The present capital of the Company is Rs. 10,50,00,000. The Company has reclassified its equity shares as class I and Class II. The classII shares include the equity shares alotted under investment agreement. The Company wants to make a Bonus issue to the Investor Company. The Company in order to issue bonus issue increased its authorised capital to Rs. 10,55,00,000. The funds are insufficient. Can the Company use the unpaid capital under class I shares for allotment under class II? OR can it reclassify the existing classes together with increase in authorised capital?
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Increase of authorised capital
Replies (2)
Hello Priya!
you have to increase the authorised capital because after issuing bonus shares your company capital exceeds the limit of authorised capital. unpaid capital can not be used for the purpose of bonus issue. Increase the authorised capital and then issue bonus shares.
Hi Priya,
Firstly, you need to check the Articles of the Company as whether it allows such issue of bonus shares to one class only. Shares may be reclassified and then can be issued.
Regards,
Nidhi
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