Query_Section 61 - reclassification of share capital

[Anjali Gupta]

Dear All,

Please answer my query related to reclassification of share capital of a private company in compliance with the provisions of Companies Act, 2013.

Facts of the case:

The Authorised capital of the Company is Rs. 50,00,000 divided into 5,00,000 equity shares of Rs. 10 each.

Now, the Company wants to issue preference shares and for this it has sought approval of the members of the company in general meeting and post approval, the capital clause reads as follows:

The Authorised Share Capital of the Company is Rs. 50,00,000 (Rupees Fifty Lakhs only) divided into 4,85,000 (Four Lakh Eighty Five Thousand) Equity Shares of face value of Rs. 10/- (Rupees Ten Only) each and 1,50,000 (One Lakh and Fifty Thousand) Preference Shares of Rs. 10/- (Rupees Ten Only) each. 

Issue:

We have filed Form SH 7 for giving effect to the abovesaid amendment under section 61 of the Act. The form was marked for resubmission with comments "Section 61 and Section 64 doesn't provide for such reclassification."

Then, we have resubmitted the form alongwith a clarification letter that reclassification is permitted and it corresponds to section 94 of the Companies Act, 1956.

The form had been rejected.

I request all the members to please clarify as to whether such reclassification is permitted or not.

Thanks

Anjali

[Jayashree Chandrasekaran]

Re-classifiation is definitely permitted.....will get you more details a little later

Jayashree

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C.JAYASHREE
PROPRIETOR
S.GANESH&ASSOCIATES
CHENNAI
98840 17120

[Himanshu Iplani]

Dear Anjali,

We have just handled the same case in related to a company the way out is let SH7 remain rejected and if your mgt14 is approved then directly file for allotment now, because in no case roc will approve your form. Few companies have faced same issue and they were not able to get there form SH7 approved.

Regards

CS Himanshu Iplani.

Mohit Jian & Co.

Delhi 

[nidhi goel]

Correct.... SH-7 for Reclassification of Capital had been rejected in our case too. 

We have done the same in year 2015 which was approved.

But now ROC asked that reclassification is not allowed , as company evades the ROC fee by doing reclassification and company have to increase the authorised capital instead of reclassification. 

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Thanks & Regards

Nidhi Goel

Company Secretary.

[Anjali Gupta]

Thank yo all for the inputs.

So, as an alternate, we need to increase the authorised capital in order to issue preference shares?