[Ref: In Notification No. G.S.R. 794(E) dated 24.12.2020]
Recently, the Ministry of Corporate Affairs (MCA) has amended eForm SH-7 (Notice to Registrar of any alteration of share capital) vide Notification No. G.S.R. 794(E) dated 24.12.2020. In exercise of the powers conferred by sub-sections (1) and (2) of Section 469 of the Companies Act, 2013 (“Act, 2013”) , the Central Government has issued Companies (Share Capital and Debentures) Second Amendment Rules, 2020 to amend the Companies (Share Capital and Debentures) Rules, 2014. By the said amendment existing eForm SH-7 has been substituted with new revised eForm SH-7.
Please note that eForm SH-7 is required to be filed pursuant to Section 64 (1) of the Act, 2013 and Rule 15 of Companies (Share Capital and Debentures) Rules, 2014 which are reproduced for your reference:
“Section 64(1): Notice to be given to Registrar for alteration of share capital.
(1) Where—
(a) A company alters its share capital in any manner specified in sub-section (1) of section 61;
(b) An order made by the Government under sub-section (4) read with sub-section (6) of section 62 has the effect of increasing authorized capital of a company; or
(c) A company redeems any redeemable preference shares,
the company shall file a notice in the prescribed form with the Registrar within a period of thirty days of such alteration or increase or redemption, as the case may be, along with an altered memorandum.”
“Rule 15:
For the purposes of sub-section (1) of section 64, where a company alters its share capital in any manner specified in sub-section (1) of section 61, or an order is passed by the Government increasing the authorized capital of the company in pursuance of sub-section (4) read with sub-section (6) of section 62 or a company redeems any redeemable preference shares, the notice of such alteration, increase or redemption shall be filed by the company with the Registrar in Form No. SH-7 along with the fee.”
Accordingly, the notice should be given to the Registrar for alteration of share capital-
– Pursuant to Section 61(1);
– Pursuant to order of Government sub-section (4) read with sub-section (6) of section 62;
– To redeem any redeemable preference shares.
Only three situations are exit in the Section 64, in which the eForm SH-7 should be filed with Registrar and existing eForm SH-7 contained in itself these three situations as ‘purpose of the form’ in Point No. 3 as under-
- Increase in share capital independent by the company
- Increase in share capital with Central Government order
- Redemption of Preference Shares
- Increase in number of members;
- Consolidation or division etc.
Please note that Redemption of Preference Shares and increase in share capital with an order of Central Government is properly covered under the existing eForm SH-7. But, as Section 64 of the Act, 2013 also mentioned about alteration of share capital in any manner specified in sub-section (1) of section 61 of the Act, 2013, therefore, it is necessary to check sub-section (1) of Section 61, which is reproduced for your reference:
“61. (1) A limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting to—
(a) increase its authorised share capital by such amount as it thinks expedient;
(b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares:
Provided that no consolidation and division which results in changes in the voting percentage of shareholders shall take effect unless it is approved by the Tribunal on an application made in the prescribed manner;
(c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination;
(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;
(e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.
(2) The cancellation of shares under sub-section (1) shall not be deemed to be a reduction of share capital.
After perusal of Section 61(1) of the Act, 2013, it is clear that there was no option in existing eForm SH-7 regarding cancellation of unissued shares. Now, after the amendment in eForm SH-7 vide Notification No. G.S.R. 794(E) dated 24.12.2020, a new option in Point No. 3 of revised eForm SH-7 has been given as “cancellation of unissued shares of one class and increase in shares of another class”. Now, revised eForm SH-7 contained the ‘purpose of the form’ in Point No. 3 as under-
- Increase in share capital independent by the company
- Increase in share capital with Central Government order
- Redemption of Preference Shares
- Increase in number of members;
- Consolidation or division etc.
- Cancellation of unissued shares of one class and increase in shares of another class.
Also, in Point No. 7 of revised eForm SH-7 a new clause (e) has been inserted regarding cancellation of unissued shares.
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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
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