ANJALI

REDEMPTION OF SHARE MEANS RETURN

OF SHARE MONEY TO THE PREFERANCE
SHAREHOLDERS. WITH EFFECT FROM 1
st

MARCH 1997 A COMPANY CANNOT ISSUE
IRREDEEMABLE PREFERANCE SHARE OR
SHARES WHICH CAN BE REDEEMED
BEYOND A PERIOD OF 20 YEARS.
REDEEMABLE PREFERANCE SHARE MEAN
THE SHARES WHICH CAN BE REDEEMED
AFTER FIXED PERIOD OR AFTER GIVING
PRESCRIBED NOTICE, AS DESIRED BY THE
COMPANY.
AUTHORISED BY ARTICLES
REDEMPTION OF FULLY PAID UP SHARES
REDEMPTION OUT OF PROFIT OR BY
ISSUING NEW SHARE.
UTILISATION OF CRR.
REDEMPTION WITHIN ONE MONTH FROM
ISSUE OF NEW SHARE
REDEMPTION AT PREMIUM
INFORMATION{WITHIN 30 DAYS}
PART OF AUTHORISED CAPITAL.
IF A CO. HAS LARGE ACCUMULATED
RESERVE{WHETHER CAPITAL OR REVENUE}
BUT IT MAY NOT BE IN A POSITION TO PAY
CASH BONUS BECAUSE IT ADVERSELY
AFFECTS THE WORKING CAPITAL OF A
CO.AND FUTURE PLANS OF
CAPITALISATION. SUCH A CO. MAY ISSUE
ADDITIONAL EQUITY SHARE TO ITS EXITING
SHAREHOLDERS IN THE PROPORTION OF
THEIR EXISTING SHAREHOLDING IN THE CO.
WITHOUT CHARGING ANY FURTHER
PAYMENT. SUCH SHARE ARE KNOWN BONUS
SHARE,.
THE B S ISSUE IS MADE OUT OF FREE
RESERVES BUILT OUT OF THE GENUINE
PROFIT OR SECURITIES PREMIUM
COLLECTED IN CASH ONLY
RESERVE CREATED BY REVALUTION OF
FIXED ASSETS ARE NOT CAPITALISED.
THE DECLARARATION OF BONUS ISSUE,
IN LIEU OF DIVIDEND, IS NOT MADE.
THE B.ISSUES IS NOTS MADE UNLESS
PARTLY PAID SHARE IF ANY ARE MADE
FULLY PAID UP.
THE CO. WHICH ANNOUNCES ITS BONUS
ISSUE AFTER THE APPROVAL OF THE
BOARD OF DIRECTORS MUST IMPLEMENT
THE PROPOSAL WITHIN A PERIOD OF 6
MONTHS FROM THE DATE OF SUCH
APPROVAL AND SHALL NOT HAVE THE
OPTION OF CHANGING IHE DECISION.
THE HAS NOT DEFAULTED IN PAYMENT
OF INTEREST OR PRINCIPAL IN RESPECT
OF FIXED DEPOSITS AND INTEREST ON
EXISTING DEBENTURES OR PRINCIPAL ON
REDEMPTION THEREFORE AND HAS
SUFFICIENT REASON TO BELIEVE THAT IT
HAS NOT DEFAULTED IN RESPECT OF THE
PAYMENT OF STATUTORY DUES OF THE
EMPLOYEES SUCH AS CONTRIBUTION TO
P. F. GRATUATY BONUS etc.
FROM CO. POINT OF VIEW:
SINCE THERE IS NO CASH OUTGOING,
HENCE LIQUIDITY OF THE CO. IS NOT
AFFECTED.
CAPITALISATION OF RESERVES
INCREASES SUBSTANTIALLY THE CR.
WORTHINESS OF CO.
PROFIT REMAINING THE SAME, THE CO.
CAN NOT DECLARE HIGH DIVIDENDS ON
EXPENDED CAPITAL
AS PROFIT AND RESERVE ARE
ACCUMULATED IN CO. THE ASSETS OF
THE CO GO ON INCRESING MORE IN
COMPARISON TO SHARE CAPITAL.THIS
DISPARITY CAN BE REMOVED BY ISSUING
B S. BECAUSE A RESULT OF ISSUING BS
,THE ACCUMULATED PROFITS ARE
CONVERTED INTO SHARE CAPITAL
WITHOUT AFFECTING ASSETS.
THE SHAREHOLDERS CAN DISPOSE OFF BS
FOR FULFILLING THEIR CASH NEEDS.
THE SHAREHOLDERS CAN RECEIVE MORE
DIVIDENDSIN FUTURE DUE TO
INCREASED SHAREHOLDINGS.
AS IT IS V. DIFFICULT TO BUY SHARE OF
NEW CO. AND THEY GET IT EASILY.
DIVIDENDS IN CASH ATTRACT HIGH TAX
RETURN.
THE ISSUE OF BS MAY RESULT IN DRASTIC
FALL IN THE MARKET PRICE OF THE SHARES
BECAUSE OF INCREASED SUPPLY OF THE
SHARE IN THE MARKET.
ISSUE OF BS MAY RESULT INTO
REDUCTIONIN THE RATE OF DIVIDEND AS IT
IS ONLY THE CAPITAL THAT INCREASES AND
NOT THE PROFIT OF THE CO.
THE ISSUE OF BS MAY LEAD TO SPECULATIVE
DEALING IN ITS SHARES IN THE STOCK
MARKET.
CAPITAL REDEMPTION RESERVE
SECURITY PREMIUM ACCOUNT
(BOTH THE ABOVE ACCOUNTS CAN BE
UTILISED ONLY FOR ISSUING FULLY PAID
BS NOT FOR MAKING PARTLY PAID
SHARES AS FULLY PAID)
CAPITAL RESERVE
GENERAL RESERVE
BALANCE OF P&L A/C
ANY OTHER RESERVE.
THE CO ACT 1999 HAS INSERTED NEW
SECTION 77A,77B PREMITTING A CO. TO
PURCHASE ITS OWN SHARES SUBJECTS TO
CERTAIN CONDITION PRIOR TO THIS ACT CO.
COULD NOT PURCHASE ITS OWN SHARES
A CO. MAY USE THE FOLLOWING SOURCES
FOR BUY BACK OF ITS OWN SHARES;
ITS FREE RESERVES
THE SECRITIES PREMIUM ACCOUNT
THE PROCEEDS OF ANY SHARES OR OTHER
SPECIFIED SECURITIES.
THE BUY- BACK SHOULD BE AUTHORIZED
BY THE ARTICLES OF ASSOCIATION OF
THE COMPANY.
THE SPECIAL RESOLUTION IS TO BE
PASSED IN THE GENERALMEETING OF
SHAREHOLDERS.
THE BUY-BACK SHOULD BE COMPLETED
WITHIN 12 MONTHS FROM THE DATE OF
PASSING THE SPECIAL RESOLUTION.
THE DEBT-EQUITY RATIO OF THE COMPANY
SHOULD NOT BE MORE THAN2:1 AFTER
SUCH BUY BACK.
ALL THE SHARES OR OTHER SPECIFIED
SECURITIES FOR BUY BACK SHOULD BE
FULLY PAID UP.
A CO. THAT BUY BACK ITS OWN SHARES
SHALL EXTINGUISH AND PHYSICALLY
DESTROY SUCH SHARES WITHIN SEVEN DAYS
OF THE LAST DATE OF COMPLETION OF BUY
BACK IN THE PRESENCE OF MERCHANT
BANKERS OR REGISTRAR OR STATUTORY
AUDITOR
THE BUY-BACK MAY BE MADE:
EXISTING EQUITY SHAREHOLDERS ON A
PROPORTIONATE BASIS.
OPEN MARKET
ODD LOT SHAREHOLDERS
EMPLOYEES OF THE COMPANY
PURSUANT TO A SCHEME OF STOCK
OPTION OR SWEAT EQUITY.
WHERE A COMPANY COMPLETES THE BUY
BACK OF ITS SHARES ,IT SHALL NOT MAKE
FURTHER ISSUE OFSHARES WITHIN A
PERIOD OF TWENTY FOUR MONTHS EXCEPT
IN THE FOLLOWING FORM:
BONUS ISSUE
DISCHARGE OF SOME OBLIGATION SUCH AS
CONVERSION OF WARRANTS
STOCK OPTION SCHEMES
SWEAT EQUITY SHARES OR CONVERSION OF
PREFERANCE SHARES IN TO EQUITY SHARES


IT HELPS CAPITA L RESTRUCTURING OF
THE COMPANY.
IT HELPS IN GETTING RID OF THE
CAPITAL NOT REQUIRED BY CO. THEREBY
A CO. CAN ENHANCE ITS EARNING PER
SHARES.
IT HELPS A CO. TO OBSTRUCT A TAKE
OVER OF THE CO. BY UNDESIRABLE
PERSONS.
CORPORATE DIVIDEND TAX CAN BE
SAVED
ACC. TO SECTION 77A, A CO. MAY
PURCHASE ITS OWN SHARES OR OTHER
SPECIFIED SECURITIES OUT OF THE
FOLLOWINGS:
FREE RESERVE
SECURITIES PREMIUM ACCOUNT
THE PROCEEDS OF ANY SHARES OR
OTHER SPECIFIED SECURITIES.