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Section 24 of The Road Transport Corporations Act, 1950

Additional capital of the Corporation.

If, after the issue of shares under section 23 a Corporation requires any further capital, the Corporation may, with the previous sanction of the State Government, raise such additional capital by the issue of new shares and the provisions of sub-sections (2), 1[(2A)] (3), (4), (5) and (6) of the said section shall apply to the issue of such shares.

Summary

The Corporation can raise more money by issuing new shares after its first share issue.
This process requires the Corporation to get permission from the State Government first.
The same rules that apply to original shares also apply to these new additional shares.
These rules include how shares are divided, who can buy them, and how they can be transferred.

Practical examples

1The Metropolitan Transport Corporation decides it needs 500 new electric buses to expand its routes. Since it has already used its original capital, the Board asks the State Government for permission to issue new shares to raise another 50 crore rupees from local investors.

2A regional transport body wants to build 10 new bus depots. They seek sanction from the State Government to issue additional shares. Once approved, they follow the same allotment rules used for their very first shares back when the company started.

FAQ

1. Can a transport body raise more money after its initial shares are sold under Section 24 of The Road Transport Corporations Act, 1950?

Yes, Section 24 of the Road Transport Corporations Act, 1950 allows the Corporation to raise additional capital by issuing new shares as long as it has the previous sanction of the State Government.

2. Do the rules for original shares apply to new shares under Section 24 of The Road Transport Corporations Act, 1950?

Yes, Section 24 of the Road Transport Corporations Act, 1950 states that many of the same rules from Section 23, such as those about share division and transfers, apply to the new shares.

3. Who must give permission for a Corporation to issue new shares under Section 24 of The Road Transport Corporations Act, 1950?

The State Government must provide its previous sanction, or formal approval, before the Corporation can raise additional capital through new shares under Section 24 of the Road Transport Corporations Act, 1950.

Test yourself

1.Under Section 24 of The Road Transport Corporations Act, 1950, what must a Corporation obtain before raising additional capital?

2.Which section of The Road Transport Corporations Act, 1950 provides the underlying share rules that Section 24 follows?

3.Under Section 24 of The Road Transport Corporations Act, 1950, additional capital is raised through which method?

4.If a Corporation raises money under Section 24 of The Road Transport Corporations Act, 1950, are these shares transferable?

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