Conversion of preference shares into equity shares

Swati Hegde (Company Secretary) (37 Points)

03 December 2014  

Pls help in tackling this practical issue:

A private Limited Company has total authorized share capital of Rs.10 Cr out of which Rs. 7 Cr is Equity and Rs. 3 Cr is Prefernce Shares. It has paid up equity share capital of Rs. 9 Cr and Paid up preference share capital of Rs.2.5 Cr.

Now it is proposed to convert preference share capital in to equity share capital which needs increase in authorized equity share capital.

Now, my question is, can we do it without increasing the limit of authorized equity share capital? Is it possible to club the authorized preference shares with authorized equity shares by conducting EGM and filing form SH-7 under conversion head? (Even though the authorized preference share capital includes both unissued and issued)?

And after such clubbing of authorized share capital, is it possible to covert paid up preference into equity by filing PAS 3 (Earlier form 2) though there is no such authroized preference shares after clubbing with authorized Equity Shares.

I feel it can be done at the same EGM. And Pls suggest, if any practical difficuly which may be faced ehile filing relevant forms as it is a "chicken and egg cycle" situation.

Pls suggest on priority.