Procedure for sub-division and splitting of shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 August 2011 Can anybody let me know the entire checklist for sub-division and splitting of shares for a listed company.

Thanks.

Querist : Anonymous

Querist : Anonymous (Querist)

05 August 2011 1. Check the Articles of Association (AOA) to see whether they authorize sub-division u/s. 94(1)(d).
2. Give 21 days prior notice to the recognized Stock Exchange (SE’s)/NSDL/CDSL with which the shares of your company are listed of such proposed sub-division. (Cl. 28 of Listing Agreement)
3. Make an application to the same recognized SE’s for listing of the securities as changed if the exchange so requires (Cl. 28 of Listing Agreement)
4. Convene a Board Meeting after giving notice to all the Directors of the company as per section 286 to decide about the sub-division and to fix up date, time, place and agenda for calling a General Meeting (GM) to pass an Ordinary Resolution.
5. Immediately inform the SE’s/NSDL/CDSL where the shares are listed about the outcome of the Board Meeting.
6. Issue notices in writing at least 21 days before the GM proposing the Ordinary Resolution with suitable explanatory Statement.
7. Forward 6 copies of the notice to the SE’s/NSDL/CDSL before dispatching the shareholders
8. Hold the GM and pass the Ordinary Resolution.
9. File the copy of proceedings with the SE’s/ NSDL/CDSL
10. File Form No. 23 with the ROC.
11. Give notice of sub-division to the ROC in Form No. 5 within 30 days on receipt of which he will record the notice and make any alteration which may be necessary, in the company’s Memorandum & Articles of Association (M&A) and pay the required fees as prescribed fee under Schedule X to the Companies Act, 1956.
12. Forward six copies of amended M&A immediately after the GM to the SE’s.
13. If company is listed one can fix the amount of par value of shares indicated by them in the M&A by splitting the existing shares into any amount not below Re. 1.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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10 August 2024 The procedure for sub-division and splitting of shares for a listed company involves several steps to ensure compliance with regulations and proper documentation. Here is a detailed checklist and procedure for the sub-division and splitting of shares:

### **Procedure for Sub-Division and Splitting of Shares**

**1. ** **Check Articles of Association (AoA):**
- Verify if the AoA authorizes the sub-division of shares as per Section 61(1)(d) of the Companies Act, 2013.

**2. ** **Notice to Stock Exchanges and Depositories:**
- Provide a notice to the recognized Stock Exchanges (SEs), NSDL, and CDSL at least 21 days prior to the proposed sub-division.
- The notice should include details of the proposed sub-division and any changes in the face value of the shares.

**3. ** **Application for Listing:**
- If required by the SEs, make an application for the listing of the securities post sub-division. Ensure compliance with Clause 28 of the Listing Agreement.

**4. ** **Board Meeting:**
- Convene a Board Meeting after giving proper notice to all directors, as per Section 173 of the Companies Act, 2013.
- Discuss and pass a resolution for the sub-division of shares.
- Decide on the date, time, and venue for the General Meeting (GM) where the Ordinary Resolution will be proposed.

**5. ** **Inform SEs/Depositories:**
- Immediately inform SEs, NSDL, and CDSL about the outcome of the Board Meeting and the proposed date of the General Meeting.

**6. ** **Notice for General Meeting:**
- Issue notices in writing to all shareholders, at least 21 days before the GM, with details of the proposed sub-division and an explanatory statement.

**7. ** **Forward Notice to SEs/Depositories:**
- Forward 6 copies of the notice to the SEs, NSDL, and CDSL before dispatching the notices to shareholders.

**8. ** **Hold General Meeting:**
- Conduct the General Meeting and pass the Ordinary Resolution for the sub-division of shares.

**9. ** **File Proceedings with SEs/Depositories:**
- File the copy of the proceedings of the GM with the SEs, NSDL, and CDSL.

**10. ** **File Form MGT-14:**
- File Form MGT-14 with the Registrar of Companies (ROC) within 30 days of passing the resolution, detailing the resolution passed in the GM.

**11. ** **Notify ROC:**
- File Form SH-7 (previously Form No. 5) with the ROC within 30 days of the resolution. This form notifies the ROC about the sub-division and any changes in the capital structure.

**12. ** **Amend Memorandum & Articles of Association:**
- Amend the Memorandum of Association (MoA) and Articles of Association (AoA) to reflect the changes in the face value of shares and file the amended MoA and AoA with the ROC.

**13. ** **Forward Amended Documents to SEs:**
- Send 6 copies of the amended MoA and AoA to the SEs, NSDL, and CDSL immediately after the GM.

**14. ** **Update Share Certificates:**
- Issue new share certificates to shareholders reflecting the new face value of the shares. Ensure that old share certificates are cancelled and returned to the company.

**15. ** **Record Keeping:**
- Update the Register of Members and other relevant records to reflect the new share capital structure.

### **Key Points to Remember:**

- **Regulatory Compliance:** Ensure compliance with the Companies Act, 2013, and SEBI regulations for listed companies.
- **Documentation:** Maintain and file all required documentation and resolutions with the appropriate authorities.
- **Shareholders Communication:** Keep shareholders informed throughout the process to avoid any confusion.

By following these steps, you will ensure that the sub-division and splitting of shares are conducted in compliance with regulatory requirements and are properly documented for all stakeholders.

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