05 November 2012
I am working in a Pvt. Ltd. Co. which is 100% subsidiary of the Japanese Co. Prevailing Articles has the provision of subdivison of share Capital in smaller amount or larger amount .
However it does not talks about reclassification of shares. By amending Articles of Association of Companny , I want to insert one more Article which will allow reclassification of share capital in the different class of shares.
Which resolution has to be passed for such reclassification.
While adding Article for allowing reclassification Can I simply state that Shareholders in general meeting by passing Ordinary resolution can classify or reclassify its share Capital.
( original Article will be more elaborate but crux will be as above.) OR
Do I statutorily allow it through passing special resolution only???
Can I directly authorise Board through Articles, to clasify or reclasify the existing Authorised share Capital Structure?
In the abovementioned case, you will have to pass resolutions as follows:
1. Resolution for amending articles for Differential voting rights.
2. Resolution to be passed u/s 94(1)(a) & (2) in general meeting.
It is better to pass two seperate resolution.
Further you also have to full fill the conditions laid down under "The Companies ((Issue of Share Capital with Differential Voting Rights) Rules, 2001"
We just want to reclassify our existing authorised Capital Structure which is currently divided into Equity Share Capital & preference share Capital.
Issued Preference shares were duly redeemed over a period of time. We want to reclassify the Preference share Capital which is lying in the Authorised Capital but actully do not exist in Paid up Capital, into Equity Shares.
I understand that for authorising such reclassification I need to pass special Resolution for inserting fresh Article which will allow Reclassification.
But What I should Statutorily mention ?
Whether Shareholder can reclassify the Capital structure by passing Ordinary Reolution or Special Resolution has to be passed while carrying out Reclassification?????
In my opinion, Ordinary Resolution is required to be passed for utilizing Authorized share capital for issue of Equity shares.
For this you may refer to section 94 read with Section Section 80(3)&(4).
Further if you are planning for new issue of shares to otherwise than existing shareholder then you may require to pass Special Resolution in addition to above Resolution u/s 81 (1A)of the Companies Act, 1956.
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