What we do
Our work in this practice group is structured around the records, deadlines, and decisions involved:
- Guidance on the appropriate capital restructuring process.
- Assistance with increase or alteration of authorized share capital.
- Proper preparation of Board and shareholder resolutions.
- Support with applicable share capital documentation.
- Assistance with MCA forms and statutory filings.
- Accurate maintenance of updated capital records.
- Guidance on applicable stamp duty and statutory requirements.
How the engagement works
Changes in company share capital are governed primarily by the Companies Act, 2013, applicable rules, and the company’s Memorandum and Articles of Association. Different procedures apply depending on whether the company is increasing authorized capital, altering share capital, consolidating or subdividing shares, converting shares into stock where permitted, or reducing share capital. Certain changes require shareholder approval and prescribed filings with the Registrar of Companies, while capital reduction may require additional statutory procedures and approvals.
Scenario 1: A company wants to increase its authorized share capital before issuing additional shares.
Scenario 2: Existing shareholders want to restructure the company’s share capital through consolidation or subdivision of shares.
Scenario 3: A company is raising capital and needs its authorized capital increased to accommodate the proposed issue.
Scenario 4: A company wants to alter its share capital structure as part of a business restructuring or ownership reorganization.
Scenario 5: A company is considering reduction of share capital and needs professional guidance on the applicable legal procedure.
Capital Structure Review
We review the company’s existing authorized and paid-up capital, Articles of Association, shareholding structure, proposed transaction, and intended capital change.
Capital Change Planning
We identify the appropriate legal and procedural route for increasing, altering, consolidating, subdividing, reclassifying, or reducing share capital.
Board & Shareholder Documentation
We prepare applicable Board resolutions, shareholder resolutions, notices, explanatory statements, and other corporate documentation required for the capital change.
MOA & Corporate Record Updates
Where required, we assist with updating the capital clause of the Memorandum of Association and the company’s statutory registers and corporate records.
MCA Filing Support
We prepare and assist with filing the applicable MCA forms, attachments, resolutions, and supporting documents with the Registrar of Companies.
Post-Change Compliance
We assist with updating share certificates, capital records, registers, and other corporate documentation following completion of the capital change.
Step-by-step process
Step 1: Capital & Transaction Review
We review the company’s existing capital structure, Articles, shareholding, proposed transaction, and reason for the capital change.
Step 2: Legal Procedure Assessment
We determine the applicable Companies Act procedure, approval requirements, resolutions, forms, and supporting documents based on the proposed change.
Step 3: Corporate Approvals
We prepare the required Board and shareholder documentation and assist with completing the applicable approval process.
Step 4: MCA Filing & Capital Update
We assist with filing the applicable MCA forms and updating the company’s Memorandum, registers, and statutory records.
Step 5: Post-Change Documentation
We complete the applicable post-change documentation and provide guidance on share certificates, capital records, and related compliance requirements.
Key deliverables & outputs
General questions
01What does change in capital mean?
Change in capital refers to a legally permitted alteration of a company’s share capital structure, such as increase of authorized capital, consolidation, subdivision, reclassification, or reduction of capital, depending on the applicable provisions.
02Can a company increase its authorized share capital?
Yes. A company may increase its authorized share capital subject to the Companies Act, its Articles of Association, required corporate approvals, applicable fees, and prescribed MCA filings.
03What is the difference between authorized and paid-up capital?
Authorized capital is the maximum share capital that a company is authorized to issue under its constitutional documents, while paid-up capital represents the amount of share capital actually issued and paid by shareholders.
04Does increase in authorized capital require shareholder approval?
The applicable approval depends on the company’s Articles and the Companies Act provisions governing alteration of authorized share capital. In the usual process, an alteration of authorized capital requires approval of the members in accordance with the applicable provisions.
05What MCA form is used for increase in authorized capital?
Form SH-7 is generally used for filing notice of alteration of share capital with the Registrar of Companies, subject to the applicable Companies Act provisions and the nature of the capital alteration.
06Can share capital be reduced?
Yes, a company may reduce its share capital subject to the conditions and procedure prescribed under the Companies Act. Capital reduction generally involves additional approvals and statutory procedures beyond a routine increase in authorized capital.
07Can shares be consolidated or subdivided?
Yes. Subject to the applicable Companies Act provisions, Articles of Association, and required approvals, a company may consolidate or subdivide its share capital in accordance with the prescribed procedure.
08Can you handle the complete capital change process?
Yes. We can assist with capital structure review, procedure planning, Board and shareholder resolutions, statutory documentation, MCA filings, Memorandum updates, and post-change corporate records.