Alteration- Capital Clause Series- 47

CS DIVESH GOYAL Mob: +918130757966

Practicing Company Secretary [email protected]

GOYAL DIVESH& ASSOCIATES

GOYAL DIVESH & ASSOCIATES, Practicing Company SecretaryGOYAL DIVESH & ASSOCIATES, Practicing Company SecretaryGOYAL DIVESH & ASSOCIATES, Practicing Company SecretaryGOYAL DIVESH & ASSOCIATES, Practicing Company Secretary

ALTERATION IN ALTERATION IN ALTERATION IN ALTERATION IN CAPITALCAPITALCAPITALCAPITAL CLAUSECLAUSECLAUSECLAUSE,,,,

Section 13 read with rule 29 of Companies

(Incorporation) Rules, 2014

SeriesSeriesSeriesSeries1111 49494949

Every business run on finance and share capital is base finance; hence Finance is life blood of

a company. Section 13 of Companies Act 2013 regulates the process of amendment in

Memorandum of Association is applicable to all companies. All clauses of Memorandum except

Capital clause can be altered by following the provisions of Section 13 of Companies Act, 2013

by passing special resolution.

Under Companies Act, 2013, the process of Increase in Authorize Capital is governed by

Section 61 read with Section113 and 64 of Companies Act, 2013.

Where any communication or publication of a company contains a statement of the amount of

the authorize capital of the company, it shall also contain a statement in an equally prominent

position and in equally conspicuous characters of the amount of the capital which has been

subscribed and the amount paid up.

Section 61 (1) of the act states that a limited company having a share capital, if so authorized

by its articles , alter the conditions of its memorandum to increase its share capital by such

amount as it thinks expedient by issuing new shares.

Furthermore section 14(1) of the act states that the articles of company can be altered by a

special resolution if so allowed by the memorandum of the company.

ALTERATION IN CAPITAL CLAUSE UNDER COMPANIES ACT- 2013

GOYAL DIVESH & ASSOCIATES, PRACTICING COMPANY SECRETARY

SERIES

NO- 49




STEPS OF INCEREASE IN AUTHORIZE CAPITAL (SectionSTEPS OF INCEREASE IN AUTHORIZE CAPITAL (SectionSTEPS OF INCEREASE IN AUTHORIZE CAPITAL (SectionSTEPS OF INCEREASE IN AUTHORIZE CAPITAL (Section1111 13 & 61)13 & 61)13 & 61)13 & 61)

There are two way of Increase in Authorize Capital:

1) If there is no requirement to Alteration in Article of Association.

2) If there is require to Alter Article of Association.

1) 1) 1) 1) 1111 If there is No requirement of Alteration in Article of AssociationIf there is No requirement of Alteration in Article of AssociationIf there is No requirement of Alteration in Article of AssociationIf there is No requirement of Alteration in Article of Association

First Check is there any provisions in Article of Association regarding increase in capital, if

there is provision in AOA then no need for alteration in Article of Association.

STEP:STEP:STEP:STEP: IIII

Call Meeting of Board Director:

Issue Notice of Board Meeting to all the directors of company at least 7 days before

the date of Board Meeting.

Attach Agenda of Board Meeting along with Notice.

STEP: ISTEP: ISTEP: ISTEP: IIIII

Hold the Board Meeting:

At the Board meeting, the given resolutions must be passed:1

Get Approval to Increase in the authorized capital and recommending the proposal for

members' consideration by way of ordinary resolution.

Fixing the date, time, and venue of the general meeting and authorizing a director or

any other person to send the notice for the same to the members.

Approval of Notice of EGM.

Provisions of the Section 101 of the Companies Act 2013 provides for issue of notice of

EGM in writing to below mentions atleast 21 days before the actual date of the EGM :

All the Directors.

Members

Auditors of Company




The notice shall specify the place, date, day and time of the meeting and contain a

statement on the business to be transacted at the EGM.

Authorize Director & Company Secretary of company to issue notice of EGM.

STEPSTEPSTEPSTEP1111IIIIIIIIIIII

Hold Extra Ordinary general Meeting::::

Check the Quorum.

Check whether auditor is present, if not. Then Leave of absence is Granted or Not. (As

per Section1 146).

Pass the Ordinary Resolution (u/s1 61(1)(a) of the companies act, 2013) for change in

Capital Clause of Memorandum of Association of Company.

Approval of Alteration in MOA & AOA.

STEPSTEPSTEPSTEP1111IIIIVVVV

FILING AND FEES::::

I) File FORM NO. SH17 (Section164(1) read with Rule 15 of The Companies (Share Capital

and Debentures) Rules, 2014 )within 30 days of passing the Ordinary resolution, along

with given documents:1

Certified True Copies of the Ordinary Resolutions along with explanatory

statement;

Copy of the Notice of meeting send to members along with all the annexure;

A printed copy of the Altered Memorandum of Association and Article of

Association.

Minutes of General Meeting.

STEPSTEPSTEPSTEP1111VVVV

Concerned Registrar of Companies (ROC) will check the E1form and attached the documents

and will approve the increase in Authorize capital of company.




22221111 If there is requirement of Alteration in Article of AssociationIf there is requirement of Alteration in Article of AssociationIf there is requirement of Alteration in Article of AssociationIf there is requirement of Alteration in Article of Association

First Check is there any provisions in Article of Association regarding increase in capital, if

there is no provision in AOA then first requires alteration in Article of Association.

STEP: ISTEP: ISTEP: ISTEP: I

CALL BOARD MEETING:

To Alter the Clause in Article of Association of Company for Increase in Authorize

Capital of Company.

To alter the Capital clause in memorandum of association of Company By giving Notice

of at least 7 days.

STEP: ISTEP: ISTEP: ISTEP: IIIII

CALL BOARD MEETING

At the Board meeting, the given resolutions must be passed:1

Get Approval for alteration in Article of Association

Get Approval to Increase in the authorized capital and recommending the proposal for

members' consideration by way of ordinary resolution.

Fixing the date, time, and venue of the general meeting and authorizing a director or

any other person to send the notice for the same to the members.

Provisions of the Section 101 of the Companies Act 2013 provides for issue of notice of

EGM in writing to below mentions atleast 21 days before the actual date of the EGM :

All the Directors.

Members

Auditors of Company

The notice shall specify the place, date, day and time of the meeting and contain a

statement on the business to be transacted at the EGM.

STEPSTEPSTEPSTEP1111IIIIIIIIIIII

HOLD A GENERAL MEETING:

Check the Quorum.




Check whether auditor is present, if not. Then Leave of absence is Granted or Not. (As

per Section1 146).

Pass the Special Resolution for change in Capital Clause of Article of Association and

Memorandum of Association of Company.

Approval of Alteration in MOA & AOA.

STEPSTEPSTEPSTEP1111IVIVIVIV

FILING AND FEES:

I) File FORM NO. MGT114 (Filing of Resolutions and agreements to the Registrar under

section 117) with the Registrar along with the requisite filing within 30 days of passing the

special resolution, along with given documents:1

Certified True Copies of the Special Resolutions along with explanatory statement;


A printed copy of the Altered Article of Association and Memorandum of

Association.

2) File FORM NO. SH17 (Section164(1) read with Rule 15 of The Companies (Share Capital

and Debentures) Rules, 2014 )within 30 days of passing the Ordinary resolution, along

with given documents:1

Certified True Copies of the Ordinary Resolutions along with explanatory

statement;


A printed copy of the Altered Memorandum of Association and Article of

Association.

Minutes of General Meeting.

STEPSTEPSTEPSTEP1111VVVV

Concerned Registrar of Companies (ROC) will check the E1form and attached the documents

and will approve the increase in Authorize capital of company.




SAMPLE BOARD RESOLUTION FOR:SAMPLE BOARD RESOLUTION FOR:SAMPLE BOARD RESOLUTION FOR:SAMPLE BOARD RESOLUTION FOR:

Increase in Authorised Share CapitalIncrease in Authorised Share CapitalIncrease in Authorised Share CapitalIncrease in Authorised Share Capital

RESOLVED THATRESOLVED THATRESOLVED THATRESOLVED THAT pursuant to the provisions of Section 61 and 64 and other applicable

provisions, if any, of the Companies Act, 2013 (including any amendment thereto or re1

enactment thereof) and the rules made there under, the consent of the Board of Directors of

the Company be and is hereby accorded, subject to the approvals of shareholders in the

General meeting, to increase the Authorized Share Capital of the Company from existing Rs.

50,00,000 (Rupees Fifty Lacs) divided into 5,00,000 (Five Lacs) Equity Shares of Rs. 10/1 each to

Rs. 75,00,000 (Rupees Seventy Five Lacs) divided into 7,50,000 (Seven Lacs Fifty Thousand)

Equity Shares of Rs. 10/1 each by creation of additional 2,50,000 (Two Lacs Fifty thousand)

Equity Shares of Rs. 10/1 each ranking pari passu in all respect with the existing Equity Shares

of the Company.

Alteration in the Capital Clause of Memorandum of AssociationAlteration in the Capital Clause of Memorandum of AssociationAlteration in the Capital Clause of Memorandum of AssociationAlteration in the Capital Clause of Memorandum of Association

RESOLVED THAT pursuant to the provisions of Section 13, 61 and 64 and other applicable

provisions of the Companies Act, 2013 (including any amendment thereto or re1enactment

thereof) and the rules framed there under, the consent of the Board of Directors of the

Company be and is hereby accorded, subject to the approvals of shareholders in the General

meeting, for substituting Clause V of the Memorandum of Association of the Company with the

following clause.

(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice

from Delhi and can be contacted at [email protected]) Disclaimer: The entire contents of

this document have been prepared on the basis of relevant provisions and as per the information

existing at the time of the preparation. Though utmost efforts has made to provide authentic

information, it is suggested that to have better understanding kindly cross-check the relevant

sections, rules under the Companies Act, 2013. The observations of the author are personal view

and the authors do not take responsibility of the same and this cannot be quoted before any

authority without the written




V. The Authorised Share Capital of the Company is Rs. 75,00,000/1 (Rupees Seventy Five Lacs)

divided into 7,50,000 (Seven Lacs Fifty Thousand) Equity Shares of face value of Rs. 10/1

(Rupees Ten) each.

Sample Shareholders Resolution to be passed in the General Meeting:

INCREASE IN AUTHORISED SHARE CAPITAL AT GENERAL MEETINGINCREASE IN AUTHORISED SHARE CAPITAL AT GENERAL MEETINGINCREASE IN AUTHORISED SHARE CAPITAL AT GENERAL MEETINGINCREASE IN AUTHORISED SHARE CAPITAL AT GENERAL MEETING

Special BusinessSpecial BusinessSpecial BusinessSpecial Business

To consider, and if thought fit, to pass with or without modification(s), the following resolution

as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Section 61 read with Section 64 and other

applicable provisions, if any, of the Companies Act, 2013 (including any amendment thereto or

re1 enactment thereof) and the rules framed there under, the consent of the members of the

Company be and is hereby accorded to increase the Authorized Share Capital of the Company

from existing Rs. 50,00,000 (Rupees Fifty Lacs) divided into 5,00,000 (Five Lacs) Equity Shares

of Rs. 10/1 each to Rs. 75,00,000 (Rupees Seventy Five Lacs) divided into 7,50,000 (Seven Lacs

Fifty Thousand) Equity Shares of Rs. 10/1 each by creation of additional 2,50,000 (Two Lacs

Fifty Thousand) Equity Shares of Rs. 10/1 each ranking pari passu in all respect with the

existing Equity Shares of the Company.

Alteration in the Capital Clause of Memorandum of AssociationAlteration in the Capital Clause of Memorandum of AssociationAlteration in the Capital Clause of Memorandum of AssociationAlteration in the Capital Clause of Memorandum of Association

To consider, and if thought fit, to pass with or without modification(s), the following resolution

as an Ordinary Resolution:;

RESOLVED THAT pursuant to the provisions of Section 13, 61 and 64 and other applicable

provisions of the Companies Act, 2013 (including any amendment thereto or re1enactment

thereof) and the rules framed there under, the consent of the members of the Company be and

is hereby accorded for substituting Clause V of the Memorandum of Association of the

Company with the following clause.




V. The Authorised Share Capital of the Company is Rs. 75,00,000/1 (Rupees Seventy Five Lacs)

divided into 7,50,000 (Seven Lacs Fifty Thousand) Equity Shares of face value of Rs. 10/1

(Rupees Ten) each.

(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice

from Delhi and can be contacted at [email protected]) Disclaimer: The entire contents of

this document have been prepared on the basis of relevant provisions and as per the information

existing at the time of the preparation. Though utmost efforts has made to provide authentic

information, it is suggested that to have better understanding kindly cross-check the relevant

sections, rules under the Companies Act, 2013. The observations of the author are personal view

and the authors do not take responsibility of the same and this cannot be quoted before any

authority without the written

Alteration- Capital Clause Series- 47

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Transcript of Alteration- Capital Clause Series- 47