Post incorporation query

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ROHITH KRISHNAN HARIKRISHNAN (Querist)
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16 June 2017 We have incorporated a company with two subscribers to MoA recently. In MoA they agree to subscribe shares in 1:1 ratio. But actually they wanted it to be in 9:1 ratio. My question is, can we issue share certificate in this new ratio or is there any provision for changing the ratio. Also we want to have a concrete proof to convince the person with major share that he has been allotted with 90% of shares.

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Aswath Raman

Aswath Raman (Expert)
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16 June 2017 "concrete proof to convince the person with major share that he has been allotted with 90% of shares"

Will not the shareholding from MCA website be a good proof for that? I think that would suffice. Or, at the most and if required, get it certified from a practicing chartered accountant.

To your first query, a combined reading of Section 42 and 62 of Companies Act, 2013 would tell you that you can issue shares on a preferential basis and nothing in the act is contrary to issuing shares to specific existing shareholders if the procedures mentioned in the act are complied (I do not want to replicate them here). Also, give a reading to Section 397 and 398 on Oppression and Mismanagement, because you don't want the minority shareholder to come up with such complaints since his shareholding is reduced to 10% from 50%.

Hope this helps!

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 June 2017 Shares has to be subscribed in 1:1 ratio being agreed upon in the subscription sheet of MOA and share certificate has to be issued accordingly. Then shares can be transferred in between them to make the ration as 9:1. Endorsement regarding the transfer in the share certificate is a valid proof for the share holding.

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