These lecture notes clearly explain the concept of shares in regards to Company Law. Excellent for revision and study for CPAs, Bcom or any students taking business related courses where business law is a course unit.

1. CHAPTER VI: SHARES
The capital of a company is divided into certain indivisible units of a fixed amount. These units
are called shares. ‘Share’ means a definite portion of the share capital of a company. It includes
stock except where a distinction between stock and share is expressed or implied.
It is the interest of a shareholder in the company measured by a sum of money for the purpose of
liability in the first place and of interest of the shareholder in the company in the company in the
second. [Borland’s Trustee v Steel Bros. & Co. Ltd., (1901) 1 Ch. 279].
A share is evidenced by a share certificate. A share certificate is issued by a company under its
common seal. It specifies the shares held by a member and is prima facie evidence of the title of
the member to the shares.
Nature of shares. The shares of any member in a company are a movable property. They are
transferable in the manner provided by the Articles of the company (Sec.75).
STOCK AND SHARES
Stock is the aggregate of fully paid-up shares, consolidated and divided, for the purpose of
convenient holding into different parts. It may be transferred or split up into fractions of any
amount, without regard to the original face value of the share. It also denotes that a company has
recognized the fact of complete payment of shares and that they can be assigned in fragments
which could not be done before. Stock can validly be issued only when the shares are fully paid-
up.
A company limited by shares may, if authorized by its Articles, by a resolution passed in a
general meeting, convert all or any of its fully paid-up shares into stock and reconvert the stock
into fully paid-up shares of any denomination.
Share and stock – distinction. The difference between shares and stock has been likened to the
difference between a bucketful of peas each one of which, though capable of being handled
along with others, retains its if identity as a separate unit, and a bucketful of water, each drop of
which coalesces with the rest. The important points of distinction between ‘share’ and ‘stock’ are
as follows:
1. A share has a nominal value, whereas stock has no nominal value.
2. Shares may be partly of fully paid-up. Stock is always fully paid-up.
3. Shares can only be transferred in round numbers while stock is transferable in small
fractions also.

2. 4. All shares are of equal denomination. Stock may be of unequal amounts.
5. Shares always bear distinctive numbers while the fractions or parts of stock do not bear
any distinctive numbers.
6. Shares can be directly issued to the public whereas stock cannot be issued directly. Only
fully paid-up shares can be converted into stock.
Types of Shares
In terms of Sec..5(2) a company limited by shares is required to state the amount of nominal
capital in the memorandum and its division of shares in a number of shares of the same par
value. A company may have the following class of shares:
(i) Preference shares
(ii) Ordinary shares
(iii) Deferred shares
(iv) Corporate shares
(i) Preference shares
These have a number of preferences, such as:
a) They can earn dividends before other classes of shares
b) They can earn dividends at a fixed rate
c) When they are designated as cumulative, the arrears in dividends cannot be lost
but will be carried forwards to the subsequent years
Classification of preference shares
a) Participating and non-participating preference shares
With participating preference shares after earning dividends in the first round and if there is a
surplus available, they will be entitled to participate in the distribution of the surplus at a fixed
rate.
Non-participating preference shares will only earn dividends once and then stand aside for the
other classes to share the surplus.
b) Cumulative and non-cumulative preference shares
In cumulative, the arrears of unpaid dividends are not lost but are carried forward to subsequent
years when dividends are declared.
Non-cumulative means that the arrears are not carried forward and are thus lost.

3. c) Redeemable and non-redeemable preference shares
Redeemable shares are issued on the understanding that the company shall buy them back at a
future date.
Non-redeemable shares are therefore not supposed to be bought back by the company.
d) Convertible and non-convertible preference shares
Convertible shares are issued on condition that on a future date they shall be converted into
ordinary shares. Non-convertible preference shares maintain their identity and are not liable for
conversion by a company into a different class of shares
(ii) Ordinary shares
Also known as equity shares, these are the commonest class of shares in a company. The
holders of these shares are said to have the ownership of the company; they take the risk and are
the ultimate beneficiaries, i.e.,
a) They don’t earn dividends at a fixed time and rate and neither are they the first
to be paid when the dividends are declared – there is therefore no guarantee on
their investment.
b) However, once the preference shareholders are paid the balance lion share
becomes theirs. Further, they have automatic voting rights and it’s immaterial
what is stated in the articles.
(iii) Deferred shares
A way of remunerating the promoters is by issuing them these type of shares for free. These
don’t carry any voting rights but entitle the holders to some payment of dividends after some
classes of shareholders have been paid.
(iv) Corporate shares
This is the class of shares the company pays for in order to allot them to the employees free of
charge. The idea is to win their cooperation by making them feel part of the organization. They
however must be relinquished once the employee leaves the company and they therefore don’t
really belong to the employee. They don’t carry any voting rights but they are entitled to
dividends after some classes have been paid.
APPLICATION AND ALLOTMENT OF SHARES

4. An application for shares is an offer by a prospective shareholder to a company to take shares.
Allotment is the acceptance by the company of the offer. Allotment results in a binding contract
between the company and the prospective shareholders.
Rules as to allotment
1. Minimum subscription (Sec.49). No allotment shall be made of any share capital of a
company offered to the public for subscription unless –
a) The amount stated in the prospectus as the minimum amount has been subscribed,
and
b) The sum payable on application for such amount has been paid to and received by
the company, whether in cash or by a cheque or other instrument which has been
paid.
2. Application money (Sec.49(3)). The amount payable on application on each share shall be
at least 5% of the nominal amount of the share.
3. Statement in lieu of prospectus (Sec.50). Where a company having a share capital does not
issue a prospectus, it can allot any shares or debentures only when at least 3 days before
the first allotment of the shares or debentures, there has been delivered to the Registrar for
registration a statement in lieu of prospectus. This does not apply to a private company.
4. Effect of irregular allotment (Sec.51). Allotment of shares is irregular when it has been
made by a company –
a) without receiving the minimum subscription, or
b) where it has not issued a prospectus without filing with the Registrar for registration a
statement in lieu of prospectus at least 3 days before the first allotment of shares.
Irregular allotment of shares made by a company is voidable at the instance of the
applicant. The effect of irregular allotment is that it may be set aside by the allottee of
shares.
5. Opening of the subscription list. When shares or debentures of a company are offered in
pursuance of a prospectus issued generally, no allotment may be made until the beginning
of the 3rd day from the date of the issue of prospectus or on such later day as may be
specified in the prospectus. This date is known as ‘the opening of the subscription lists’.
6. Shares and debentures to be dealt in on stock exchange (Sec.53). Every company
intending to offer shares or debentures to the public for subscription by issue of a

5. prospectus shall, before such issue, make an application to one or more recognized stock
exchanges for permission for the shares or debentures intended to be so offered to be dealt
with in the stock exchange.
7. Return as to allotments (Sec. 54). Within 60 days of allotment of shares by a company, the
company shall file with the Registrar a statement known as ‘return as to allotment’. The
return shall contain –
a) Particulars about the number and nominal amount of the shares allotted for cash, the
names, addresses and occupations of the allottees, and the amount paid on each share,
b) Particulars about the shares (not being bonus shares) allotted or fully paid-up, for any
consideration other than cash,
c) Particulars about the number and nominal amount of bonus shares and their allottees,
d) A copy of the resolution passed by the company authorizing issue of shares at a
discount.
CALLS ON SHARES
After taking into account moneys paid in respect of shares upon application and allotment, the
balance of the nominal value is sometimes made payable, not at a time fixed by the terms of issue
but as and when a ‘call’ is made. A call is a demand by a company on its shareholders, in
pursuance of a resolution of the Board of directors and terms of the Articles, to pay the whole or
part of the balance remaining unpaid on each share. It may be anytime during the lifetime of the
company or during its winding up.
SHARE CERTIFICATE
Every one whose name is entered in the register of members has a right to receive a share
certificate in respect of those shares he holds in the company. A certificate should be issued
within 60 days of the allotment or lodgement of transfer.
In case of default, the company and every director, manager, secretary and every other officer
who knowingly is part to the default is liable to a max penalty 100 shillings in respect of every
day during which the default continues. One can however escape liability if he/she proves that he
was not aware of the fact that the certificate had not been issued. To be valid, a certificate must
have a common seal of the company affixed to it and must also be stamped; one or more

6. directors must sign it. It must state the name, address and occupation of the holder, number of
shares and their distinctive number and amount paid.
Legal effects of share certificate:
A certificate is a prima facie evidence of the title of the member to the shares specified in the
certificate per section 83. Lord Caris says that a share certificate is a solemn affirmation under the
seal of the company that a certain amount of shares or stock stands in the name of the individual
mentioned in the certificate.
In Bahia & San Francisco Rly (1868) CR 30 B 584 the object of a share certificate was stated
"the power of granting certificates is to give the shareholders opportunity of more easily dealing
with their shares in the market and to afford facilities to them of selling their shares at once
showing
a marketable title and the effect of this facility is to make the shares of greater value".
In addition to the above the certificate makes the company liable in two ways:
1. Estoppel as to title
The company will in no way deny that a holder to a share certificate is entitled to those shares.
In Dixon vs. Kenmery & Co. (1900) 1 Ch. 833, L was the secretary of a company and also a
stock broker. D applied for 300 shares in the company and paid for them. L's clerk who owned
no shares executed transfer in favour of D. the company without requiring the production of a
share certificate from the clerk, registered the transfer and gave D a new certificate. It was held
that the company was estopped from denying the validity of D's certificate and was liable to D in
damages. The company may not be bound by a certificate issued without the authority or the
board of directors or where the certificate is a forgery e.g. in the case of Ruben v Great Fingall
Consolidated [1906] AC 439.
2. Estoppel as to payment.
If the certificate indicates that the shares are fully paid the company is estopped as against a
bona fide purchaser from alleging that the amount stated in the certificate as being paid has been
paid. A case in support of the above is in Bloomenthal v Ford [1897] AC 156.
When the person named in the certificate knew that the shares were not fully paid for in such a
case he has not been misled by the certificate and the rule of estoppel does not apply.
(Crickman's case Re Carobbeam Co. (1875) LR 10 Ch. App. 614).

7. Loss of certificate
Articles authorize directors to issue duplicate if such a certificate is proved to have been lost or
destroyed, defaced, mutilated or torn on payment of two and half shillings or such s a lesser sum.
SHARE WARRANT
A public company limited by shares may convert its fully paid-up shares into share warrants. The
bearer of the share warrant is entitled to shares specified therein. One great advantage of issuing
a share warrant is that shares can be transferred by mere delivery of the warrant. The registration
of the transfer in such a case with the company is not necessary.
Share warrants shall be issues under the common seal of the company.
A share warrant is by mercantile usage a negotiable instrument.
Bearer of a share warrant is not a member of the company. On the issue of the share warrant, the
company shall strike out of its register of members the name of the member in respect of the
shares specified in the warrant as if he had ceased to be a member. The company shall enter
instead in the register of members the following particulars, viz.,
a) The fact of the issue of the warrant;
b) A statement of the shares specified in the warrant, distinguishing each share by its
number; and
c) The date of issue of the warrant.
Transfer of shares
Section 75 states “the shares or other interests of any member shall be movable property
transferable in manner provided by the articles of the company provided by the articles of the
company”. The articles of a public company may and those of a private company must restrict
rights to transfer. Article 23 of Table A of the First Schedule to the Act states "Subject to such of
the restrictions of these regulations as may be applicable, any member may transfer all or any of
these shares by instrument in writing in all usual or common form or any other form in which
directors may approve. Article 24 of Table A of the First Schedule states:

8. “The directors may decline to register the transfer of shares to a person whom they shall not
apply; and they may also decline to register the transfer of a share on which the company has
lien”. Articles restrict but not forbid the transfer of shares.
In case of refusal, the company must send a notice to the transferee and the transferor within
sixty days from the date on which the date of instrument of transfer was delivered to the
company.
Procedure of transfer
The following are the usual steps taken when transferring shares.
a) For a share warrant a mere delivery of the share warrant transfers ownership of the shares.
b) To transfer shares a written instrument of transfer is executed by the transferor and the
transferee, duly stamped, specifying the name, address and occupation of the transferee, which is
delivered to the company for registration together with a share certificate.
Certificate of transfer
When the shareholder is selling only part of the share he does not deliver a share certificate but
the selling-broker produces it along with the transfer instrument to an officer of a company who
"certificates the transfer" by writing its margins the words "certificate lodged " and mentions the
number of shares for which it is lodged: the officer then hands the certificated instrument back
to the broker together with the balance ticket for any share not registered.
The transferor to get a new certificate uses the ticket and the certificated instrument is given to
the transferee, which he uses to acquire a new certificate.
The company thus conceals the old certificate and prepares two certificates
a) One for share sold
b) For the unsold portion of the shares.
If a company after certifying returns the original certificate together with the certificated transfer
to the transferor who uses it to commit fraud on the transferee, the third party has no right against
the company. The terms implied between seller and buyer
a) That the seller will give to the purchaser genuine of transfer and share certificate required to
enable the purchaser to be registered.
b) The seller will not prevent the buyer from registering the transfer.

9. c) The seller will compensate the buyer for any calls or liability which may arise in respect of
shares sold. The purchaser must also indemnify the seller against calls made after date of
contract.
Effect of transfer
Position of the transferee before he is registered as a member
1 The transferor continues to be the legal owner of the shares set as a trustee of the transferee
2 The transferee has no rights as a shareholder of the company.
3 The transferee has equitable claim
4 If calls are made, the transferor must pay and recover the amount from the transferee
5 If dividends are paid the transferor is entitled to them.
6 Transferor must vote as the transferee directs [Massel White vs. V. H. Massel White & Son
Limited (1962) Ch. 964]
Priority between transferees
When two or more persons lay their claim to the same shares, the priorities as between the
different claimants will be decided in accordance with the following rules:
1 The first to secure registration will get priority irrespective of the date when his claim arose.
2 As between claimants, the earlier in point of time will be preferred, irrespective of the date
when notice was given to the company.
Notice of transfer
It is not mandatory, but it is advisable to give notice of the lodgement of transfer to the
transferor.
Forged transfer
Consequences of forged transfer
1. Forged transfer does not pass any legal title to the transferee
2. In instances where the company has issued a share certificate to the transferee of forged
transfer and he sold these to an innocent buyer, the buyer gets no right to be registered as
a shareholder, in such case he can claim damages from the company.

10. 3. If the company has been put to loss by reason of the forged transfer, it may recover the
loss from the person who procured registration, even though he might have acted in good
faith.
Blank transfer
This is a transfer of shares which is executed without the name of the transferee being filled in
the transfer form of deed which a transferor hands over to purchaser or pledgee.
The transferor also hands over to the purchaser the share certificate along with the blank
transfer form or deed, the date the date of sale and name of the transferor are left blank
The blank transfer is thus used as negotiable instrument. The advantage in giving a blank
transfer form is that the buyer or pledgee will be at liberty to sell again without his name and
signature to subsequent buyer.
At the end of the transfer the first seller is treated as the transferor and the last buyer as a
shareholder and his name is registered in the company register.
SURRENDER OF SHARES
When a shareholder of a company voluntarily gives up his shares, he is said to have surrendered
them to the company. The Act does not contain any provisions relating to the surrender of shares.
If a company accepts the surrender of shares, it amounts to a purchase by the company of its own
shares. This is prohibited by Sec.56, the Articles, however, sometimes give powers to the
directors to accept a surrender of shares.
The surrender of shares by a member to the company is valid –
1) Where the Articles give the directors the power to accept it and it is accepted, in case of
partly paid shares, to save the company from going through the formalities of forfeiture.
Thus the surrender of shares which are not fully paid can be accepted only where a
forfeiture would be justified.
Surrender of partly paid shares, not liable to forfeiture, is unlawful, as it (a) releases the
shareholder from further liability in respect of shares, (b) amounts to a purchase by the
company of its own shares, thus resulting in reduction of capital without the sanction of the
court.

11. 2) Where it is in accordance with the Articles and accepted in case of fully paid shares in
exchange for new shares of the same nominal value and the surrendered shares remain
capable of re-issue.
Surrendered shares can be validly re-issued in the same way as forfeited shares, if the
Articles authorize their re-issue.
FORFEITURE OF SHARES
If a shareholder, having been called upon to pay any call on his shares, fails to pay the call,
the company has two remedies against the shareholder, namely –
1. it may sue him for the amount due
2. it may forfeit his shares, if the power to that effect has been taken by the company in
its Articles.
The company may forfeit the shares of a shareholder for non-payment of some call/calls
if the following conditions are satisfied:
1) In accordance with the Articles. Forfeiture must be authorized by the Articles. To be
valid it must be strictly in accordance with the grounds specified in the Articles.
2) Notice prior to forfeiture. The notice must (a) give not less than 14 days time from the
date of service of notice for the payment of the amount due; and (b) state that in event of
non-payment of the amount due within the period mentioned in the notice, the shares in
respect of which the call was made will be liable to be forfeited.
The notice of forfeiture must also specify the exact amount due from the shareholder.
3) Resolution of the Board. The directors must pass a resolution forfeiting the shares if they
are not paid within the notice period.
4) Good faith. This power to forfeit must be exercised by the directors in good faith and for
the benefit of the company.
Effect of forfeiture
1. A person whose shares have been forfeited ceases to be a member in respect of the
forfeited shares. But notwithstanding the forfeiture he remains liable to pay to the
company all moneys which, at the date of forfeiture, were payable by him to the company
in respect of the shares.

12. 2. The liability of the person whose shares have been forfeited ceases if and when the
company receives payment in full of all such money in respect of the shares. [Sec.37 First
Schedule]
Forfeited shares become the property of the company, but these may be re-issued or otherwise
disposed off on such terms and in such manner as the Board thinks fit. The purchaser would be
liable to pay all the calls due on the shares including the call for which the shares were
forfeited.[Sec.36 First Schedule]
TRANSMISSION OF SHARES
Transmission of shares takes place on the death or insolvency of an individual member or if the
member is a limited company, on its going into liquidation. When the member of the company
dies or is declared insolvent, the shares vest in his legal representative, or Receiver can validly
transfer the shares to another person even though he himself is not a member. In case of
transmission of shares no instrument of transfer is necessary. The person to whom the shares are
transmitted should make an application to the company for registration of shares in his name.
Transmission takes place by operation of law, while transfer of shares is effected by an act of the
parties.
PURCHASE BY COMPANY OF ITS OWN SHARES (Sec.56)
A company limited by shares, and a company limited by guarantee and having a share capital,
cannot by its own shares unless the consequent reduction of capital is effected and sanctioned in
pursuance of the provisions of the Companies Act. Further a public company and a private
company which is a subsidiary of a public company, cannot directly or indirectly give any
financial assistance to any person for the purchase of shares in the company.
The purchase of its own shares by a company is void and ultra vires the company. It cannot be
permitted even if the power to do so is taken in the Articles. The utilization of funds of a
company in the purchase of its own shares results in reduction of its capital without the sanction
of the court and is ‘in violation of Statute law’ and is thus prohibited.
The following kinds of transactions are however, not prohibited:
1. The lending of money by a banking company in the ordinary course of its business.
2. The provision of money by a company for the purchase of fully paid shares in the
company by trustees for and on behalf of the company’s employees.

13. 3. The lending of money by a company to its employees with a view to enabling them to
purchase fully paid shares in the company and hold them by way of beneficial ownership.
The word ‘employee’ here does not include directors or managers.
ISSUE OF SHARES AT A PREMIUM
A company can always issue shares at a premium. The expression premium is not defined in the
Act. It means the value of any advantage measurable in terms of money which is conferred on the
company and which is over and above the cash payment on shares issued by the company. These
powers of the company to issue shares at a premium need not be taken in the Articles.
Share premium account. Where a company issues shares at a premium, whether for cash or
otherwise, a sum equal to the value of the premium on these shares must be transferred to an
account called ‘the share premium account’. The share premium account may be applied by the
company –
a) In issuing to the members of the company fully paid bonus shares; or
b) In writing off preliminary expenses of the company; or
c) In writing off the discount allowed or commission paid on any issue of shares or
debentures; or
d) In providing for the premium payable on the redemption of redeemable preference shares
or debentures.
ISSUE OF SHARES AT A DISCOUNT (Sec.59)
A company can issue shares at a discount subject to the provisions of Sec.59.
Conditions for issue of shares at discount. A company may issue shares at a discount if the
following conditions are fulfilled, namely;
1. Shares to be of a class already issues (sec.59(1)).
2. Resolution of company sanctioned by the Court. The issue of shares at a discount must
have been authorized by a resolution passed by the company in general meeting and
sanctioned by the court [sec.59(1)(i)].Where a company has passed a resolution
authorizing the issue of shares at a discount, it may apply to the court for an order
sanctioning the issue, and on any such application the court, if, having regard to all the

14. circumstances of the case, it thinks proper so to do, may make an order sanctioning the
issue on such terms and conditions as it thinks fit (sec.59(2)).
3. Maximum rate of discount. The resolution shall specify the maximum rate of discount at
which the shares are to be issued [sec.59(1)(ii)].
4. Company working for a year. Not less than one year shall, at the date of the issue, have
elapsed since the date on which the company was entitled to commence business
[sec.59(1)(iii)].
5. Shares to be issued within one month of sanction of the court. The shares to be issued at a
discount shall be issued within one month after the date on which the issue is sanctioned
by the court or within such extended time as the court may allow [sec.59(1)(iv)].
Every prospectus relating to the issue of the shares must contain particulars of the discount
allowed on the issue of the shares or of so much of that discount as has not been written off at the
date of the issue of the prospectus (sec.59(3)(a)).
If default is made in complying with this subsection, the company and every officer of the
company who is in default shall be liable to a default fine (sec.59(3)(b)).
DIVIDENDS
One of the main objects of commercial enterprise is to earn profits which are distributed among
shareholders by way of a ‘dividend’. The Act does not define the term ‘dividend’. It may,
however, be defined as receipt of a part of the profits of a trading company by the members in
proportion to their respective shares. Subject to certain statutory requirements and the provisions
of the Articles, the amount to be distributed as dividend is a matter of internal management and
the courts do not interfere with the discretion of the directors and shareholders in this regard.
[Burland v. Earle, (1902) A.C. 83].
Provisions regarding dividends
1. Resolution at the annual general meeting. The dividend is declared by a company by a
resolution passed at the annual general meeting. The Board determines the rate of dividend
to be declared. The rate determined by the Board has to be sanctioned by the members of
the company in the AGM. The members may reduce the rate recommended by the Board
but they cannot increase it. the directors must state in the report to be attached to the
company’s balance sheet, the amount which it recommends to be paid by way of dividend.

15. 2. Payment of dividend in proportion to paid-up capital. Where unequal amounts have been
paid on shares, the dividends may be unequal as among different shareholders. In the
absence of such a clause in the Articles, members are entitled to dividend in proportion to
the nominal value of the shares, and not in proportion to the amount paid thereon.
3. Dividend to be paid only out of profits. The dividend can be declared or paid by a
company for any financial year –
a) out of the profits of the company for that year arrived at after providing for
depreciation in the manner laid down in the Act, or
b) out of the profits of the company for any previous financial year or years arrived at
after providing for depreciation and remaining undistributed, or
c) out of both.
4. Transfer to the reserves of up to 10% of profits.
5. Compliance with provisions of Sec.6. A company which fails to comply with the
provisions of sec.60 (which deals with redemption of redeemable preference shares) shall
not, so long as such failure continues, declare any dividend on its equity shares.
6. Dividend only payable in cash. But the capitalization of profits or reserves of the company
for the purpose of issuing fully paid bonus shares or paying up any amount for the time
being unpaid on any shares held by the members of the company is not prohibited.
7. Dividend to be paid out of current year’s profits. In the event of inadequacy or absence of
profits in any year, the company can declare dividends out of the accumulated profits.
8. Unpaid Dividend Account. Where a dividend has been declared by s company but has not
been paid to any shareholder within 42 days from the date of declaration, the company
shall, within 7 days from the date of expiry of 42 days, transfer the unpaid dividend to a
special account to be called ‘Unpaid Dividend Account of …Company Limited/ Company
(Private) Limited’.
9. Dividend to be paid to registered shareholder. The dividend must be paid only to the
registered shareholder or to his order or to his bankers, or to the bearer of the share
warrants.
10. Dividend a debt from the date of declaration.
Test Questions

16. 1. What is the difference between (a) stock and shares, (b) transmission of shares and transfer
of shares?
2. What is the legal effect of an allotment which is irregular either because the minimum
subscription has not been subscribed or because a statement in lieu of prospectus has not
been filed when required?
3. Give the statutory requirements with regard to share warrants. How far is the bearer of a
share warrant a member of a company?
4. Describe the procedure of effecting transfer of shares. Can the directors of a public
company refuse to register a transfer of shares?
5. Write a note on conversion of shares into stock. Also distinguish between share and stock.
6. Can a company issue shares at a premium and at a discount? Can it also issue shares for
consideration other than cash?
7. Can a company buy its own shares? If so, under what circumstances?
8. Under what circumstances is surrender of shares lawful?
9. What are statutory provisions regarding payment of dividends? What is the legal effect of
payment of dividend out of capital?