Authorised capital

This query is : Resolved

Roshni Garach (Querist)
Follow

27 February 2013 Dear all
Can a company issue shares more than its Authorised Capital , if yes then what is the litigation regarding the same???
Please explain me with this Example
Authorised capital -Rs 150 lks
Shares Previously issued for Rs 40 lks
Fresh shares issue for Rs 112 lks therefore total issued capital is equal to Rs 152 lks Is it possible to show the 2 lks(152 lks minus 150 lks) as share premium????

Dr. Rashid Mehmood, CPA, Ph.D

Dr. Rashid Mehmood, CPA, Ph.D (Expert)
Follow

28 February 2013 Dear Roshni

A company can not do so because:

1. whenever new shares are issued, the company has to report to security and exchange commission of the country - a statutory body looking after the corporate matters. this report contains the number of shares, face value, premium and total value of shares.

2. the amount exceeding the authorized capital cannot be booked as share premium if it is against the issuance of shares. because authorized capital is not only monitored by amount but also by shares.

3. therefore, the company wants to increase the capital can issue shares within the authorized available shares but at a higher price and the difference can then be booked as share premium.

4. if it is not possible to issue shares at higher of the face value then first increase the authorized capital through a simple process by amending MOA, AOA and filling an application to SEC. then issue shares from that authorized shares.

5. in case company violate the law, it is serious corporate offence and may lead to heavy fines and loss of integrity and repute.

Hoping it will suffice your concerns.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

JACOB ABRAHAM KURIALANICKAL

Pritanu Chakraborty

Tax Expert Group

MAYANK

Devaraj B V

Subscribe Now

Authorised capital

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

CA Final

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant