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Conversion of Shares into Stocks

Conversion of fully paid shares into stock may similarly be affected by the ordinary resolution of the company in the general meeting. Notice of the conversion must be given to the Registrar within 30 days of the conversion; the stock may be changed into totally paid shares following the same procedure and notice given to the Registrar in Form no 5. In this connection, the following provisions are important :

  • Only totally paid shares can be converted into stocks.
  • Direct issue of stock to members is not legalized and cannot be done.
  • The distinction between shares and stock is that shares are transferable only in complete units so that transfer of half or any part of share is not possible whereas stock is expressed in terms of any total money and is transferable in any money fractions.
  • Articles may be giving the Board of Directors right to fix minimum amount of stock transferable.
  • Since stock is not separated into different units it is not required to be numbered, shares on the other hand must be numbered.

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