Explain the following terms/concepts.

1. Transmission of shares
Ans: (a) Transmission of shares means the transfer of shares by operation of law, i.e. shares of a member are automatically transferred to another person.
(b) Transmission of shares happens on a specific event such as death, insolvency, or insanity of shareholders

2. Bonus shares
Ans: (a) Bonus issues refers to the fully paid up shares given to its existing equity shareholders without any cost, based upon the number of shares they own.
(b) Such shares are given by the company as a gift to its existing equity shareholders out of its profits or reserves.

3. Allotment of shares
Ans: (a) Allotment of shares means the company allots (to give) shares to the general public. Allotment means the distribution of shares among the applicants. When a public company wants to issue the shares to the general public, it has to issue prospectus to invite the general public to subscribe to its shares.
(b) In response to it, the general public may apply for shares of the company, they are known as ‘Share Applicants’. The Board of Directors takes the decision regarding the allotment of shares by passing a resolution.

4. Employees Stock Option Scheme
Ans : (a) Under this scheme, the company offers certain shares from the new issue to the whole time directors, officers, or employees of the company.
(b) The company offers the shares at a predetermined price which is usually less than the price offered to the general public.

5. Surrender of shares
Ans: (a) Surrender of shares means the return of shares by the shareholder to the company for cancellation. Holder in this case voluntarily abandons all his shares in favour of the company.
(b) The power to accept the surrender of shares cannot be exercised by a company unless expressly given by the Articles of Association. Only partly paid-up shares can be surrendered. Surrendered shares can be reissued in the same way as forfeited shares.

6. Sweat Equity shares
Ans : (a) Sweat equity shares are such equity shares, which are issued by a company to its directors or employees at a discount or for consideration, other than cash. 
(b) The issue of sweat equity shares allows the company to retain the employees by rewarding them for their services.

7. Share certificate
Ans: (a) Share certificate is a registered document of title to the shares issued by the company under its common seal, duly stamped by at least two directors and counter signed by the secretary of the company. 
(b) It is issued by both public and private companies in respect of partly or fully paid up shares. Since it is a registered document of the title of share, it only is transferred by following the procedure laid down in Articles of Association.

8. Authorised capital
Ans: (a) This is the amount of capital stated in the capital clause of the Memorandum of Association. It is also known as “Nominal Capital” or “Registered Capital”. 
(b) The company is entitled to raise finance by the issue of shares only up to the amount of authorised capital. However, the company can increase the amount of authorized capital by altering the Memorandum suitably.

9. Forfeiture of shares
Ans : (a) Forfeiture of shares is a process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or installment of the issue price of his shares within a certain period of time after they fall due. 
(b) In other words, when the shareholder fails to pay the full amount of share which he agreed to pay in installments, the company can cancel his shares. The company will give 14 days’ notice; after 14 days if the shareholder does not pay the company will forfeit his shares and strike his name from the register of shareholders.

10. Paidup capital 
Ans: (a) Paid-up Capital is the part of called up capital which is actually paid by the shareholders.
(b) In other words, paid-up capital is the total amount of money actually paid by shareholders when the company has called up or demanded them to pay.

11. Calls on shares
Ans : (a) Calls on shares mean the demand made by the company on its shareholders holding partly paid shares to pay part or full unpaid amount on the shares.
(b) A call may be defined as “A demand made by the company on its shareholders to pay whole or part of the balance remaining unpaid on each share at any time during the lifetime of a company”.

12. Subscribed capital
Ans: (a) It is that part of the issued capital which is taken up by the public. Sometimes, the public may not take up all the shares that are offered to the public, for a subscription. 
(b) In such a case, the subscribed capital shall be less than the issued capital. If the public subscribe to all the shares, it shall be equal to the issued capital.

13. Minimum subscription
Ans: (a) Minimum subscription is the minimum amount raised by the company for obtaining a trading certificate and to start the work of allotment of shares. This amount is mentioned in the prospectus. 
(b) It must be collected within thirty (30) days from the issue of prospectus. The minimum subscription amount should be 90% of the issued capital.

14. Transfer of shares
Ans: (a) Transfer of shares means the transfer of ownership of shares from one person to another. 
(b) Transfer of shares takes place when the shareholder wants to sell his shares or give as a gift to another person. Shares can only be transferred by following the procedure laid down in the Articles of Association.

15. Initial Public Offer
Ans: (a) An Initial Public Offer (IPO) is a process of offering shares to the general public for the first time. A public company makes an appeal to the general public to purchase its shares by issuing the prospectus 
(b) The prospectus contains detailed information about the company, its project, and shares. It also includes an application form free of cost.

16. Blank transfer
Ans: (a) When a member signs the Instrument of transfer without filling in the name of the transferee and hands it over to the transferee along with the share certificate, it is called ‘Blank Transfer’. 
(b) Blank transfers can be deposited with a bank when shares are being used as security for a loan. A blank transfer can also be used when shares are held by nominees, the beneficial owner holding the blank transfer.

17. Further Public Offer
Ans: (a) Follow-on Public Offering or Further Public Offer, is the process of offering shares to the public, after the process of IPO. 
(b) In FPO, the company goes for a further issue of shares to the general public with a view to diversifying its equity base. The shares are offered for sale by the company through the prospectus.

18. Forged transfer
Ans: (a) An instrument on which the signature of the transferor is forged is called forged transfer. It is a null transfer and does not confer any title. 
(b) It is so because in the case of forgery there is not merely an absence of free consent but there is no consent at all.

19. Rights Issue
Ans: (a) The Company issue shares to its existing equity shareholders in the proportion of shares held by them. Such shares issued is called as Rights Issue’ of shares. 
(b) Under the Rights issue, such shareholders are given pre-emptive rights to apply for new shares.

20. Private placement
Ans:(a) If a company offers shares to a selected group of investors, not exceeding 200 to raise capital, is called private placement. 
(b) The selected group can be mutual funds, banks, insurance companies, pension funds and so on.