Introduction
When a company incorporates then a limit of Authorized share capital was decided in Clause V of the Memorandum of Association of the company which may be changed if required.
Rules & Regulation
As per section 61 of the Companies Act, 2013 read with The Companies (Share Capital and Debentures) Rules, 2014
The Companies (Share Capital and Debentures) Rules, 2014The Companies (Share Capital and Debentures) Rules, 2014
- A limited company having a share capital may, if so authorized by its articles, alter its memorandum in its general meeting to—
- increase its authorized share capital by such amount as it thinks expedient;
- consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares:
- *Provided that no consolidation and division which results in changes in the voting percentage of shareholders shall take effect unless it is approved by the Tribunal on an application made in the prescribed manner;
- convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination;
- sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;
- cancel shares which, at the date of the passing of the resolution on that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so canceled.
2. The cancellation of shares under sub-section (1) shall not be deemed to be a reduction of share capital. amount of its share capital by the amount of the shares so canceled.
Procedure
First, check the Article of Association of the company for authority the change/alter the authorized share capital of the company then follow the following procedure:
Convene the Board Meeting:
- Issue a Notice to all the directors of the company to convene Board Meeting at least 7 days before the meeting
- Hold the Board Meeting
- Pass resolution for change authorized Share capital of a Company
- Change the Memorandum of Association (MOA) of the company as per resolution passed
- Decide the date & place of the Extraordinary General Meeting and Issue the Notice with an explanatory Statement to all shareholders, Directors & Auditors of the company at least 21 days before the meeting. However, a shorter notice period can be given if and only if the consent is given by not less than 95% of the members who are entitled to vote at the meeting. The consent has to be obtained either in Writing or Electronic mode.
Convene the Extraordinary General Meeting:
- Hold the Extraordinary General Meeting
- Pass the Ordinary/Special resolution as applicable to the company
File the e-form with the Registrar of Companies (ROC):
- File MGT-14 (if applicable) within 30 days from the date of passing the member resolution with the Registrar of Companies (ROC) with the following attachment:
- Certified true of the resolution
- Notice of Extraordinary General Meeting
- Shorter Notice Consent if Extraordinary General Meeting held in a Shorter notice
- Altered copy of the Memorandum of Association (MOA)
- File SH-7 within 30 days from the date of passing the member resolution with the Registrar of Companies (ROC) with the following attachment:
- Certified true of the resolution
- Altered copy of the Memorandum of Association (MOA)
- First Subscriber Sheet
Disclaimer
The information provided in this article is for general informational purposes only. All information in the article is provided in good faith, however, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information in the article. Please consult with appropriate professionals before taking any actions based on the information contained in this article.
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