A Private limited company has the authorised share capital of Rs. 50,00,000 divided into 5,00,000 equity shares of Rs. 10 each. The paid up capital is Rs. 1,00,000. Now the company wants to increase the authorised capital to Rs. 70,00,000. It will be divided into 3,40,000equity shares of Rs. 10 each and 36,000 preference shares of Rs. 100 each. Is it possible for the company do do so? If yes, then which resolution will be required?
The Clause V of MOA of the company is as follows:
The authorised share capital of the company is Rs.5,000,000/- (Rupees Fifty Lakhs) only divided into 500,000 equity shares of Rs.10/- each. The company will have the right to increase, divide, consolidate and reduce its capital for the time being into shares of different classes and attach to any such shares, such preferential qualified or special rights, privileges or conditions and to vary, modify or abrogate any or such rights privileges or conditions in such manner as may for the time being be provided by the articles of the company.
The Articles of the company contains the following clauses:
The Authorised Share Capital of the Company shall be such amount and be divided into such shares as may from time to time be provided under Clause V of the Memorandum of Association of the Company.
Subject to the provisions of Section 80 any preference shares may, with the sanction of an ordinary resolution be issued on the terms that they are, or at the option of the Company, are liable, to be redeemed on such terms and in such manner as the Company before the issue of the shares may, by special resolution, determine.
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