The following are the statutory arrangements for converting shares into inventory.
(1) For the conversion of shares into inventory, it is necessary to have a provision in the articles of the company. If there is no such provision in the Articles of Association, then the company has to make such a provision by amending the Articles. Therefore, any company can convert its fully paid-up shares into inventory, if there is a provision in the articles of the company.
(2) A company may by its general motion
(i) convert its fully paid-up shares into inventory or
(ii) redistribute the stock in fully paid-up shares of any value. converted
(3) The stock can be transferred in the same way as the fully paid-up shares are transferred but the Board of Directors may fix a minimum amount of the transfer of the stock, from which a lesser amount cannot be transferred. Provided that this minimum amount shall not exceed the face value of the shares from which the stock is formed.
(4) The stockholders shall have the same rights to vote in the meetings of the company, to get profits and in other matters as are enjoyed by the shareholders.
(5) The rules of the company which apply in respect of fully paid-up shares shall also apply to the stock.