Skip to main content

Relevant company law provisions for increase in Authorised Share Capital

Increase in Authorized Share Capital (ASC) is governed by the following sections of The Companies Act, 2013:-



To increase in ASC, company need to alter its Memorandum of Association(MoA) and Articles of Association(AoA) as the case may be. 

Check the AoA of the Company to verify whether necessary authority/powers is there to increase the ASC of the Company.

If such authority is not provided for in the AoA, then the provisions in AoA has to be amended to include provisions authorising the company to increase its share capital. Such amendment could be done by passing of Special Resolution.

And, if the articles permit and company need to alter the capital clause of MoA.

As per section 13 of The Companies Act, 2013, alteration in MoA i.e., alteration in any of its five clauses need to pass the special resolution by the company. But there is one exception, alteration in capital clause of the MoA is as per the section 61 of the law. 

In legal language:
Section 13(1)- Save as provided in section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum.

Now, as per section 61 of The Companies Act, 2013, ordinary resolution needs to passed by the company for increase in ASC. 

In legal language:
Section 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.

Also,as per section 64 of The Companies Act, 2013, after the passing of resolution company should file a notice to the RoC for such alteration in ASC.

In legal language:
Section 64. [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 authorised 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.

[2] If a company and any officer of the company who is in default contravenes the provisions of sub-section [1], it or he shall be punishable with fine which may extend to one thousand rupees for each day during which such default continues, or five lakh rupees, whichever is less.



Disclaimer: 

The contents of this article are solely for informational purpose. It does not constitute any professional advice. The author does not represent that the contents of the article are accurate or complete. Neither the Site/Blog 'Your Instasolv' and the author accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

Labels:

Comments

Post a Comment

If you have any doubt, let me know in the comment section.

Popular posts from this blog

Difference between Loans and Deposits under the Companies Act, 2013

Loans : As per Companies Act, 2013, the following types of money received by a company are termed as loans: 1.   Money received from the Central Government or a State Government or Local Authority or Statutory Authority, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government. 2.   Money received from foreign Governments, foreign or international banks, multilateral financial institutions (including, but not limited to, International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation and International Bank for Industrial and Financial Reconstruction), foreign Governments owned development financial institutions, foreign export credit agencies, foreign collaborators, foreign bodies corporate and foreign citizens, foreign authorities or persons resident outside India subject to the provisions of Foreign Exchange Management Act, 1999. 3.   Money received as a lo...
Post a Comment
Read more

Difference between Exemptions & Deductions under the Income Tax Act

What are Deductions under the Income Tax Act, 1961? Chapter VI-A of Income Tax Act contains various sub-sections of section 80 that allows an assessee to claim deductions from the gross total income on account of various tax-saving investments, permitted expenditures, donations, etc .   What are Exemptions under the Income Tax Act, 1961? Exemptions are provided on particular sources of income and not on the total income. It can also mean that you do not have to pay any tax for income coming from that source. For example - As per Section 10(1) of the  Income Tax Act, 1961 - Income from agriculture is exempted.   Difference between Exemptions & Deductions Basis Exemptions Deductions Incidence These are not included in our Taxable income. These are deducted from our Gross total income. Application Applied at each head of income. Applied at Gross total income...
Post a Comment
Read more

Commercial Banks of India and its types

Commercial Banks are regulated under the Banking Regulations Act, 1949. They are profit making institutions and earn profit in the form of interest, commission, etc. Their primary function is to accept deposits and grant loans to households, entrepreneurs, businessmen, etc.   The operations of all commercial banks are regulated by the Reserve Bank of India (RBI) which is also known as the central bank or apex bank of India. Oudh Commercial Bank (1881-1958) – the  first commercial bank  of India.    Types-   The Commercial Banks can be broadly classified under two heads:-                                                i.           Scheduled Banks    ...
Post a Comment
Read more