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Share capital enhancement

ArchAngel (Corporate Affairs Enthusiast) (118 Points)

27 September 2012

Hello,

A private limited company of share capital 50 lakhs. Its directors proposed a capital enhancement of 2 crore for the AGM.

In the same AGM, can its shareholders consider the capital enhancement proposal but only upto 1 crore? Note that 2 crore was proposed by the directors and the resolution sent in the AGM notice.

I know the shareholders can reduce the dividend proposed by the directors. Can the same be applicable to the capital enhancement proposal?

Thanks and Regards,

ArchAngel

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10 Replies

Shridhi Jain (Company Secretary) (1678 Points)
Replied 27 September 2012

Yes, shareholders can do that in AGM.

Charu Srivastava (Company Secretary) (4210 Points)
Replied 27 September 2012

Yes, Shareholder can do.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 27 September 2012

In my opinion either shareholders approve or reject the resolution. The above provision is applicable only in case of dividend.

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 28 September 2012

Agree with the view of Mr. Ankur.

Aditya Soni (CS Final Student Trainee) (727 Points)
Replied 28 September 2012

Agree with Mr ankur,

Shareholders can only approve or reject the resolution.

Regards.

Tanveer Md Masood (Indispensable) (361 Points)
Replied 28 September 2012

DEAR EXPERTS...

SHAREHOLDERS IN ANY SORT OF RESOLUTION BE IT CAPITAL ENHANCEMENT OR DECLARAION OF DIVIDEND OR FOR ANY ISSUE FOR THAT MATTER , HAVE THE AUTHORITY TO EITHER PASS THE RESOLUTION OR REJECT IT.

TANVEER MD MASOOD

CALCUTTA

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 28 September 2012

Mr. Tanveer, In case of declaration of dividend, Board only recommend the dividend it is declared by a resolution passed at the Annual General Meeting by the shareholders. The shareholders have power to declare a lower rate of dividend than what is recommended by the Board but they have no power to increase the amount or the rate of dividend so recommended by the Board of Directors.

Tanveer Md Masood (Indispensable) (361 Points)
Replied 28 September 2012

DEAR MS.DHAWAN..

I WAS REFERING TO THE AUTHORITY OF SHAREHOLDERS TO CONFIRM OR GIVE GO AHEAD TO RESOLUTIONS.

Mukesh Pamnani (COMPANY SECRETARY) (136 Points)
Replied 29 September 2012

The amendment of a notified resolution should be considered within the mandatory provisions of the section, such as, "the intention to propose the resolution as a Special Resolution has been duly specified" in the notice proposing such resolution. It is observed that the scope of verbal proposition of amendment of a 'specific resolution’ becomes in effect a fresh proposition which should be notified in the same manner. Authoritative view in this regard is that a 'special resolution' should be passed substantially in the form in which it appears in the notice of the meeting. If there is something wrong in the basis of the resolution, a fresh resolution to be moved as Special Resolution may be notified in accordance with and within the scope of section 189 of the Act in a subsequent general meeting.

It is advisable to use the words 'with or without modification' while drafting a notice for the special resolution. The use of such words will permit minor amendments in the special resolution at the meeting.

So, the Shareholder can ammend the said Resolution.