The Authorised share capital of a public limited is Rs.15.25 crores divided into 12,00,000 equity shares of Rs.10/- each and 32,50,000 preference shares of Rs.10/- each.
The paid-up capital is Rs.12,88,00,000/- divided into 96,30,000 equity shares of Rs.10/- each and 32,50,000 preference shares of Rs.10/- each.
The company is going to convert the preference capital into equity capital as per original terms. The existing authorised equity capital is inadequate to accommodate the converted equity shares. The company also do not want the preference shares in the authorised capital. Hence it is proposed to alter the Authorised Capital clause as Rs.15,25,00,000/- divided into 1,52,50,000 equity shares of Rs.10/- each. This will only be a mere alteration in the existing authorised capital by passing requisite resolutions at an EGM. According to me no fees is payable to ROC as there is no enhancement in authorised capital (this is only interchange of the existing authorised capital)
Kindly advise whether the same will be in accordance with the provsions of the Act.
Conversion of authorised capital can be done only for unissued share capital. Since the pref share capital is already issued, you cannot convert it. Once the pref shares are converted into equity and the pref shares are no longer shown in issued capital, the authorised capital for such pref share cap may be converted into equity.
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