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Reduction or dimunition of authorized share capital

Llewellyn (Director) (30 Points)

05 June 2018

If a company has its authorized share capital as 10Lakhs and its paidup capital as 1 Lakh, can it reduce or dimunit its authorized share capital as 1.5 or 2 Lakhs? What would be the process if the AOA states that the company may reduce its share capital by special resolution? Would the MOA & AOA also need ammendment?

Based on the above, please clarify this point

1. After Dimunition of Authorized Share Capital from 10 Lakhs to 1.5 Lakhs, will the Authorized share capital in the MOA be updated?

2. If the ans for 1. is no, will it be possible by reduction?

3. If ans of 2 is yes, what kind of a time frame is needed to take an approval from the Tribunal?

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2 Replies

Aditi (Student) (389 Points)
Replied 05 June 2018

first of all please clarify that u want to dimunish the capital which means cancelling the unsubscribed portion of issued capital and it results in decrease in authorised capital which requires Ordinary resolution, articles authority , alteration of capotal clause of moa (section 61) and tribunal approval required only in case of reduction of share capital which means either paying off already paid up capital or extinguishing liability on unpaid share and doesnt results in moa alteration procedure under section 66 to be followed for obtaining tribunal approval and special resolution required.
so as per my interpretation of ur question ur co. eants to dimunish the share capital by unsubscribed amount so it will result in moa alteration . separate resolution for obtaining approval for dimunition is req(o.r.) amd for alteration of Moa ( Special resolution)