Classification of unclassified authorised capital
This query is : Resolved
GGA Compliance
(Querist)
15 January 2025
Hello, Can you please let me know the process to classify the unclassified portion of authorised capital?
12 August 2025
What is Unclassified Authorised Capital?
Unclassified Authorised Capital refers to the part of a company’s authorised share capital which is not divided into specific types/classes of shares (like equity shares, preference shares, etc.) in the company’s records or in the Memorandum of Association (MoA).
This sometimes happens if the company has increased authorised capital but not specified the nature of those shares.
Why Classify Unclassified Authorised Capital?
To comply with Company Law and SEBI Regulations (if listed).
To issue shares properly, the authorised capital must clearly specify the class of shares.
To avoid confusion during capital raising or for statutory compliance.
Process to Classify Unclassified Authorised Capital
Board Meeting and Shareholder Approval:
Convene a Board Meeting to propose classification of unclassified authorised capital into specified classes (Equity, Preference, etc.).
Pass a Board Resolution approving the classification.
Convene a General Meeting (Extraordinary General Meeting, if needed) to get shareholders’ approval by passing a special resolution.
Alteration of Memorandum of Association (MoA):
File Form MGT-7 (Annual Return) and Form SH-7 with the ROC for alteration of capital clause in MoA to specify classification.
The alteration must clearly specify the number and type of shares into which unclassified capital is divided.
Filing with Registrar of Companies (ROC):
File Form SH-7 for increase or alteration of authorised share capital with detailed classification.
Attach copy of special resolution and altered MoA.
Pay requisite fees for filing.
Update Company Records:
Update the Register of Members and Statutory Registers to reflect the classification.
Inform statutory auditors and other stakeholders.
Important Points:
Classification must be in line with Companies Act, 2013 provisions (Section 61, 64).
If shares are to be issued later, classification is necessary to comply with issue terms.
Seek professional advice if complex types (e.g., convertible preference shares) are involved.
Unclassified Authorised Capital refers to the part of a company’s authorised share capital which is not divided into specific types/classes of shares (like equity shares, preference shares, etc.) in the company’s records or in the Memorandum of Association (MoA).
This sometimes happens if the company has increased authorised capital but not specified the nature of those shares.
Why Classify Unclassified Authorised Capital?
To comply with Company Law and SEBI Regulations (if listed).
To issue shares properly, the authorised capital must clearly specify the class of shares.
To avoid confusion during capital raising or for statutory compliance.
Process to Classify Unclassified Authorised Capital
Board Meeting and Shareholder Approval:
Convene a Board Meeting to propose classification of unclassified authorised capital into specified classes (Equity, Preference, etc.).
Pass a Board Resolution approving the classification.
Convene a General Meeting (Extraordinary General Meeting, if needed) to get shareholders’ approval by passing a special resolution.
Alteration of Memorandum of Association (MoA):
File Form MGT-7 (Annual Return) and Form SH-7 with the ROC for alteration of capital clause in MoA to specify classification.
The alteration must clearly specify the number and type of shares into which unclassified capital is divided.
Filing with Registrar of Companies (ROC):
File Form SH-7 for increase or alteration of authorised share capital with detailed classification.
Attach copy of special resolution and altered MoA.
Pay requisite fees for filing.
Update Company Records:
Update the Register of Members and Statutory Registers to reflect the classification.
Inform statutory auditors and other stakeholders.
Important Points:
Classification must be in line with Companies Act, 2013 provisions (Section 61, 64).
If shares are to be issued later, classification is necessary to comply with issue terms.
Seek professional advice if complex types (e.g., convertible preference shares) are involved.
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