effect of conversion of shares into stock

for example:- a company has authorised share capital of 1,00,000 shares of RS 10 each

issued all..

subscribed fully and fully paid..ie 1,00,000 shares of RS 10 each ..

now company converts 40% fully paid shares ie 40,000 shares of RS 10 each into stock...

so, total outstanding shares will be reduced..

so, now company can issue further 40,000 shares without increasing the authorised share capital..?