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reduction of share capt

Aditi (Student) (389 Points)

13 June 2018

does reduction in share capital ( as per sec 66 of company act) results in alteration of moa.? if yes how.?

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3 Replies

Siddharth Goel (Chartered Accountant) (3026 Points)
Replied 13 June 2018

Hi,

Reduction of Share Capital is a part of Internal Restructuring of company, therefore decision of majority will prevail by way of special resolution (SR). Therefore an SR is passed in the General meeting in this regard.

Reduction of Capital should have been mentioned in the Articles of Association (AOA) and AOA should authorise the power to do so. If the AOA do not contain any provision for reduction of capital, the AOA must first be altered so as to give such power.

Also, documents to be registered with ROC include

i. A memorandum setting out details of the share capital MOA, so just a memorandum or addendum to the MOA is needed

ii. The special resolution

iii. A statement by Director confirming that the solvency statement was made not more than 15 days.

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Aditi (Student) (389 Points)
Replied 13 June 2018

articles permission is necessary for reduction in share capital also cz section 66 does nt provides for it.and it cn br concluded that it doesnt lead to alteration in moa right.?

Siddharth Goel (Chartered Accountant) (3026 Points)
Replied 13 June 2018

Yes. That is correct. As already mentioned, it is an internal affair of the company and only AOA deals with internal matters of the company. MOA does not deal with the internal affairs of the company.