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Query on increasing the paid up capital

07 August 2017

I need some guidance on the procedure to increase the 'Paid-up Capital"

1. For increase in Paid-up Capital, do we need 'Ordinary / Special Resolution' or just a 'Board Resolution' is sufficient?

2. Can the MoA, AoA be framed accordingly to mandate 'Ordinary / Special Resolution' while increasing the Paid-up Capital to protect shareholder's interest and that the Board of Directors don't dilute the shareholding pattern without shareholder's consent?

Thanks & Regards,

S S Shet

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6 Replies

sagar kailas kasat (Student Others) (30 Points)
Replied 08 August 2017

Refer Section 62 for increase in paid up capital by further issue of share

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hhshah9 (not working) (32 Points)
Replied 08 August 2017

1) Company can issue securities in following manner and accordingly mentioned respective resolution shall be passed:
by way of right issue -Board resolution
by way of ESOP- Board resolution
by way of preferential basis-Shareholders special resolution

2) firstly MOA is altered only when there is increase in authorised capital, so for increase in paid up capital MOA is not require to be altered. Secondly if Company wanna insert the point regarding the interest of shareholders than such alteration or addition can be made in AOA but such alteration can be done only after getting shareholders approval by way of special resolution

Sameer Shet (42 Points)
Replied 08 August 2017

Hi Sagar and Shah Madam,

Thanks for your inputs. Does that mean, we can incorporate a clause in the AoA referring that any alteration in the paid-up capital needs to be approved my shareholders by way of 'Special Resolution'.

Thanks & Regards,

Sameer Shet

hhshah9 (not working) (32 Points)
Replied 08 August 2017

Yes sir, refer section 14 of Companies Act.2013

Regards,
CS Harsh Hiren Shah

Sameer Shet (42 Points)
Replied 09 August 2017

Thanks Harsh [sorry for referring as Shah Madam].

I still have some ambiquity as our lawyer (he is not clear though) is referring that a clause can't be incoporated in the the AoA for altering the Paid-up Capital and bringing Special Resolution.

Further, can the ESOP subscripttion be regulated by invoking a clause in the AoA, so that the BoD don't allocate shares to themselves and dilute the shareholding pattern.

" (b) to employees under a scheme of employees’ stock option, subject to special resolution passed by company and subject to such conditions as may be prescribed; or "

Thanks & Regards,

Sameer Shet

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hhshah9 (not working) (32 Points)
Replied 10 August 2017

Yes Company can incorporate such clause which is in public interest and which will not overrule the act.

You can proceed with that.

Regards,
CS Harsh Hiren Shah