What we do
Alteration Of Share Capital
Alteration Of Share Capital
Alteration of Share Capital refers to the changes in the existing capital structure of the firm. A company can alter its share capital only if it is authorized by its Articles of Association. An article of association is the document framed at the time of incorporation of the company to govern its internal affairs.
In case of public company, the shares are being subscribed from the public. So the limited company has to make alteration of the Memorandum of Association clause also. There is a capital clause in the Memorandum of Association that contains the details regarding the amount of share capital that can be raised by the company during its lifetime. The capital clause has to be get altered by the registrar appointed under Companies Act 2013.
Procedure Followed For Alteration of Share Capital
The steps followed for the Alteration in Share Capital are as follows:
- Issue a Board notice with the agenda of the meeting at least 7 days before the date of the meeting.
- Hold a Board Meeting
- Pass the Resolution for the Alteration of Share Capital in the Board meeting.
- The Resolution passed is subject to the approval of Shareholders Meeting.
- For holding a Shareholders Meeting, fix the date, time and venue for the meeting.
- Director is authorized to send notice of the Shareholders meeting to the Shareholders.
- The notice for a Shareholders meeting should be issued at least before 21 days of the meeting
- Hold a Shareholders meeting
- Pass the Resolution with the consent of the majority shareholders.
- After passing of the Resolution, the Registrar of the Companies (RoC) should be notified about the Alteration in Capital within 30 days of the passing of Resolution. If the Registrar is not notified about the Alteration within 30 days, then the company or its officers will be liable to pay a fine up to 10,000 Rupees for each day of delay and which can be extended to 5 lakh Rupees.
The above forms are to be filed with the prescribed fees by the Ministry of Corporate Affairs. If the Forms mentioned above are not filed with the Registrar of Companies, then according to Section 117 of the Companies Act, 2013[1], the company shall be liable for a fine which shall not be less than five lakh rupees and may extend up to 25 lakhs of rupees. Every officer who is in default will be liable to pay 1 lakh rupee and which can be extended to 5 lakhs of Rupees.
Types of Alteration of Share Capital
According to the relevant provisions of the Companies Act, 2013, the company which is deciding to alter its share capital can do it in a different number of ways by following the procedure for alteration of share capital and other relevant procedures. Below are some of how the company can alter its share capital:
- Increase in ‘authorised share capital’ by issuing fresh shares, which involves a lot of legal procedures, filing of forms with ROC, etc
- Consolidation and sub-division of share capital
- Cancellation of share capital
- Conversion of share capital
The quick way of increasing your company’s authorised share capital with the aid of an expert legal team and business advisors only at E-TAX HUB INDIA. Contact our legal team @9962903855
