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Regarding Authorised Capital

(Guest)

Hello friends,

Good day.

Two company get amalgamated. (Type is merger) Company A & B. All assets and liabilities of company A is takenover by company B. Company A authorised capital is Rs.10 Lakhs. Company B Authorised capital is Rs.10 Lakhs. Now after merger what is the authorised capital of company B.

It is Rs.10,00,000 or Rs.20,00,000. (Please tell about the relevant section, circular or anything as a proof.)
Does the new company have to pay fee for new additional authorised capital.

I have problem in dealing these with ROC. It you can give source apart from suggesstion then it will be very much helpful for me.

With regards,

Sathya.

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5 Replies

(Guest)

Waiting for your reply.

J. Manivannan (Advocate & IP) (242 Points)
Replied 28 March 2010

Dear Mr. Sathyanarayanan.

The following case law may be resolved your query.

THE COMPANIES ACT, 1956, SECTIONS 97, 391 & 394 AMALGAMATION- INCREASE OF SHARE CAPITAL

Text Box: Juggilal Kamplapat Holding Ltd In re (2006) 132 Comp. Cas 237 (All.)

Facts

The company application u/s 391, 394 of the Companies Act, 1956 was jointly filed by JKH Ltd. (transferee co.) JKI Ltd. (transferor company No. 1) and KI Ltd. (transferor company No. 2) to approve the scheme of amalgamation for the amalgamation of Transferor Company Nos. 1 and 2 with the transferee company.

The Regional Director, Ministry of Company Affairs in his affidavit raised an objection, that the authorized share capital of the transferee company shall automatically increased by addition of authorized share capital of the transferor companies. Therefore the transfer of authorized share capital could only be done after following the procedure prescribed under the relevant provisions of the Companies Act, 1956, payment of requisite fees to the Registrar of Companies and stamp duty to the State Government.

Held

The HonΓÇÖble High Court relying on the decisions of Bombay High Court in the case of PMP Inds. Ltd. In re (1994) 80 Comp. Cas. 289 (Bom) and Gujarat High Court in the case of Maneck Showk and Ahmedabad Manufacturing Co. Ltd. In re (1970) 40 Comp. Cas 819 (Guj.) held that when the transferee companies and transferor company had already paid the prescribed fee of their respective authorized share capital and since the combined authorized capital of the transferee company did not exceed the authorized capital of all the three companies no further fees or stamp duty was Required to be paid.

*However, the scheme of amalgamation should contain a clause in this regard and same approved by the Court.

regards,

mani vannan j

(Guest)

Dear M.J.Mani Vannan ,

Thanks for you reply.

HARDIK (COMPANY SECRETARY NCFM (Corporate Governance )) (664 Points)
Replied 28 March 2010

there is one case of You telecom india pvt ltd in which bombay highcourt order with regarding authorised in case of amalgamation in which no need to pay fees on comibining the authorised capital of both companies.

Archit (Practice) (27 Points)
Replied 30 March 2010

Dear Sathya,

In addition to the valuable suggestions of memebrs, i would like to add that the increase in capital from Rs. 10 Lacs to Rs. 20 Lacs is quite possible and the same has also been decided by the Hon'ble Court of various states.

But, the only pre-requisite is that this must be mentioned in the Scheme of Amalgamation so that the Hon'ble Court can sanction the same.

Regards

ARCHIT JAIN

j.archit28 @ gmail.com