Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Birfurcation of Share Capital

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)

17 February 2011

Dear Sir

I am having one query.please help me on the same.

One of the listed Company wants to reclassify its authorised share capital.

At present the entire equity sahre capital of the company is listed at BSE and NSE, and now the Company wants to reclassify part of its equity shares into preference shares.

Please guide me the precedue that we need to follow for the proposed re-classification as this is a bit urgent. <br> Will it be covered under the scheme of arrangement under section 391??

Regards

Reply
Follow
Share

2 Replies

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 17 February 2011

It would not covered under section 391.

You just have to amend your MOA by way of passing Ordinary Resolution in General Meeting.

Give the intimation to the stock exchanges about the bifurcation of share capital.

Upgrade to CAclubindia Pro. Subscribe Now!

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 17 February 2011

Draft Ordinary Resolution for Bifurcation of Authorised Share Capital.

“RESOLVED THAT pursuant to the provisions of Section 94(1)(e), 94(1)(a), 95 and other applicable provision(s) of the Companies Act, 1956, if any, the un-issued Authorized Equity Share Capital of the Company to the extent of Rs...................(................................ Only) divided into ............................ (..............) Equity Shares of10/- each be reclassified as Preference Share Capital by way of cancellation of the said Authorized Equity Share Capital and creation in lieu thereof the Preference Share Capital of................................ (...........................Only) divided into ........................ (....................) Preference Shares of10/- each, without altering the overall Authorised Capital of.................................................../- (Rupees ...........................................Only).”

RESOLVED FURTHER THAT, Clause V of Memorandum of Association of the Company be substituted as under:-

“The Share Capital of the Company is Rs................................./-(Rupees ................................ only) divided into ............................... (.....................) Equity Shares of10/-(Rupees Ten) each and ............................ (..............................) Preference Shares of 10/- (Rupees Ten) each with power to increase or reduce the capital and to divide and subdivide the shares into several classes and to attach there to respectively such preferential qualified or special rights, privileges or conditions, as may be determined by or in accordance with the Articles of Association of the Company for the time being and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may be permitted by the Companies Act,1956, or as provided by the Articles of Association of the Company for the time being.”

“RESOLVED FURTHER THAT Shri ................................, Shri ..................................Directors and Shri ......................................., Company Secretary be and are hereby jointly and / or severally authorized to do all such acts, deeds, matters and things as may be necessary, expedient and desirable to give effect to the above resolution.”