e   rit    ar et in ndia     14.11
     was to be on the Board of Directors or an office-     Speculators may start hoarding them for hefty
     bearer in a stock exchange.                           margins, this was seen in India in mid-2006. And
          This has been done in the case of all stock      since such stocks get hoarded, ultimately their
     exchanges except three regional stock exchanges       market prices increase. The speculators earn profit
     (RSEs) in India.                                      after offloading (selling) these shares at high prices
                                                           and others who purchase these shares ultimately
     AuthoriseD cAPitAl                                    might fetch huge losses because price rise of
     The limits upto which shares can be issued by a       these stocks are unintentional or each intentional
     company—also known as the nominal or registered       manipulation and nothing else.
     capital. This is fixed in the Memorandum of
     Association (MoA) and the article of association      esoP
     (AoA) of a company as required by the Companies       The Employee Stock Ownership plan (ESOP)
     Act (Law).                                            enables a foreign company to offer its shares
                                                           to employees overseas. It was allowed in India
     PAiD-uP cAPitAl                                       (February 2005) provided that the MNC has
     The part of the authorised capital of a company       minimum 51 per cent holding in its Indian
     that has actually been paid by shareholders. A        company. Earlier a permission from the RBI was
     difference may arise because all shares authorised    required for such an option.
     might not be issued or issued shares are only partly
     paid-up.                                              sbt
                                                           Screen Based Trading (SBT) is trading of stock
     subscribeD cAPitAl                                    based on the electronic medium, i.e., with the
     The amount actually paid by the shareholders or       help of computer monitor, internet, etc. First
     have been committed by them for contribution.         such trading was introduced in New York in 1972
                                                           by the bond broker Cantor Fitzgerald. India
     issueD cAPitAl                                        introduced it in 1989 at the OTCEI. Now it is
     The amount which is sought by a company to be         carried out at all exchanges.
     raised by issuing shares which cannot exceed the
     authorised capital of the company.                    ofcDs
                                                           Debentures are the debt instruments which may
     greenshoe oPtion                                      be issued by a listed or non-listed firm to raise
     A provision under which a company issuing shares      funds in a security market. They are of many
     for the first time is allowed to sell some additional types, viz., Redeemable, Non-redeemable, Partially
     shares to the public—usually 15 per cent, is          Convertible and Fully Convertible. In case of ‘fully
     also known as over-allotment provision. It gets       convertible debentures’ an ‘option’ (that is why the
     its name from the first company (Greenshoe            name OFCDs, i.e., Optionally Fully Covertible
     Company, USA) which was allowed such an               Debentures) is given to the debenture-holders
     option.                                               who may wish to convert their OFCDs into shares
                                                           (after expiry of the period fixed by the debenture
     Penny stocks                                          issuing firm—known as ‘lock-in’ period). But
     The share which remains low-priced at a stock         the ‘rate’, will be decided by the company (e.g.,
     exchange for a comparatively longer period.           how many shares against how many debentures).