Company Share Capital: Latest Companies Act 2013 Rules
Few topics carry as many quietly-outdated numbers as company share capital. 📈 Old notes still teach the 1956-Act figures — 6% on calls in advance, a 26% cap on non-voting shares, jail for a Section 53 breach. Every one of those has changed under the Companies Act, 2013 and its later amendments.
This verified 2026 update walks a CAIIB candidate through the current company share capital rules: calls in advance, differential-voting (DVR) shares, the decriminalised Section 53, sweat-equity ceilings and the new demat mandate for private companies — each with a quick table and an exam-style test at the end.
💰 Calls in advance: 12%, not 6%
When a shareholder pays money the company has not yet called up, that is a call in advance. Where the Articles are silent, the maximum interest the company may pay is governed by Table F of Schedule I.
| Regime | Max interest on calls in advance |
|---|---|
| Companies Act, 1956 (Table A) - repealed | 6% p.a. |
| Companies Act, 2013 (Table F, Reg. 13) - in force | 12% p.a. |
📌 The exam-trap is the old 6%. Under the 2013 Act it is 12% p.a. unless the Articles fix a different rate. Calls in advance carry no voting rights until the amount is actually called up.
🗳️ Differential-voting (non-voting) shares: 74% cap
Shares with differential rights as to voting or dividend — often called non-voting shares — are issued under Rule 4 of the Companies (Share Capital and Debentures) Rules, 2014.
The 2019 amendment sharply raised the ceiling: a company may now have DVR shares up to 74% of total voting power (including existing DVR shares), against the old 26% of post-issue paid-up equity. This was a deliberate relaxation to help promoters raise capital without losing control.
⚖️ Section 53: issuing shares at a discount
Section 53 still prohibits issuing shares at a discount (a sweat-equity issue is the narrow exception). What changed is the penalty. The Companies (Amendment) Act, 2019 decriminalised it.
| Before 2019 | Now (Section 53(3)) | |
|---|---|---|
| Penalty | Fine Rs 1-5 lakh | Up to the amount raised or Rs 5 lakh, whichever is less |
| Imprisonment | Up to 6 months | None |
| Refund | - | Refund money received + 12% interest from receipt |
📌 So the modern answer is: a monetary penalty plus refund with 12% interest, and no imprisonment.
🛠️ Sweat equity ceilings
Sweat equity rewards employees and directors for know-how or value addition. Rule 8 of the same Rules sets the limits, and start-ups get a far longer runway.
| Company type | Sweat equity ceiling |
|---|---|
| Unlisted (per year) | 15% of paid-up equity OR Rs 5 crore, whichever is higher |
| Unlisted (overall) | 25% of paid-up equity |
| Start-up | Up to 50% of paid-up capital, within 10 years of incorporation |
The start-up window was widened from 5 to 10 years by the 2020 amendment — a common update old notes miss.
💻 Demat for private companies + summary
Under Rule 9B (inserted Oct 2023), every private company other than a small company must dematerialise its securities; the compliance deadline was 30 June 2025 and is now in force. Small companies (paid-up up to Rs 10 crore and turnover up to Rs 100 crore, w.e.f. 1 Dec 2025) are exempt.
🧾 One-glance revision of these company share capital figures:
| Item | Current rule |
|---|---|
| Calls in advance | 12% p.a. (Table F) |
| DVR / non-voting cap | 74% of total voting power |
| Section 53 breach | Penalty + refund with 12% interest, no jail |
| Sweat equity (unlisted) | 15%/yr or Rs 5 cr; 25% overall |
| Sweat equity (start-up) | 50% within 10 years |
| Demat (Rule 9B) | Mandatory for private non-small companies |
📝 Test yourself: 10 questions (online test mode)
Test your grip on the latest company share capital figures. Answer all ten, then submit for an instant score.
❓ Frequently Asked Questions
What is the maximum interest on calls in advance?
Where the Articles are silent, 12% per annum under Table F of the Companies Act, 2013 - not the old 6% of the 1956 Act.
What is the cap on differential voting right (DVR) shares?
74% of total voting power including existing DVR shares, under Rule 4 as amended in 2019 (up from 26% of post-issue paid-up equity).
Is there imprisonment for issuing shares at a discount?
No. Since the 2019 amendment, Section 53(3) carries only a penalty (up to the amount raised or Rs 5 lakh, whichever is less) plus refund with 12% interest. Imprisonment was removed.
What is the sweat equity limit for an unlisted company?
15% of paid-up equity in a year or Rs 5 crore (whichever is higher), with an overall ceiling of 25% of paid-up equity.
How much sweat equity can a start-up issue?
Up to 50% of paid-up capital, within 10 years of incorporation (widened from 5 years by the 2020 amendment).
Do private companies have to dematerialise shares?
Yes. Rule 9B makes demat mandatory for private companies other than small companies; the deadline was 30 June 2025.
What is the current small company threshold?
Paid-up capital up to Rs 10 crore and turnover up to Rs 100 crore, with effect from 1 December 2025.
Do calls in advance carry voting rights?
No. The amount paid in advance does not carry voting rights until it is actually called up, though it may earn interest.
Which table governs calls in advance interest?
Table F of Schedule I to the Companies Act, 2013 (Regulation 13) - the model Articles that apply when a company's own Articles are silent.
Where can I practise CAIIB AFM company-law questions?
Take a free CAIIB mock test on iibf.store, or use the AFM material on our CAIIB course page.
✅ Final Word
The modern company share capital answers — 12% calls in advance, a 74% DVR cap, a decriminalised Section 53, the sweat-equity ceilings and Rule 9B demat — are exactly where old notes go wrong. Learn them once, correctly, and they become reliable marks. For the bare provisions, always cross-check the latest text on mca.gov.in. 🎯 Ready to check yourself? Take a free CAIIB mock test now.
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