Amit Agarwal (Articled) (37 Points)
12 January 2012A copmany is having the following structure of Authorized Capital
Preference Rs 7,50,000
Ordinary Rs 2,50,000
It wants to convert the entire amount to Ordinary shares of Rs 10,00,000/-
Can it do so, if yes how?
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 12 January 2012
conversion of ordinary shares into preference shares or other forms amounts to reduction of capital as per sec 100.But preference shares can be converted into ordinary shares if the preference share holders agree for such conversion in a scheme of reconstruction i.e corporate restructuring
other views solicited
SkDash
(CS (Member) CWA (Final))
(909 Points)
Replied 12 January 2012
Siva ram- I think the Q was different. Amit was aksing the regrouping of Authorised Capital (not issued capital) and thus question of reduction, consent etc will not arise.
As per me, this will be a case of sub division of shares and can be passed by O-Res in the manner for inc in Auth Cap (I think it is covered in Sec 94)
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 12 January 2012
Sorry Mr Santosh i dint read the question properly .Mr Amit my answer is wrong go with Mr santoshs explanation .Thanks Mr Santosh for correcting me
Amit Agarwal
(Articled)
(37 Points)
Replied 12 January 2012
Dear Amit/ Sivaram,
It will amount to CONSOLIDATION OF SHARE CAPITAL RATHER THAN SUBDIVISION.
In case of subdivison face value is reduced to lesser amount like one share of face value of Rs. 10/- each is converted in 10 shares of Rs. 1/- each. Subdivision is change of face value of shares into smaller denomination.
U/s 95 (1) (a), In consolidation the company can convert the authorized preference share to Equity/ ordinary share by passing an ordinary resolution and thereby amending the MOA. File form 5 with 30 days with office of ROC.
CAclubindia
