Considering your expertise and experience, will like to know following:
1) What are the factors a pvt limited co must keep in mind while increasing its authorised capital &
2) What is an adequate authorised cap as per you.
Along with increase in authorised capital, many other provisions/factors are attracted, for eg;
1) Stamp duty 2) Applicability of Caro 3) Appointment of Co secretary 4) shift from Small & Medium Companies to non-SMC 5) applicability of Accounting standards 6) Losing its identity as pvt co, etc
08 October 2010
Procedure For Alteration Of Share Capital Including Increase Of Authorised Share Capital Act: The Companies Act, 1956 Relevant Section: 31, 40 and 94(1) 1. Preliminary I) The procedure for alteration of share capital including increase of authorised share capital should not contravene the provisions of Section 31 , Section 40 , Section 94(1) of The Companies Act, 1956. II) The memorandum of every company having a share capital must state the authorised share capital with which the company is incorporated. III) A limited company having a share capital, may, only if so authorised by its articles, alter its share capital in any of the following ways:- a. increase its share capital by issuing new shares; b. consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; c. convert all or any of its fully paid up shares into stock, and reconvert that stock into fully paid up shares of any denomination; d. sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so that 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; e. cancel shares which, at the date of the passing of the resolution in 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 cancelled. IV) If articles do not contain an express provision for alteration, first take necessary steps to amend the articles so as to insert a suitable provision therein. V) Convene a Board Meeting for the purpose of passing resolution for the alteration of share capital. 2. Application I) At the Board meeting, the given decisions must be taken:- a. approving the proposal for alteration of share capital and consequential alteration of the memorandum; b. convening a general meeting for passing an ordinary resolution in terms of section 94 and a special resolution if the alteration of share capital calls for alteration of articles; c. fixing a date, place and time of the meeting and to approve the draft notice of the general meeting and explanatory statement; and d. authorising a Company Secretary (or a director or other officer) of the company to issue the notice to the members. II) In the case of listed company, send 3 copies of the notice of the general meeting to all the Stock Exchanges on which the company's securities are listed, at the same time when notice is sent to the members. III) Convene a General Meeting to pass a resolution ordinary/special resolution for the alteration of share capital and the memorandum and articles of the company. IV) Get the FORM NO. 5 duly stamped or franked from the concerned Stamp authority for the stamp duty paid for increase in the authorised share capital, in accordance with the Stamp Act of the State in which the registered office of the company is situated. 3. Filing And Fees I) File FORM NO. 23 with Registrar of Companies alongwith the requisite filing fees, alongwith the certified copy of the a special resolution and the explanatory statement passed at the general meeting, within 30 day of the conclusion of the meeting. II) File FORM NO. 5, duly stamped, with Registrar of Companies alongwith the requisite filing fees, in respect of increase of the authorised share capital alongwith given documents a. certified copy of the special resolution passed at the general meeting; and b. demand draft or challan for the fees paid on the increase of the authorised share capital and the normal filing fee.
08 October 2010
Increase in authorised capital has nothing to do with CARO applicability and appointment of CS. The same is dependent on the paid up capital of the company.
Further on Increase in authorised capital you have to pay stamp duty to ROC along with ROC fee.
The can incorporate a private company with auth. Capital of Rs. 100 crore so the same is not going to lose its identity due to higher AC.
08 October 2010
In connection with the above question & clarification, some more clarification is required:
1. whether Security (share) premium is to be considered as paid up capital for the purpose of caro & CS appointment.
2. also as per the companies act, 1956, the security premium is a restricted reserve/fund.
Sec.78 restrict the usage of Securities Premium only for the following purposes--- * Can be used to issue fully paid up bonus shares and such premium amount used should be realised in cash. * To write off preliminary exp. of the company. *To write off any exp of or commission, discount allowed on any issue of shares or debenture. * To provide for premium on redemption of shares or debentures.
Whether we can use security premium for acquisition of other company or expansion of the company, if so how??? if not how are so many listed company utilising the share premium collected at the time of IPO. whether it will not result in blockage of funds.......???
CAclubindia
