ALTERATION OF SHARE CAPITAL

Application Provision : Section 13, 61, 64 of the Companies Act, 2013

Applicable Rules: Companies (Share Capital & Debentures) Rules, 2014

CLASSIFICATION OF CAPITAL

Authorised Capital or Nominal Capital
Issued Capital
Called up Capital
Subscribed Capital
Paid-up capital or Share Capital Paid-up
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Authorised Capital or Nominal Capital

means such Capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company;

Issued Capital

Issued Capital" means such capital as the company issues from time to time for subscription. Issued capital is a part of the authorized capital. The Company cannot issue capital beyond the authorised Capital of the company.

Called up Capital

Called-up Capital is the part of the capital which the company calls for payment.

Subscribed Capital

Subscribed Capital means such part of the issued capital which is for the time being subscribed by the members of a Company. Subscribed Capital is the part of issued Capital. it cannot be beyond the issued capital of the company.

Paid-up capital or Share Capital Paid-up

means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called. In other word, Paid up capital is the part of called up capital which are paid or credited by shareholders in respect of issued shares.

ALTERATION OF SHARE CAPITAL

The capital of a company is separated into units of a fixed denomination and such unit is a share. The companies are allowed to alter the share capital according to the provision and procedures mentioned in Section 61 read with Section 13 and 14 of the Companies Act, 2013.
An increase or decrease in the share capital of a company may be carried out as and when the company requires. Whenever the company want to alter the Share Capital of the Company, may alter by passing an ordinary resolution in general meeting of the company.

TYPES OF ALTERATION OF SHARE CAPITAL U/S 61
The alteration of share capital may take the following form

  • Increase of authorised share capital
  • Consolidation and division all or any of share capital;
  • Conversion of all or any of the fully paid-up shares into stock;
  • Sub-division of shares;
  • Cancelation of shares which, 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 cancelled.

PROCEDURE INVOLVED IN ALTERING THE SHARE CAPITAL

The company has to ensure that its articles of association contain a clause authorising it to increase its authorised share capital. If there is no such provision, then the company has to take steps for alteration of its articles of association in accordance with the provisions of section 14 of the Companies Act, 2013, so as to provide for power to increase the share capital of the company before increasing its authorised share capital. Thus, if the increase of share capital results in alteration of articles of association special resolution is required. Otherwise ordinary resolution is to be passed.
Hold the Board meeting
  1. to decide about the increase in the authorised share capital of the company;
  2. to fix time, date and venue for holding general meeting of the company to pass a special resolution/ordinary resolution as the case may be for increasing the authorised share capital of the company [Section 13(1)];
  3. to approve notice, agenda and explanatory statement to be annexed to the notice of the general meeting as per Section 101 and 102 of the Act;
  4. to authorise the company secretary, if any or a director to issue, on behalf of the Board, notice of the general meeting as approved by the Board.
Issue notice in accordance with the provisions of Section 173(3) of the Act for convening a Board meeting.
Issue Notice of EGM to all members, directors and the auditors of the company
File with the Registrar the respective forms.
Hold the general meeting and pass ordinary resolution for alteration of share capital of the company

FORM TO BE FILLED WITH ROC

  • MGT-14 along with resolutions and Explanatory Statement (if any).
  • SH-7 along with Special resolution and Altered MOA and AOA

REQUIRED DOCUMENTS

For MGT-14

  1. Copy(s) of resolution(s) along with copy of explanatory statement under section 102.
  2. Altered memorandum of association
  3. Altered articles of association.
  4. Optional attachment(s) - if any.

For SH-7

  1. Copy of the resolution for alteration of capital
  2. Altered memorandum of association.
  3. Optional attachment(s) - if any.
Note :
  • Stamp duty can be paid electronically through the MCA portal
  • 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.

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WMC can help you for alteration of share Capital of Company. The average time taken to draft and file documents of alteration of share Capital is about 3 - 5 working days, subject to government processing time and client document submission. Get a free consultation for alteration of share Capital by scheduling an appointment with a WMC Advisor.