Is paidupcapital and Paidupequitycapital interchangeable?

Simranjeet Singh (Proprietor at S Simranjeet & Associates Company Secretaries) (4396 Points)
Replied 18 January 2011

your first observation is correct. paid up capital includes eq as well as pref. sh cap.......

and in my view for the second one there is no need to first increase the authorised cap to issue 1 cr pref. shares...... as authorised capital as mentioned in MoA includes preference share capital also.

other expert comments yet to come ........

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 18 January 2011

agree with Simranjeet singh as authorised capital is 10 crores and paid up is 9 crores it can issue 1 cr without increasing its authorised capital

paid up capital includes both equity and preference and nothing else

sameera (student) (61 Points)
Replied 18 January 2011

Originally posted by : simranjeet singh
	your first observation is correct. paid up capital includes eq as well as pref. sh cap....... and in my view for the second one there is no need to first increase the authorised cap to issue 1 cr pref. shares...... as authorised capital as mentioned in MoA includes preference share capital also. other expert comments yet to come ........

thank you all

correction in my previous query...it wants to issue 2cr woth pref shares

Shivish Verma (C A) (376 Points)
Replied 19 January 2011

Authorised share capital includes equity and pref share and you wil have to change the authorised share capital clause in MOA enhancing the limit from 10 to 11 cr.

1 Like

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 19 January 2011

If you want to issue 2 crores preference shares then you have to increase the authorised share capital first from 10 crores to 11 crores.

1 Like

Nilesh Jain (Assistant Manager) (1064 Points)
Replied 19 January 2011

Authorised capital has bifurcation of how many equity and pref. share will be there.

If xyz ltd wants to issue pref. share of worth rs. 2 Cr. than this will exceed the authorised capital (9+2=11) therefore first increase authorised capital than make issue of pref. shares.

1 Like

sonia (student) (59 Points)
Replied 19 January 2011

sir

here i have one doubt

at the time of incorporation of companies ( or at any time thereafter from time to time to increase such authorised capital), we need to specify the autorised capital in MoA, so in such a case do we need give the segregation of that into equity and pref share capital or is it enough just to mention the total amount.

thank you

sonia

Nilesh Jain (Assistant Manager) (1064 Points)
Replied 19 January 2011

Yes, you have to provide in the MOA that what will be the structure of the authorised capital.............

1 Like

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 20 January 2011

In the MOA it is sufficient to mention the Authorised Capital and no need to show the bifurcation.

Sudhir Garg (Service) (236 Points)
Replied 20 January 2011

Dear Jayashree

Upto best of my knowledge, division of authorised capital into equity and preference is required. If we refer, Table B, it is required to mention the number of shares with its face value. In case, equity share is of Rs 10/- and preferece share is of Rs 100/-, How Table B can be complied??

Please suggest.

Regards- Sudhir

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 21 January 2011

Dear Sudhir,

Incorporation is the first step to give birth to a company. At that time generally the capital structure of the company would not be known. So it's common in most cases to get the company incorporated with a specific authorised share capital. Later on as and when the company decides to issue equity or preference shares within this authorised capital, it can be done by way of Board Resolution. In MOA we generally mention " The Authorised share capital of the Company is Rs.5,00,000/- divided into 50,000 shares of Rs.10/- each". We don't mention whether it's a preference or equity share.

However if the face value of equity and preference are fixed at different rates, then we will have to amend MOA as and when the decision is taken.

It's better to avoid the bifurcation to be shown in MOA as any change would then necessitate shareholders approval.

udit sharma (Company Secretary) (2303 Points)
Replied 21 January 2011

In my opinion, MOA should show the bifurcation of Authorised Capital into Equity and Preference Share Capital. It should be clearly mentioned that the Authorised Share Capital of the Company is Rs.>>>>>>>> divided into ......... Equity shares of Rs.10/- each and .............Preference shares of Rs.....each.

Without the bifurcation, how can u determine wat is the Auhorised Equity Share Capital and Authorised Preference Share Capital????/Experts please clarify......

Regards

CS Udit Sharma