Initial Shareholders are the ones whose names are recorded in FORM 1. Within 20 working days of the issue of such shares, a notice should be given to the Registrar of Companies describing,
- The Number of shares issued
- Consideration for which the shares have been issued
- Company’s stated Capital
The Board of Directors have to decide the amount of the Consideration/Value for which the shares to be issued.
The share value need to be fair and reasonable to the Company and to all existing Shareholder. Shareholder can bring his investment to the company in various ways, such as cash, promissory notes, and future services, property of any kind or other securities of the company.
Subject to the Articles of Association of the Company, Time to time the Board of Directors decide to Issue share to their existing shareholders and / or to third parties. By submitting Form 6 and the Extract of the Resolution passed by the Board of Directors, the Company can Issue Shares.
The Company should issue a Certificate called “Share Certificate” to Shareholders and it is a written Document signed on behalf of the Company. This Certificate is a valuable property as a Deed and Share Certificate is an Evidence to a person to show that he owns Shares of such Company and indicates number of shares.
State Capital is the total of all amounts received by the Company from shareholders or due and payable to the Company by shareholders. In simple form it will be the value per share multiplied by the total number of shares issued. The stated capital can be in respect of the Issue of Shares and calls on Shares.