This article is written by Ms khushi sarkhedi , a 1 year BA LLB student from
AURO university.
Notice to be given to registrar for alteration of share capital:
As previously mentioned herein, pursuant to section 64 of the Companies Act 2013,
(a) If the company changes its share capital in the manner specified in section 61(1);
(b) A government order under section 62 section 6 in conjunction with section 4 shall have the effect of increasing the authorized capital stock of the company again
(c) The company repurchases all redeemable preference shares;
The Company shall notify the Registrar in the prescribed form with the amended Memorandum within his 30 days of such change, increase or withdrawal.
Ways to alter share capital :
Run the show 15 of the Companies (Share Capital and Debentures) Rules 2014 endorses, “Where a company modifies its share capital in any way indicated in sub-section (1) of segment 61, or an arrange is passed by the Government expanding the authorized capital of the company in compatibility of sub-section (4) examined with sub-section (6) of area 62 or a company recovers any redeemable inclination offers, the take note of such change, increment or recovery might be recorded by the company with the Recorder in Shape SH – 7 in conjunction with the fee.”
Purpose of eform :
At whatever point a company changes its share capital/ number of individuals autonomously or increments the share capital by transformation of debentures/loans due to arrange of Central Government, at that point a return should be recorded with the enlistment center inside 30 days of such change or increment. The return might too be recorded where the company recovers any redeemable inclination offers.
This is often an E – Frame to be recorded with the Enlistment center of the Companies. The Frame may be recorded for taking after purposes:
- Increment in Share Capital freely by company
- Increment in number of Individuals
- Increment in share capital with Central Government Arrange
- Combination or division etc.
- Recovery of redeemable inclination offers
The Shape needs data of sort of determination, date of assembly and Benefit Ask Number (SRN) of Shape MGT – 14. Encourage, the Frame inquires points of interest of Existing and Changed share capital with increment and diminish. In case of Government or Tribunal arrange, points of interest of the arrange should be given. In case of solidification, change, Reconversion, subdivision, cancelation or renaming subtle elements thereof might be given. The Frame require point by point breakup after the occasion requiring recording of this frame. Where stamp obligation is appropriate, subtle elements of installment of stamp obligation might too be entered.
When share capital stands automatically increased?
The share capital of a company stands naturally expanded when any Government, by its arrange made, coordinates that any debentures issued to, or the credits gotten from the Government by a company or any portion thereof should be changed over into offers within the company, on such terms and conditions as are considered by that Government to be sensible within the circumstances.
| Appeal against Govt. Order | In any case, where the terms and conditions of such transformation are not satisfactory to the company, it may, inside sixty days from the date of communication of such arrange, offer to the Tribunal which might after hearing the company and the Government pass such arrange because it considers fit. |
| Where appeal is dismissed or not preferred | Where the Government has, by an arrange, coordinated that any debenture or advance or any portion thereof might be changed over into offers in a company and where no request has been favored to the Tribunal or where such request has been expelled, the reminder of such company might, where such arrange has the impact of expanding the authorized share capital of the company, stand modified and the authorized share capital of such company might stand expanded by an sum break even with to the sum of the esteem of offers which such debentures or credits or portion thereof has been changed over into. [Area 62(6)].
This Section 62(6) is however to be informed. |
Judicial Pronouncement about a company’s power to alter its share capital:
| The powers can be worked out by the individuals as it were in the event that authorized by the articles.
[Re North Cheshire Brewery Co] |
| The control ought to be worked out bona fide within the intrigued of the company and not for profiting any gather. [Needle Businesses (India) Ltd. v. Needle Businesses Newey
(India) Holding Ltd.] |
| The take note meeting the assembly to pass the determination for increment must indicate the sum of the proposed increment. [Mac Connell v. E. Prill & Co. Ltd.] |
| Union and sub-division may be affected by the same determination [Re. North Cheshire Borewery Co. Ltd.] |
Nature of stock :
| Meaning of share | Section 2(84) of the Act in characterizing a share, states that “share implies a share in the share capital of a company and incorporates stock”. |
| Conversion to stock | Section 61 permits the company to change over its completely paid-up offers into stock. |
| Stockholders | Hence by changing over offers into stock, a shareholder is known as a stockholder. A stockholder has the same rights as to profits as a shareholder |
As it were completely paid-up offers can be changed over into stock, and (ii) no coordinate issue of stock by a company is legal. It is as it were the change of fully-paid offers into stock, that’s permitted by and not a coordinate issue of stock.
Example: After offers are changed over into stock, the stockholder may claim Rs.1,000 worth of stock where once he held 100 offers of Rs.10 each.
| Basis | Share | Stock |
| Distinct no | Shares in physical form bear distinct numbers | Stocks are the consolidated value of share capital |
| Fully paid up | Shares may or may not be fully paid up . | Stock is always fully paid up |
| Nominal value | Shares have a nominal value. | Stock does not have any nominal value. |
| Denomination | All shares are of equal denomination. | Stock is divisible and transferable into any fractional value . |
| Frictional value | It is not possible to transfer shares into fraction . | Stock is divisible and transferable in to any fractional value . |
| Issued | Shares comes into existence before the stock and it is issued initially . | Stocks comes into existence after conversion of shares into stock and on conversion of shares into stock the provisions of he act governing the shares shall cease to apply to the share capital as it is converted into stock . |
Reduction of share capital :
Sec. 66 (1) Subject to affirmation by the Tribunal on an application by the company, a company restricted by offers or constrained by ensure and having a share capital may, by a extraordinary determination, decrease the share capital in any way and may—
(a) quench or decrease the obligation on any of its offers in regard of the share capital not paidup; or
(b) either with or without quenching or diminishing risk on any of its offers, —
(i) cancel any paid-up share capital which is misplaced or is unrepresented by accessible
resources; or (ii) pay off any paid-up share capital which is in overabundance of the needs of the company, modify its reminder by decreasing the sum of its share capital and of its offers in like manner.
Proviso to Segment 66(1) states that the decrease of capital might not be made in case the company is in overdue debts within the reimbursement of any stores acknowledged by it, or the intrigued payable consequently.
Circumstances disallows buy-back [Area 70(1)]
No company should specifically or by implication buy its claim offers —
- through any backup company counting its claim auxiliary companies;
- through any speculation company or gather of venture companies; or
- in the event that a default, is made by the company, within the reimbursement of stores acknowledged, intrigued installment consequently, recovery of debentures or inclination offers or installment of profit to any shareholder, or reimbursement of any term advance or intrigued payable consequently to any monetary institution or managing an account company:
However, the buy-back isn’t precluded, in case the default is helped and a period of three a long time has passed after such default ceased to subsist. [Proviso to Segment 70(i)] .
Citation.:
https://aishmghrana.me/2014/05/29/notice-to-registrar-for-alteration-of-share-capital/