ACCOUNTS BY SONIA SETIA

  CALLS IN ARREAR Under the Companies Act 2013, "calls in arrears" refers to the unpaid portion of a call made by a company to its shareholders.   Here's a breakdown:     Call : A call is a demand for payment of a certain portion of the subscribed share capital of a company. It's a way for the company to collect funds from its shareholders to meet its financial needs.     Calls in Arrear : When shareholders fail to pay the call amount by the due date, the unpaid portion is termed "calls in arrear". This unpaid amount remains a liability on the shareholder until paid up.     Consequences : Companies typically have provisions to enforce payment of calls in arrears, which may include charging interest on the unpaid amount or even forfeiture of shares in extreme cases.     Disclosure : The company must disclose the details of calls in arrears in its financial statements, ensuring transparency regarding its financial obl...

  DIFFERENCE BETWEEN PREFERENCE SHARES AND EQUITY SHARES Preference shares and equity shares are both types of shares issued by companies, but they have distinct characteristics:   1. Preference Shares:    - Preference shares are a type of share capital that combines features of both equity and debt.    - Holders of preference shares have a preference over equity shareholders in receiving dividends and in the distribution of assets during liquidation.    - Preference shareholders typically receive a fixed dividend, which is paid out before any dividends are distributed to equity shareholders.    - In the event of liquidation, preference shareholders have priority over equity shareholders in receiving back their investment.    - However, preference shareholders usually do not have voting rights or have limited voting rights compared to equity shareholders.    - Preference shares can be cumulative or n...

  WHAT ARE SHARES AND KINDS OR CLASSES OF SHARES   Section 43 of the Companies Act, 2013, deals with issuing shares and the different kinds of shares that a company can issue. Here's an overview:   1. Shares :       - Shares represent ownership in a company and are issued to investors in exchange for capital investment.    - Section 43 of the Companies Act, 2013, provides the framework for the issuance and classification of shares by companies.   2 . Kinds of Shares :      Section 43 of the Companies Act, 2013, recognizes various kinds of shares that a company can issue, including:      - Equity Shares : Equity shares, also known as ordinary shares, are the most common type of shares issued by companies. They represent ownership in the company and entitle shareholders to voting rights and a share in the profits of the company through dividends. Equity shareholders bear the highest r...

  SHARE CAPITAL OF A COMPANY Under the Companies Act, 2013, share capital refers to the total capital raised by a company by issuing shares to shareholders. It represents the ownership stake of shareholders in the company and serves as a key source of funding for the company's operations, growth, and expansion. Here are some key points regarding share capital under the Companies Act, 2013:   1 . Types of Share Capital :    - Authorized Share Capital : This is the maximum amount of share capital a company is authorized to issue as per its Memorandum of Association (MOA). It represents the upper limit of the company's share capital, and any increase in authorized share capital requires approval from shareholders and regulatory authorities.    - Issued Share Capital : This refers to the portion of authorized share capital that has been issued by the company to shareholders through the sale of shares. It represents the actual amount of capital raised ...

  PRELIMINARY EXPENSES Under the Companies Act, 2013, preliminary expenses refer to the costs incurred by a company in connection with the formation, registration, and establishment. These expenses are incurred before the company starts its regular business operations and are typically associated with the setup and organization of the company.   Here are some key points regarding preliminary expenses under the Companies Act, 2013:   1. Nature of Expenses : Preliminary expenses may include various costs incurred during the incorporation process, such as legal fees, registration fees, stamp duty, printing expenses for memorandum and articles of association, expenses related to the issue of shares or debentures, costs of prospectus preparation, and other administrative expenses.   2. Treatment in Financial Statements : According to the Companies Act, preliminary expenses are considered deferred revenue expenditure and are written off over some time, usuall...

  INCORPORATION OF A COMPANY   Here's a step-by-step process of incorporating a company, starting from the promotion stage, and then moving on to registration, capital subscription, and commencement of business:   1. Promotion Stage      -Conceptualization and Market Research**: Promoters conceive the business idea, conduct market research, and assess the feasibility of the proposed venture.      - Formation of Promoter Group**: Promoters assemble a group of individuals or entities who share the vision and are willing to invest in the company's formation.      - Pre-incorporation Contracts**: Promoters may enter into contracts on behalf of the proposed company, termed as pre-incorporation contracts, for various purposes such as property acquisition or employment agreements.      - Preparation of Incorporation Documents**: Promoters prepare essential documents required for incorporation, in...