ISSUE OF CUMULATiVE CONVERTBLE PREFERENCE SHARES
In early 1985, just before presentation of the Central Budget for I 9S 86, the Government of India nutiatcd several steps aimed at rat rat al of the capital market and ma it easier for companies to raise fiir.incc for various purposes As part of this exercise, the Government announced introduction of a new type of shares, namely Cumvlafive Converfible Preference (CCP) shares Public limited cornpauues were allowed to issue this n oft type of shares to raise finance for setting up new projects, e..pansio l, divcrsifcation, normal capital expenditure for modenusation or for wor capital require uents
Special features. The special features of the Cumulative Convertible Preference (CCP) shares are
(a) The rate of dividend on the CCP shares can be freely determined by the company
(b) The issue of CCP shares cannot be an independent issue it n ust be issued simultaneously with further issue of equity shares
(c) The amount of issue of CGP shares would be to the extent the company offers equity shares for public subscription
SECRETARIAL PROCEDURES FOR ISSUE OF CGP SHARES
For rssmng Cumulative Convertible Preferences shares, the Secretay will have to see that the following-steps are taken
(i) To hold a Board meeting fit) to consider issues of CCP shares to the public; (b) to decide on the object (as per guidelines for which the CCP shares are to be issued; (c) to decide on the amount of CCP shares to be issued so that it does not exceed the amount of -the equity shares to be simultaneously offered to the public for subscription; (d) to decide on the date of holding a general meeting of shareholders to amend the Articles to provide for the issue of CCR shares and to pass a special resolution under Sec. 81(1-A)
(ii) To seek tile approval of the banWfmzmcial institution, in case the project is assisted by them
(iii) To hold a general meeting of shareholders to amend the constitution amd to pass a special resolution under Sec. 8 1(1-A) ofthe Compames Act
(iv) To obtafil approval of the MRTP auLhonties, if the company is registered under the MRTP Act
(v) Ma an application in the prescribed orm accompanied by z Demand Draft for the required fees and the documents reqm to be submitted w th the application as per the guidklm
132 'S: SECRETARIAL PRACTICE
(c) At least one year has elapsed (at the date of issue) from the date on which the company was entitled to commence business; and
(d) The shares are issued within two months after the date on which the issue is sanctioned by the Company Law Board or within such extended tune as the Company Law Board may allow