23 August 2017
Dear all, what is the procedure for conversion of partly paid up shares into fully paid up shares of private company
what would be the effect of that conversion in the share cerytificates?
If any one aware about any provision, please share.
Thank you.
20 July 2024
Converting partly paid-up shares into fully paid-up shares in a private company involves following specific procedures as per the Companies Act, 2013. Here’s a detailed guide on the procedure and its implications:
### Procedure for Conversion of Partly Paid Shares to Fully Paid Shares:
1. **Board Resolution**: - Convene a Board Meeting and pass a resolution approving the conversion of the partly paid-up shares to fully paid-up shares. - The resolution should specify details such as the number of shares to be converted, the amount paid-up on each share, and any conditions or terms associated with the conversion.
2. **Shareholders’ Approval**: - Check the company’s Articles of Association (AOA) to determine if shareholders’ approval is required for such conversion. If required, convene a General Meeting and obtain approval through a special resolution.
3. **Notice to Shareholders**: - Provide notice to all shareholders about the proposed conversion, especially if a General Meeting is required for approval. - Include details such as the reason for conversion and any impact on shareholding patterns.
4. **Filing Requirements**: - Prepare and file Form PAS-3 (Return of Allotment) with the Registrar of Companies (ROC) within 30 days of the conversion. - Attach necessary documents such as the Board Resolution, Shareholders’ Resolution (if applicable), list of shareholders whose shares are being converted, and updated Share Certificate details.
5. **Update Registers**: - Update the Register of Members and any other relevant registers maintained by the company to reflect the conversion of shares.
6. **Amendment of Share Certificates**: - Issue new Share Certificates to shareholders whose partly paid-up shares have been converted to fully paid-up shares. - Clearly indicate on the new Share Certificates that the shares are now fully paid-up.
### Effect on Share Certificates:
- **Endorsement or Issuance**: The existing partly paid-up Share Certificates should be surrendered by shareholders to the company. - **Issuance of New Certificates**: The company will then issue new Share Certificates for the same number of shares, endorsing them as fully paid-up shares. - **Details on Certificates**: The new Share Certificates will specify that the shares are fully paid-up, indicating the amount paid on each share and any other relevant details.
### Compliance and Legal Considerations:
- Ensure compliance with all provisions of the Companies Act, 2013 and rules made thereunder. - Verify any specific requirements or procedures mentioned in the company’s AOA regarding conversion of shares. - Seek advice from a company secretary or legal advisor to ensure all statutory requirements are met and to handle any nuances specific to your company's situation.
By following these steps, your private company can effectively convert partly paid-up shares into fully paid-up shares, ensuring clarity and compliance in its shareholding structure.
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