Explore the comprehensive guide on altering authorized share capital under Section 61 of the Companies Act, 2013. Understand the legal procedure, resolution format, and filing obligations for a precise and compliant execution. Consult legal professionals for accurate advice.
Introduction: The Authorised Share Capital of a company is a crucial element defined in the memorandum, and its alteration involves compliance with legal procedures. This article provides a comprehensive guide on the procedure and resolution format for the alteration of authorised share capital under Section 61 of the Companies Act, 2013.
AUTHORISED SHARE CAPITAL
According to Section 2(8) of the Companies Act, 2013 “Authorised capital” or “Nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company.
Section governing Alteration of Authorised Share Capital
Section 61 of the Companies Act, 2013 deals with the alteration of authorised share capital.
Procedure for Alteration of Authorised Share Capital along with Draft Resolution
1. First, the Company has to check and verify the Article of Association (AOA) to make sure that there is a provision related to the expansion of the authorized Share capital. If there is no such provision in AOA, then appropriate steps u/s 14 of the Companies Act, 2013 are required to be taken to amend its Articles.
2. Issue Notice of Board Meeting to all the directors of the company at least 7 days prior to the date of Board Meeting along with the agenda of meeting.
3. Conduct a Board Meeting and pass the following Board resolution for alteration of authorised share capital and fix the date, time & venue for the shareholders’ meeting.
“RESOLVED THAT pursuant to the provisions of Section 13, 61(1)(a), 64 and all other applicable provisions, if any, of the Companies Act, 2013 (including any statutory modification (s) or re-enactment thereof, for the time being in force) and the relevant rules framed there under and in accordance with the applicable provisions of the Articles of Association of the Company and subject to the approval of members of the Company, the consent of Board of Directors be and is hereby accorded to increase the Authorized Share Capital of the Company from Rs.__________ (Rupees) divided into No. of shares (in words) equity shares of Rs. Face value/- (Rupees) each to Rs.__________ /- (Rupees) divided into No. of shares (in words) equity shares of Rs. Face value/- (Rupees) each by the creation of additional No. of shares (in words) equity shares of Rs. Face value /- (Rupees) each.”
RESOLVED FURTHER THAT pursuant to the provisions of Section 13 and all other applicable provisions of the Companies Act, 2013 and the relevant rules framed thereunder, the Capital Clause (Clause V) of the Memorandum of Association of the Company is substituted with the following Clause V:
The Authorized Share Capital of the Company is Rs._________ /- (Rupees) divided into No. of shares (in words) equity shares of Rs. Face value/- (Rupees) each.
RESOLVED FURTHER THAT Mr. Name of Director (DIN: _______ ), Director of the Company be and is hereby authorized to do all such acts, deeds, things and matters and to sign such other documents and file such forms as may be necessary and expedient to give effect to the aforesaid resolution.”
4. Issue notice of extraordinary general meeting to all the members of the company along with an explanatory statement.
5. Conduct extraordinary general meeting and pass Ordinary Resolution for approval of alteration of MOA.
“RESOLVED THAT pursuant to the provisions of Section 13, 61(1)(a), 64 and all other applicable provisions, if any, of the Companies Act, 2013 (including any statutory modification (s) or re-enactment thereof, for the time being in force) and the relevant rules framed there under and in accordance with the applicable provisions of the Articles of Association of the Company, the consent of shareholders of the company be and is hereby accorded to increase the Authorized Share Capital of the Company from Rs.__________ (Rupees) divided into No. of shares (in words) equity shares of Rs. Face value/- (Rupees) each to Rs.__________ /- (Rupees) divided into No. of shares (in words) equity shares of Rs. Face value/- (Rupees) each by the creation of additional No. of shares (in words) equity shares of Rs. . Face value /- (Rupees) each.”
RESOLVED FURTHER THAT pursuant to the provisions of Section 13 and all other applicable provisions of the Companies Act, 2013 and the relevant rules framed thereunder, the Capital Clause (Clause V) of the Memorandum of Association of the Company is substituted with the following Clause V:
The Authorized Share Capital of the Company is Rs._________ /- (Rupees) divided into No. of shares (in words) equity shares of Rs. Face value/- (Rupees) each.
RESOLVED FURTHER THAT Mr. Name of Director (DIN: _______ ), Director of the Company be and is hereby authorized to do all such acts, deeds, things and matters and to sign such other documents and file such forms as may be necessary and expedient to give effect to the aforesaid resolution.”
6. File E-form MGT-14 with the ROC within 30 days from the date of passing the resolution.
7. File E-form SH-7 with the ROC within 30 days from the date of passing the resolution.
8. File linked form INC-33 (for amendment of MOA) with the ROC within 30 days from the date of passing the resolution.
9. Pay MCA fees for both the forms. Then pay the stamp duty for the increased share capital.
ATTACHMENTS
1. Certified true copy of the ordinary resolution along with the explanatory statement
2. First subscriber sheet (INC-33)
3. Consent for shorter notice, if any.
Conclusion: Altering authorised share capital is a legal process that demands meticulous adherence to statutory requirements. This guide elucidates the step-by-step procedure, resolution format, and filing obligations, ensuring companies navigate this process with precision. Always consult with legal professionals for accurate and compliant execution.
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DISCLAIMER:- This Blog is for the purposes of information/knowledge and shall not be treated as solicitation in any manner or for any other purposes whatsoever.
Feel free to contact the author for further clarification at 9953808432 or via mail at cssinghaniaandassociates@gmail.com. The author is the founder of SINGHANIA & ASSOCIATES (Practicing Company Secretaries Firm) based in Delhi.
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