Reclassification of authorised share capital

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Raman Kumar (Querist)
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01 February 2013 can any expert help me..
at present a private company is having authorised share capital 200000 of Rs 10 each divided into:
Equity - 200000 share
Preference - Nil.
company has issued equity share capital Rs. 10,00,000/-.
so, there is unissued 100000 equity share, and the company wants to issue preference share without increasing total authorised share capital.
Is it possible to convert authorised unissued equity share into authorised preference share? and what process company has to follow?

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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01 February 2013 Yes, it is very much possible.

The company needs to bifurcate its Authorised Share Capital into equity and preference by cancelling unissued equity shares and coverting the same into preference shares.

The same may be done by way of alteration of MOA by passing ordinary resolution and form 5 need to be filed within 30 days. This form 5 will not charge any fee except filing fee of Rs. 500/-.

Thereafter, the Board may allot shares accordingly by passing Board Resolution from time to time and filing form 2 for the same.

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CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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01 February 2013 Draft Ordinary Resolution

“RESOLVED THAT pursuant to the provisions of Section 94(1)(e), 94(1)(a), 95 and other applicable provision(s) of the Companies Act, 1956, if any, the un-issued Authorized Equity Share Capital of the Company to the extent of Rs.2,00,00,000/- (Two Crores Only) divided into 20,00,000 (Twenty Lacs) Equity Shares of Rs. 10/- each be reclassified as Preference Share Capital by way of cancellation of the said Authorized Equity Share Capital and creation in lieu thereof the Preference Share Capital of Rs. 2,00,00,000/- (Two Crores Only) divided into 20,00,000 (Twenty Lacs) Preference Shares of Rs. 10/- each, without altering the overall Authorised Capital of Rs. 10,00,00,000/- (Rupees Ten Crores Only).”

RESOLVED FURTHER THAT, Clause V of Memorandum of Association of the Company be substituted as under:-

“The Share Capital of the Company is Rs.10,00,00,000/-(Rupees Ten Crores Only) divided into 80,00,000 (Eighty Lac) Equity Shares of Rs. 10/-(Rupees Ten) each and 20,00,000 (Twenty Lac) Preference Shares of Rs.10/- (Rupees Ten) each with power to increase or reduce the capital and to divide and subdivide the shares into several classes and to attach there to respectively such preferential qualified or special rights, privileges or conditions, as may be determined by or in accordance with the Articles of Association of the Company for the time being and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may be permitted by the Companies Act,1956, or as provided by the Articles of Association of the Company for the time being.”

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Raman Kumar

Raman Kumar (Querist)
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02 February 2013 Thank u very much Sir..
Have a nice day.

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