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Resolution for sub-division of shares

Shikha Sharma (Chartered Accountant) (311 Points)

04 March 2010

When a company goes for sub-division of shares of Rs. 10 each to Re.1 each, should a special resolution be passed or an ordinary resolution is enough.

Sec 94 specifies that resolution should be passed in general meeting. Kindly clarify the nature of the resolution to be passed.

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3 Replies

S. Satheesh Kumar (Assistant Company Secretary) (84 Points)
Replied 04 March 2010

An Ordinary resolution is enough for alteration of share capital by subdivision of shares u/s 94(1)(d) of the Companies Act, 1956 and it should be passed by the members of the Company in general meeting as conferred by the Section 94(2). An ordinary resolution for Subdivision of shares: "RESOLVED THAT pursuant to the provisions of section 94 and other applicable provisions, if any, of the Companies Act, 1956 the consent be and is hereby accorded for sub-division of every equity share of Rs.10/- each into two equity shares of Rs.5/- each". Consequent to this you need to alter the Capital clause of MOA and file form 5.

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Shikha Sharma (Chartered Accountant) (311 Points)
Replied 04 March 2010

Thanks a lot..

CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 04 March 2010

Sub-division of shares

General Meeting - Ordinary Resolution (unless articles require Special Resolution)

"RESOLVED THAT each of the issued and subscribed 60,000 Ordinary Shares of Rs. 100 each in the capital of the company be sub-divided into 10 shares of Rs. 10 each fully paid-up and that each such share shall henceforth be
known as Equity Share of Rs.10/- each.

"RESOLVED THAT the existing certificates of shares be called back by the Board of Directors and cancelled and that new certificates in respect of the equity shares of Rs. 10 each be issued in lieu of the existing equity shares of Rs.100/- each in accordance with the provisions of the Companies (Issue of Share Certificates) Rules, 1960."

ALSO PASS RESOLUTIONS FOR CONSEQUENTIAL AMENDMENT IN MOA/AOA..