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Company Law » MOA and AOA of Company and Its Alteration » Capital Clause and Alteration of Capital Clause in MOA

MOA and AOA of Company and Its Alteration

Capital Clause and Alteration of Capital Clause in MOA

Capital Clause 

  • This clause shall state the amount of the capital with which the company is registered.
  • The shares into which the capital is divided must be of fixed value,which is commonly known as the nominal value of the share. 
  • As per section 61 of the Companies Act, 2013, nominal capital shows maximum limit beyond which the company cannot issue shares without altering the memorandum.
  • A company is not authorized to issue capital beyond its authorized/nominal/registered capital. If it receives applications for shares beyond the shares covered by the authorized capital, the amount received on excess number of shares should be returned.

Types of alteration of capital clause  

Following are the types of alteration of capital clause in the general meeting of a company limited by shares as per section 61(1) of the Companies Act, 2013 :

  • Increase its authorized share capital by such amount as it thinks expedient.
  • Consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares. 
  • Convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination.
  • Sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived.
  • Cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled

Note - All the above alterations do not require the confirmation by the Tribunal except that alteration relating to consolidation and division which results in changes in the voting percentage of shareholders shall not take effect unless it is approved by the Tribunal on an application made in the prescribed manner.

Procedure for altering the Memorandum of Association for increasing the Authorised Capital of the Company

under Section 61 and 64 of the Companies Act 2013 read with Rule no 15 of Companies (Share Capital and Debenture) Rules, 2014

Step -1 : Check authorization in Articles of Association of company, if there is no such provision then the company has to take steps for alteration of its Articles of Association

Step - 2 Issue notice of board meeting to all the directors least 7 days before the date of Board Meeting under Sec. 173 and SS-1.

Step - 3 : Call and hold board meeting and 

  • Pass Board Resolution
  • Delegate authority to any one director of the company to sign, certify and file the requisite forms with ROC.
  • Fix day, date, time and venue for holding the general meeting of the Company for passing a  ordinary resolution under section 61(1)(a) for increase in the authorized share capital of the Company
  • Authorize the Director or Company Secretary to sign and issue notice of the general meeting.

Step - 4 : Issue notice of General Meeting least 21 days before the actual date of General Meeting all shareholders under section 101 of Companies Act, 2013 and SS-2.

Step - 5 : Call and hold General Meeting for change in name of company and pass Ordinary Resolution under section 61(1)(a) for increase in the authorized share capital of the Company

Step - 6 File Form SH-7 within 30 days of passing of Ordinary Resolution with the concerned ROC with prescribed fees.

Attachments :

  • Notice of general meeting.
  • Certified True copy of Ordinary Resolution along with the explanatory statement pursuant to Section 102 of the Act.
  • Altered Memorandum of Association.

Step - 7 Concerned ROC will check the e-form and attached documents and will approve the increase in authorize share capital.

Step - 8 The company shall file a notice in the prescribed form with the Registrar within a period of 30 days of alteration to its share capital along with a copy of altered Memorandum.

Note - No need to pass Special Resolution for increase in authorized share capital.

However, in case the alteration of capital clause of the Memorandum of Association of the company requires the alteration of the Articles of Association of the company then, the special resolution for the alteration of articles of association of the company be passed and form MGT-14 should also be filed for the filing of copy of such special resolution with the concerned Registrar within 30 days from the date of passing of such resolution along with the prescribed fees. 


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Company Law

Chapter's Name:

1. Introduction to Company Law
2. Incorporation of Companies
3. MOA and AOA of Company and Its Alteration
4. Prospectus And Allotment of Securities
5. Share and Share Capital

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