholders in general meeting.

3.       The bonus issue is made out of free reserves built out of genuine profits or share premium collected in cash.

4.       Reserves created by revaluation of fixed assets are not capitalized for bonus shares.

5.       The bonus issue is not made unless the partly paid-up shares, if any existing is made fully paid-up.

6.       There can be issue of bonus shares only twice in a period of 5 years.

7.       The company issuing bonus shares should not have defaulted in payment of statutory dues such as contribution to provident fund, gratuity, and bonus.

8.       Consequent to the issue of Bonus Shares, if the subscribed and paid-up capitals exceed the authorized capital, a resolution should be passed by the company at its general body meeting for increasing the authorized capital.

9.       No bonus shares issue can be made by the company which will dilute (reduce in strength) the value or rights of the share holders of convertible debentures, fully or partly.

10.    Bonus shares cannot be issued within 12 months of any public right issue or right issue.

(4) Renewal of deposits

Meaning: -The depositor may renew the deposit on completion of the term of deposit. The term ‘Renew’ implies, ‘to acquire again’. Accordingly, the renewal of deposit means acceptance of the deposits by the company for further period.
                Thus, the renewal of deposit refers to issuing new deposit receipt in cancellation receipt for old deposit on maturity of old deposit on repayment. The depositor has to submit the application in writing to renew the deposit. He has to also give a declaration to the effect that the amount is not being deposited out of the funds acquired by him by borrowing or accepting deposits from any other person.

Renewal of deposit must need the following procedures to be completed.

1.Board Resolution: -If the company intends to renew deposits instead of refunding it. The resolution in the Board Meeting in this regard is to be passed.

2.Approval from Depositors: -The secretary has to prepare printed application forms for Renewal of Deposits and the same forms are to be sent to all depositors at least one month before the maturity date.

3.Renewal Receipts: -After receiving the application form for renewal, the secretary has to prepare renewal receipts and is to be sent to the depositors.

4. Entries in register of Depositors: -The secretary has to make the entries of renewal of deposit in the Register of Depositors. 

(5) Legal provisions regarding unclaimed / unpaid dividend.

(5) Provisions regarding unclaimed / unpaid dividend

(i) Meaning: The dividend which has not been paid to the shareholders within 30 days of its declaration is called ‘unpaid dividend’. If the declared dividend is not claimed by the shareholders and remains unpaid with the company’s bankers, it is called ‘unclaimed dividend’ The amount of final dividend as well as interim dividend may remain unpaid/unclaimed.

(ii) Provisions: The provisions in respect to unpaid or unclaimed dividend as incorporated under section 205 of the Companies Act, 1956 are stated as follows:

a. Unpaid dividend account:  When dividend is not paid to or claimed by shareholders within a period of 30 days from the date of its declaration, the company is required to transfer the amount of unpaid or unclaimed dividend to a separate account called “Unpaid Dividend Account of ……… Company Limited/Company (Private) Limited.” In any scheduled bank within 7 days after the expiry of 30 days of declaration of dividend.

b. Penal Interest: If a company fails to deposit the amount of unclaimed dividend into a separate bank account within a period of 7 days from the date of expiry of declaration of dividend, it is liable to pay interest on the amount not transferred @ 12% p.a. Such amount of interest is paid to the members who have not been paid or claimed dividend in proportion to their dues.

c. TransferofInvestors’EducationandProtectionFund: According to the provision of Section 205(A) of the Companies Act, 1956, if the amount of unpaid dividend remains in the account for 7 years from the date of transfer to this account, a company is required to transfer such amount together with interest due on it to “Investors’ Education and Protection Fund” (IEPF), as established by the Central Government.

d. Payment of unpaid /unclaimed dividend: Any person entitled to any amount transferred to IEPF is required to make application for refund to the authority or committee appointed by the Central Government. On verifying the evidences or documents. If the authority or committee is satisfied that such person is legally entitled to receive refund, it makes an order for payment of such amount due.

e. Penalty: If any company commits default in compliance of above requirements, such company and every officer of the company responsible for the lapse or default shall be punishable with fine upto Rs. 5000 per day during which the default continues.   

Q.4. State with reasons, whether the following statements are True or False (Any THREE):

(1) Bondholders are not owners of the company.

Ans. This statement is False.


According to Webster’s Dictionary, a bond is an interest bearing certificate issued by a government or business, promising to pay to the holder specified sum at a specified date. In fact there is no difference between bonds and debentures.

(1) Bond is a loan taken by company for medium to long period. Bond holder therefore is the creditor of the company.

(2) Bond capital is returnable and therefore has no permanency. Bond holder earns interest as return.

(3) Bond holder cannot participate in management of company. They cannot take any decision on matters of the company.

(4) Bond holder has no voting rights on matters related to company like he cannot appoint Directors / Auditors of the company.

(5) The real owner of the company is the equity shareholder. Equity shareholders are risk bearers of the company and they are having the voting rights and taking participation in management of the company. Hence bond holders are not the owners of the company.

(2) Transfer of shares is initiated by the company.

Ans. This statement is False.

1. When a member sells or gives his shares to another person voluntarily, it is known as transfer of shares. Transfer of shares is a voluntary act on the part of the shareholder.

2. The shares cannot be transferred by mere delivery. The transfer has to be place in the manner as specified in this respect. The transfer is effected by registering an instrument called ‘Instrument of Transfer’ with the company.

3. The application for transfer of shares may be made in the prescribed printed form either by the transferor or by the transferee. Such transfer instrument or form must be signed by the transferor, transferee and a witness. Such duly filled in form, stamped and signed must be submitted to the company’s office along with original share certificate.

4. In respect of transfer of partly – paid shares, a notice must be given by the company to the transferee mentioning therein that the shares to be transferred are partly paid up.

5. If an application for transfer of partly – paid shares is made by the transferee, such a notice is not required to be given by the company to the transferee. 

(3) A private company can accept deposits from the public.

Ans. This statement is false.

1. According to Provision of Section 58 (A) of the Companies Act, 1956 and Rules (2) of the companies Rules, 1975, the term ‘deposit’ means any deposit of money accepted and includes any amount borrowed by the company. The term ‘deposit’ however, does not include specific type of borrowings and security deposits.

2. Receiving the amount of deposits along with duly filled prescribed application by a company from the interested public in response to the advertisement given to invite deposits is called ‘acceptance of deposits’.

3. A public company can accept deposits from the public at large. The term ‘deposit’ is usually taken as ‘public deposit’ because the deposits are invited and accepted by the public company from the general public.

4. A private company cannot invite and accept deposits from the general public. However, it can accept deposits from its directors, relatives of directors and members provided it has satisfied certain conditions required by law. 

(4) It is compulsory to allot shares to every applicant.

The above statement is True: 
Reasons: –

Allotment shall be done within 60 days of receipt of application money. 

If Allotment is not done within 60 days then refund the whole application money within the next 15 days

(5) Handling demat shares is very time consuming.

Ans. This statement is False.

1. Share certificates, when converted from a physical form into an electronic form are called demat shares.

2. The depository system eliminates the handling of huge paperwork involved in the transfer of securities. Under this system, the securities are transferred by means of entries in the ledger of Depository System without physical movement of the security certificates.

3. Under the depository system, the process of transfer of securities is very simple and easy. The transfer of securities from one investor to another under this system is virtually automatic, speedy and all hurdles in the transfer of securities are removed.

4. As this system reduced the settlement time of transactions, the investor gets immediate payment from the purchaser or broker of the securities. 

Q.5. Attempt the following (Any TWO):

(1) Draft a letter regarding payment of interest on debentures.

Letter for Payment of Interest


50/A Bandra-Kurla Complex

Bandra East


Web: http://www disha

Tele No.: 24761524

Ref.: Disha/96/2011-12                                                          Date : 24th Jan, 2012.

Mr. Ramchandra Bohare                                                            

 H-4, Anil Housing Society,Bhadkamkar Marg,

Fort, Mumbai-400001.

Sub : Payment of interest on debentures

Dear Sir,I am directed to inform you that the interest on your 100, 10% non convertible debentures of Rs. 100 each is due for payment.The details of amount of interest payable to you are as follows :

folio no.Number of DebenturesDistinctive Nos.Gross Amount of Interest Rs.T.D.S.Net Amount of Interest Rs.Interest warrant No.

The interest warrant is enclosed herewith.Please acknowledge the receipt and oblige.

Thanking you.                                                                                      Yours faithfully,                                                                                For Disha Industries Ltd.                                                                                              Sd/-   


Encl : Interest warrant    

Interest Warrant
Disha Industries Ltd          

 No. 4888  

  50/A, Bandra Kurla Complex,                      Bandra (East), Mumbai-400051.


Date : 17th Jan, 2012.

Pay Mr. R. Bohare a sum of Z One Thousand only.

Rs. 1000/­

Bank of India               

Shivaji Park branch              


Mumbai – 96.                                          For Disha Industries Ltd.,                                                                  

1. _______________ Managing Director

2. _______________ Secretary


(2) Explain any five examples of credit instruments of the money market.

1. Treasury Bills:

Treasury bills, also known as Zero Coupon Bonds are the instrument of short term borrowing with maturity period of less than one year.

This instrument is issued by Reserve Bank of India on behalf of the Central Government for fulfilling short term requirements of funds. They are issued at discount and are paid at par.

This difference between the issue and the redemption price is the interest payable. They are highly liquid and no risk of default of payment is there. They are issued of Rs.25, 000 or in multiples thereof.

For example, suppose an investor purchases a 108 days Treasury bill for Rs. 138,000 having face value of Rs. 1, 50, 000. On maturity, he receives Rs. 1, 50,000. The difference of Rs. 12, 000 in the issue and redemption price is the interest received by him.

2. Commercial Paper:

Commercial Paper (CP) is a short term unsecured promissory note with maturity period of 15 days to one year. Since it is unsecured, it is issued by the large and creditworthy companies to meet their short term fund requirements.

Commercial Paper is issued at discount and redeemed at par. It is negotiable and transferable by endorsement. The funds raised through Commercial Paper can be used for fulfilling seasonal and working capital need. For example, for meeting the floatation cost at the time of issue of shares and debentures i.e. Bridge Financing.

3. Call Money:

Call Money is short term finance used for interbank transactions. It has a maturity period of one day to fifteen days. All the commercial banks are required to maintain cash balance which is known as Cash Reserve Ratio (CRR).

The Reserve Bank of India keeps on changing this ratio from time to time thus affecting the availability of funds, for providing loans, with the banks. Call money is a facility under which banks borrow money from each other to maintain CRR at rate of interest known as Call Rate.

This rate keeps on changing from day to day and sometimes from hour to hour. The relationship between call rates and other short term instruments such as commercial papers, certificates of deposit etc. is an inverse relationship. An increase in call money rates increases the demand for other short term instruments.

4. Certificate of Deposit:

Certificates of deposit are short term instruments issued by commercial banks and financial institutions to the individuals, corporations and companies. They are unsecured and negotiable. Such instruments are usually issued by banks when they have a tight liquidity position because of slow growth of bank deposits but the demand for credit is high.

5. Commercial Bills:

Commercial bill is a bill of exchange used to finance the credit sales of firms. It is a short term, negotiable and self liquidity instrument. In case of goods sold on credit, the buyer is liable to make the payment on a specific date in future.

The seller could either wait till the maturity date or can draw a bill of exchange. When this bill is accepted by the buyer it becomes a marketable instrument and is called a trade bill. If the seller wants the funds before the maturity date, he can get the bill discounted from the bank. When a commercial bank accepts a trade bill it becomes a commercial bill.

(3) Draft a letter of thanks to the depositor of a company.

Thanking depositors for depositing amount with the company

   Deposits are accepted from the depositor according to the acceptance of company deposit rules and provisions of the Companies Act 1956. This letter is sent by a company immediately after the deposit is received. This letter gives information regarding the amount of deposit, date of deposit, period of deposit etc. A deposit receipt is sent to the depositor along with this letter.

Sunrise Industries Limited

601A, V S. Khandekar Road,

Vile Parle (W),

Mumbai – 400056.

web: ,

Tele No.: 022-61246871                                                              Fax: 61246872Ref.: Sunind/48/2012-13                                                              15th May, 2012.

Mr. Mahendra NaikS-

4, Sahavas Society,

V Balwant Phadke Chowk,



Sub : Thanking depositor for fixed deposit

Dear Sir,We take this opportunity to thank you for showing faith and confidence in the company, for submitting form for fixed deposit of Rs. 25,000 for a period of 12 months.

Fixed deposit receipt No. 317 dated 10th May, 2012 for a sum of Rs. 25,000 is enclosed along with this letter In case you need any further information or explanation please do not hesitate to contact us. We ensure that our service is benchmarked to international standards.

Thanking you.     

your faithfully,

For Sunrise industries Ltd,



Encl : Fixed deposit receipt No. 317

(4) Draft a letter to the depositor regarding repayment of deposit. 

Sunrise Industries Limited.

60/A, V S. Khandekar Road,

Vile Parle (W), Mumbai – 400056.


Tel. No. : 022-61246871                                                   Fax: 022-61246872Ref. : D4/2012                                      –                           21st April, 2012.

Mr. Babu MahaleC/12,

Suvarna Apartment,

Raja Bade Chowk,

Mahim, Mumbai – 400016

Sub : Repayment of Deposit

Dear Sir,We have received from you the original deposit receipt no. 83556 duly discharged alongwith your instruction for repayment.Details of repayment of deposit are as under :

Type of depositReceipt No.

Deposit Amount

Maturity AmountT.D.S.Due date/ maturity date
Deposit for 12 months83556Rs. 20000/-Rs. 22000/-Nil20th April 2012

Please find enclosed herewith a cheque of Rs. 22000 bearing No. 443211 dated 20th April, 2012, drawn on Bank of India, Shivaji Park branch, Dadar, Mumbai – 28.

Assuring you the best of our services at all time.

Thanking you.

    Yours faithfully,

yours faithfully,



Encl: – Cheque No – 443211  


Q.6. What is ‘equity share’? Explain the features of equity shares.

Meaning: -According to the companies Act, 1956All shares which are not preference shares are equity shares. The capital collected by a company by issuing equity shares is called Equity Shares Capital. Equity shares do not have claim prior to preference shares for payment of dividend and repayment of capital. If a company does not earn profit in a particular year then equity shareholders will not get any dividend. Thus, the equity share capital is also called as Risk Capital.

Features of Equity shares capital: –

1.       No preferential (special) rights: -Equity share holders get dividend only after the dividend is paid to preference shareholders. Similarly, at the time of winding up of the company, the claim of equity shares is considered at the end.

2.       No fixed rate of dividend: -Company does not commit any fixed rate of dividend on equity shares. The rate of dividend keeps changing from year to year as per company’s financial position. The rate of dividend is recommended by Board of Directors every year and declared by share holders.

3.       Voting Rights: -Every equity shareholder has voting right in the proportion with the shares held by him. They can vote on all the matters placed before the meeting. As per the rights conferred upon the equity shareholders by the companies Act, the voting rights can be exercised either personally or through proxy (only after observing certain rules)

4.       No claim on unpaid dividend: -If a company incurs loss or earns less profit in a particular year then it does not pay any dividend to equity share holders. The equity shareholders cannot claim this dividend in future.

5.       Irredeemable nature: -Company does not repay the money raised through equity shares during its lifetime. This money is repaid only at the time of winding up of the company.

6.       Chances of prosperity (richness): -Equity shareholders are paid dividend at fluctuating rate as per the profits of the company. They claim the entire amount of residual (remaining) of distributable profits. So, if company earns well, the equity shareholders also prosper along with the company.
7.       Privileges (rights): – It is the privilege and right of equity shareholders to have priority in purchasing shares in case of further public issue of shares. It is called as Right Issue. Equity shareholders are also entitled to receive bonus shares which are issued by companies as a gift.

8.       Less face Value : – As compared to preference shares, the equity shares are of less face value like Rs 10/- or even Rs 1/-


        Draft a letter of allotment of shares


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