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Doubt about authorized capital and further issue of shares

Prathyush.P.G. (Derivative analyst and CA Coaching ) (179 Points)

25 September 2011

If profit and loss account exists in Asset side of the balance sheet in a private limited company,will that effect increase of authorized capital and further issue of shares ? kindly reply,if possible quote the sections or range of sections that will be applicable here

thanks in advance :)

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ARUN KUMAR (Financial Consultant ) (992 Points)
Replied 26 September 2011

NO. ABOVE ARE NOT CORRECT.

Alan Angels Augustine (STUDENT PCC) (62 Points)
Replied 26 September 2011

Authorized capital of a company as per the companies act 1956, is the maximum capital that a company can raise by issue of shares, which will be mentioned in AOA. Alteration of authorized capital is possible only by passing sepcial resolution with the members and registration of the same with the ROC.

So If profit and loss account exists in Asset side of the balance sheet in a private limited company, that will not effect increase of authorized capital and further issue of shares.