Mnemonics: Share Capital and Financing
Types of Share Capital
What needs to be memorized: Authorized Capital, Issued Capital, Subscribed Capital, Called-up Capital, Paid-up Capital, Reserve Capital
Mnemonic: "Arre! IPL Season Chalu, Paisa Ready"
🔗 The Breakdown:
- Arre! → Authorized/Nominal Capital
- IPL → Issued Capital
- Season → Subscribed Capital
- Chalu → Called-up Capital
- Paisa → Paid-up Capital
- Ready → Reserve Capital
Kinds of Preference Shares (Main Categories)
What needs to be memorized: Four main classifications of preference shares - Cumulative/Non-Cumulative, Participating/Non-Participating, Redeemable/Irredeemable, Convertible/Non-Convertible
Mnemonic: "Cricket Players Recently Converted"
🔗 The Breakdown:
- Cricket → Cumulative (vs Non-Cumulative)
- Players → Participating (vs Non-Participating)
- Recently → Redeemable (vs Irredeemable)
- Converted → Convertible (vs Non-Convertible)
Alteration of Share Capital (Section 61)
What needs to be memorized: Five ways a company can alter its share capital - Increase, Consolidate, Convert into stock, Sub-divide, Cancel
Mnemonic: "Indian Cricketers Can Sub, Cancel"
🔗 The Breakdown:
- Indian → Increase share capital
- Cricketers → Consolidate shares
- Can → Convert shares into stock
- Sub → Sub-divide shares
- Cancel → Cancel unissued shares
Methods of Reduction of Share Capital (Section 66)
What needs to be memorized: Three methods - Reduce liability on partly paid shares, Cancel lost/unrepresented capital, Pay-off excess capital
Mnemonic: "Roti, Chawal, Paneer"
🔗 The Breakdown:
- Roti → Reduce liability on partly paid shares
- Chawal → Cancel paid-up capital that is lost/unrepresented
- Paneer → Pay-off paid-up capital in excess of wants
Classification of Debentures (Four Bases)
What needs to be memorized: Four bases of classification - By Security, By Redemption, By Convertibility, By Registration
Mnemonic: "Students Read, Convert, Register"
🔗 The Breakdown:
- Students → By Security (Secured/Unsecured)
- Read → By Redemption (Redeemable/Irredeemable)
- Convert → By Convertibility (Convertible/Non-Convertible)
- Register → By Registration (Registered/Bearer)
Buy-back of Shares - Key Conditions (Section 68)
What needs to be memorized: Articles authorization, Special Resolution, 25% limit, 2:1 Debt-equity ratio, Fully paid shares only, No default
Mnemonic: "A Special Train Departed: Fully Noted"
🔗 The Breakdown:
- A → Articles must authorize buy-back
- Special → Special Resolution required
- Train → Twenty-five percent (25%) maximum limit
- Departed → Debt-equity ratio not to exceed 2:1
- Fully → Fully paid shares only
- Noted → No default in payment
Methods of Issue of Shares
What needs to be memorized: Public issue (through prospectus), Rights issue, Private placement, Bonus issue
Mnemonic: "Professor Runs Private Business"
🔗 The Breakdown:
- Professor → Public issue (through prospectus)
- Runs → Rights issue (to existing shareholders)
- Private → Private placement
- Business → Bonus issue
Doctrine of Ultra Vires - Key Effects
What needs to be memorized: Void ab initio, Ratification impossible, Injunction available, Directors liable, Property reclaimed, Member can sue
Mnemonic: "Virat Runs In Delhi, Practicing More"
🔗 The Breakdown:
- Virat → Void ab initio
- Runs → Ratification impossible (even by all shareholders)
- In → Injunction can be obtained
- Delhi → Directors personally liable
- Practicing → Property can be reclaimed
- More → Member can sue to restrain
Rights of Equity Shareholders
What needs to be memorized: Right to Vote, Right to Dividend, Right to Transfer, Right to Inspect, Right in Winding-up
Mnemonic: "Virat's Delhi Team Inspects Wickets"
🔗 The Breakdown:
- Virat's → Right to Vote
- Delhi → Right to Dividend (if declared)
- Team → Right to Transfer shares
- Inspects → Right to Inspect registers and books
- Wickets → Right in Winding-up
