Incorporating change in Form 5 filed

MCA 896 views 3 replies

Sumit Jaiswal

Company Secretary

818 Points Joined February 2011

A Pvt. Ltd. company wanted to increase its authorised share capital by issue of preference shares. The EGM was held and an ordinary resolution passed. Then Form 5 was filed showing the additional amount of authorised capital increased by issue of preference shares. The form 5 got approved.

Now the company wants to show equity shares instead of the preference shares in the authorised capital structure as the amount of capital increased. Considering that Form 5 was filed showing preference shares in the increased capital structure, now can the authorised capital increase be shown by issue of equity shares instead of preference shares?

Replies (3)

Shloka

Deputy manager (Finance)

48 Points Joined September 2010

Dear Sumit,

It is possible to reclassify the authorised share capital of the Company this can be done after obtaining approval from the share holders and completion of the procedural formalities with ROC ie filing form 5 and form 23, however no additional stamp duty is payable as it is mere re arrangement. Hope this will clarify your issues.

Thanks,

Shloka

Sumit Jaiswal

Company Secretary

818 Points Joined February 2011

Dear Shloka,

Thanks for the reply. Do you mean the reclassification can be done by passing an EGM ordinary resolution and then filing Point 8(g) of Form 5 and submitting it.

In this regard I have a query. Will Section 100 of the Companies Act not attract in this case? Since in this case, the preference shares are being extinguished and replaced by equity shares. Sec. 100(1)(a) says that subject to confirmation by the Tribunal, a company cannot extinguish or reduce the liability on any of its shares in respect of share capital not paid-up.

If Secton 100 does not attract and reclassification can be done as you said, whether the company will be required to pay fees on the additional authorised capital raised? It paid the fees while raising by issue of preference shares, now whether reclassification will require any fees?

Regards

Sumit Jaiswal