Query regarding alteration of moa

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Shivani Narang (Querist)

01 March 2018 Does reduction of share capital amount to alteration of capital clause in the MOA?

Details :
The capital clause in the MOA consists of particulars such as the authorized share capital of a company, the face value of share, the class of shares, number of shares and the subscribers to such shares.

Reduction of share capital amounts to alteration of paid up/called up share capital of a company. Such particulars do not form part of the capital clause of the MOA.

So how does this type of reduction alter the MOA?

And if not, then Sec 61 of Companies Act, 2013 states that cancellation of unsubscribed capital of a company amounts to alteration of MOA. Again, such particulars of subscribed/paid up/called up/issued capital do not form part of the capital clause of MoA, so how does it really amount to altering the MOA?

Correct me if I’m wrong in my approach here.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)

03 March 2018 Yes. If Company propose to reduce its share capital by pay off any paid-up share capital which is in excess of the wants of the company, it require alteration of its memorandum by reducing the amount of its share capital and of its shares accordingly

CS Mitesh Mehta

CS Mitesh Mehta (Expert)

03 March 2018 Reduction of share capital may be effected in one of the following ways
1. if the shares are of face value of INR 100 each of which INR 75 has been paid, the company may reduce them to INR 75 fully paid-up shares and thus relieve the shareholders from liability on the uncalled capital of INR 25 per share
2. if the shares of face value of INR 100 each fully paid-up is represented by INR 75 worth of assets. In such a case, reduction of share capital may be effected by cancelling INR 25 per share and writing off similar amount of assets
3. shares of face value of INR 100 each fully paid-up can be reduced to face value of INR 75 each by paying back INR 25 per share

Paid-up share capital for the purpose of for aforesaid capital reduction will involve alteration of capital clause of MOA.

Shivani Narang

Shivani Narang (Querist)

03 March 2018 Sir, does the capital clause of MOA contain particulars about the called up/paid up capital of the company?

If yes, could you share a sample MOA?
If not, then why would reduction of share capital alter the MOA? Can you explain how?

Thank you for your help. Your reply is awaited.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

19 July 2025 Reduction of share capital (paid-up/called-up) does NOT alter the MOA.
Cancellation of unsubscribed authorized capital DOES amount to alteration of the capital clause in MOA.
Hence, only changes to authorized capital require MOA alteration as per the Act.

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