Section 23 of The Road Transport Corporations Act, 1950
Capital of the Corporation.
1[(1) The State Government may provide to a Corporation established by that Government any capital that may be required by the Corporation for the purpose of carrying on its undertaking or for purposes connected therewith on such terms and conditions, not inconsistent with the provisions of this Act, as that Government may determine.] 2[(2) The Corporation may, whether or not any capital is provided to it under sub-section (1), raise by the issue of shares such capital (hereafter in this section referred to as the authorised share capital) as may be authorised in this behalf by the State Government: Provided that where any capital is provided to the Corporation under sub-section (1), no capital may be raised under this sub-section without the previous approval of the Central Government. (2A) Any capital raised under sub-section (2) with the previous approval of the Central Government may be,--
- (a)in addition to the capital provided to the Corporation under sub-section (1);
- (b)subscribed to by the Central Government or the State Government, as the case may be, by converting the whole or any part of the capital provided [whether before or after the commencement of the Road Transport Corporations (Amendment) Act, 1982] to the Corporation by that Government under sub-section (1).]
- (3)The 3[authorised share capital] of the Corporation shall be divided into such number of shares as the State Government may determine; and the number of shares which shall be subscribed by the State Government, 4*** and other parties (including persons whose undertakings have been acquired by the Corporation) shall also be determined by the State Government 4***.
- (4)The allotment of shares to other parties mentioned in sub-section (3) shall be made by the Corporation in such manner as may be prescribed.
- (5)The shares of the Corporation shall not be transferable except in accordance with the rules made under this Act.
- (6)The Corporation may at any time, with the previous approval of the State Government, redeem the shares issued to the other parties under sub-section (4) in such manner as may be prescribed.
Summary
- The State Government can provide the necessary money, known as capital, for the Corporation to function.
- The Corporation can also raise money by selling shares to the public or other parties if the State Government allows it.
- If the State has already provided capital, the Corporation must get Central Government approval before it can issue shares to raise more money.
- Capital can be raised through shares in addition to State funds or by converting existing State/Central funds into shares.
- The State Government decides how many shares exist and how many the State or other parties must buy.
- Shares can only be transferred or sold to others according to specific rules, and the Corporation can buy back shares from others with State permission.
Practical examples
FAQ
1. Who provides the initial capital to a transport body under Section 23 of The Road Transport Corporations Act, 1950?
Under Section 23 of The Road Transport Corporations Act, 1950, the State Government provides the capital required for the undertaking.
2. Can a Corporation sell shares under Section 23 of The Road Transport Corporations Act, 1950?
Yes, Section 23 of The Road Transport Corporations Act, 1950, allows a Corporation to raise capital by issuing shares if authorized by the State Government.
3. Is Central Government approval needed for shares under Section 23 of the Road Transport Act?
Under Section 23 of the Road Transport Act, if the State has already provided capital, the Corporation needs Central Government approval before raising more through shares.
4. Are shares in a transport corporation easily tradable under Section 23 of The Road Transport Corporations Act, 1950?
No, Section 23 of The Road Transport Corporations Act, 1950, states that shares are not transferable except in accordance with specific rules made under the Act.
Test yourself
1.Under Section 23 of The Road Transport Corporations Act, 1950, who determines the terms and conditions for capital provided by the State?
2.According to Section 23 of The Road Transport Corporations Act, 1950, when is Central Government approval required for raising share capital?
3.Under Section 23 of The Road Transport Corporations Act, 1950, who determines how many shares will be subscribed by "other parties"?
4.Under Section 23 of The Road Transport Corporations Act, 1950, and considering the limits in Section 19B, what happens if a Corporation wants to use its share capital for a 30 lakh project?