Alteration of equity share capital(paid up capital)

Pvt ltd 571 views 3 replies

A Raghavendra

Senior Executive - Finance & Corporate A

67 Points Joined April 2008

Dear Members / Experts,

I have an immediate issue to be attended at my office that is about paid up share capital:

In the case of Private Limited, to reduce the Equity share capital and to rise the preferential share capital, without disturbing the quantum of present Paid up capital I intend to take the following step:

Firstly Issuing Preferential Shares to the extent we are intending to repay the Equity share holders.
Secondly to repay the Equity share holders out of the funds raised form allotment of preferential shares issued.
i.e., Presently the Paid up Capital (Equity) of the Company is say Rs.10,00,00,000/- [Rupees Ten Crores], now the management is intending to retain the same paid up capital structure in the following manner:
1. Issuing the Preferential Shares to the extent of Rs.8,00,00,000/-
2. With the Funds raised from the above, buy back the equity shares and repay the equity shares holders to the extent shares purchased from them(Buy back).

We need your opinion in this opinion, suggestions and contravening factors CA 2013 laws and rules and the ROC compliance as well in this regard.

Please expedite the same instantaneously and help me out in this regard..

Thanks & Regards.

Raghav

Replies (3)

Jatin Bajaj

2930 Points Joined April 2016

FIRSLY FOR INCREASING THE SHARE CAPITAL, CHECK THE ARTICLES OF THE COMPANY WEATHER THERE IS THE CLAUSE AUTHORISING TO INCREASE AUTHORIZED CAPITAL, IF NOT THEN COMPANY HAS TO ALTER THE ARTICLES OF THE COMPANY AS PER SECTION 14 OF THE COMPANIES ACT 2013.

Hold the Board Meeting to decide the increase in Authorized share capital of the company.

Hold the General Meeting and pass special Resolution to increase the Authorized Share Capital of the Company.

File Form No MGT 14 TO ROC WITHIN 30 DAYS OF PASSING SPECIAL RESOLUTION ALONG WITH CERTIFIED TRUE COPY OF SR, COPY OF NOTICE OF GENERAL MEETING AND COPY OF CERTIFIED MOA & AOA.

FILE WITH ROC FORM SH 7 WITHIN 30 DAYS OF PASSING RESOLUTION AS PER SECTION 61.

FOLLOWING DOCUMENTS SHALL BE ANNEXED ALONG WITH FORM SH 7:

COPY OF RESOLUTION FOR ALTERATION OF SHARE CAPITAL

COPY OF ORDER OF CENTRAL GOVERNMENT

ALTERED MOA & AOA

STAMP DUTY ON FORM SH7 SHALL BE PAID ELECTRONICALLY THROUGH MCA PORTAL

ALSO ALTER THE CAPITAL CLAUSE IN ALL THE COPIES OF MOA &AOA SO THAT NO UNALTERED COPY IS ISSUED TO ANY PERSON

A Raghavendra

Senior Executive - Finance & Corporate A

67 Points Joined April 2008

Dear Jatin Bajaj Sir,

Thank you very much,we are not increasing the paid up share capita, we intend to split up the equity paid up capital in to the following manner:

Present Paid up Share Capital (Equity) is Rs.10,00,00,000/- and now we want to split up the same in to the following form i.e,

Equity Share Paid up Share Capital (by retaing Equity shares ) of Rs.2,00,00,000/- and Preference share Paid Up share Capital (by issuing Preference Shares) of Rs.8,00,00,000/- in total the paid up share capital remains same, i.e, Rs.10,00,00,000/-. Is this Possible as per the CA 2013? And also required compliances in this regard.

Kindly update me at the earliest please.

Thanks & Regards,

A Raghavendra

Jatin Bajaj

2930 Points Joined April 2016

Yes Mr. Raghavendra, it is possible as per section 61 of the Companies Act 2013.

Almost the same procedure is followed.

Firstly check weather Articles of Assocition contains the provision to subdivison or spliting of its shares. If not, Article shall be amended as per section 14 of the Act.

Hold the Board meeting and pass the resolution to aproove the proposed sub- division of the Shares of the Company.

Hold the general meeting and have the resolution ( Ordanary or special) as the case may be.

File Form NO MGT 14 with ROC within 30 days of passing the resolution along with certified copy of resolution, notice of General meeting and Altered MOA & AOA

Notice shall be given to the Registrar as per the provisions of Section 64 of cOMPANIES Act 2013, of subdivision of shares in Form SH7, WITHIN 30 DAYS OF PASSING RESOLUTION