Reclassification of Authorized share capital

[CS Mohit Goswami]

I am filing the Form SH-7 for Reclassification of Authorised share Capital of the Company. As per Instruction kit of Form SH-7 available on MCA site Field 12 and its sub fields shall be enabled and mandatory if  Reclassified  is selected in field number 7 a i.e. "Type of Impact". But in Field 7 of Form SH-7  the column of Reclassification is not available. Due to this  Field 12 is not able to fill. How the reclassification of authorised share capital will be filed through Form SH-7. 

Screenshot of Field 7 of Form SH-7 is attached herewith;

[Ashutosh Shukla]

Hi, 

The term "reclassification" does not appear in the "new form." The justification for the same is that the reclassification of the share capital is not specifically provided for under the CA 2013, and the said form has been rejected in the past on the very same ground. Strangely, however, Rule 9(2)(e) of the Companies (Sh & D) Rules 2014 talks about the conversion of preference to equity, which may very well give rise to the need for reclassification. Nonetheless, Form SH-7 now specifically reflects the actions listed under Section 61(1)(a)-(e) of the Companies Act 2013. In such a case, the most probable options are: either not filing SH-7 (see if things can be managed based on MGT 14  (consider pvt exemption) and PAS 3) at all or structuring the actions in such a manner that they fall under those five options given under the form. 

But I have not done them personally. Other members may share their opinion as well. 

Thanks and Regards,

CS Ashutosh Shukla

Disclaimer: For information purposes only. Not to be relied upon as a professional advice. 

[CS Mohit Goswami]

Hi,

Greatly appreciate your reply, but the major issue is that in case of alteration of authorised capital (if no changes done in paid up capital) we can not file the Form PAS-3.

Secondly if we select option alteration of authorised capital field in Form MGT-14, then the Form MGT-14 will not proceed for E- MOA. Due to this Changes in MOA cannot be submitted to ROC. 

How the changes in MOA will be filed ?

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Thanks & Regards                                      
Mohit Goswami
Company Secretary

Wave Industries Private Limited

+919891925024

[CS Subrat Sahoo]

Hi,

Recently i have reclassified ASC from equity to Equity and preference. 

We have to cancel the unissued ASC of EQUITY and reclassify in preference. So in column 7, last option has to be selected- Cancellation of unissued shares. Thanks & Regards

CS Subrat Sahoo

[LLB, M.Com, Company Secretary]

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[CS NIMISH SAKHIYA]

I had done reclassification of 0.5 CCPS of Rs.100 each to 0.1CCPS of Rs.10 each and selected

1. Point 2 - Consolidation or division

2. Point 7 (a) - Subdivided

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On Fri, Jun 16, 2023 at 1:46 PM CS Mohit Goswami <csmohitgo...@gmail.com> wrote:

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[Ashutosh Shukla]

Hi,

Could you please provide some more details as to how exactly you are trying to reclassify the authorised share capital of the company? Maybe then, I would be able to look for a more accurate solution. As of now, I have just assumed that you are trying to convert the compulsorily convertible preference shares into the equity shares of the company, in which case PAS-3 has the necessary fields to reflect the conversion. However, your concern is genuine and we are stuck on the MOA part. Again, assuming that it is a case of conversion, is it possible to vary the terms of the class of shares under consideration, redeem them, and then issue equity as if it would have been issued post-conversion? While the compliances will certainly increase, I think that this option can be explored in the absence of a specific option under SH-7. But again, it is just a guess. I have no idea why such an important action has been left out of SH-7.

Thanks and Regards,

CS Ashutosh Shukla

[CS Mohit Goswami]

Hi,

Please consider the details of reclassification of Authorised Share Capital

Existing Authorised Share Capital

The Authorized Share Capital of the Company is Rs. 10,00,000/-(Rupees Ten Lakh) divided into 1,00,000 (One Lakh) Equity Shares of Rs. 10/- (Rupees Ten) each

Proposed Authorised Share Capital after reclassification

The Authorised Share Capital of the Company of 10,00,000/- (Rupees Ten Lakhs) divided into 75,000 (Seventy Five Thousands) Equity Shares of Rs. 10/- (Rupees Ten) each and 25,000 (Twenty Five Thousands) Preference Shares of Rs. 10/- (Rupees Ten Only) each.

Current paid up capital of the Company 

The paid up share Capital of the Company is Rs. 1,00,000/- (Rupees One Lakh) divided into 10,000 (Ten Thousands) Equity Shares of Rs. 10/- (Rupees Ten Only) each.

[Ashutosh Shukla]

Hi,

Sorry for the delayed response. I checked the details that you shared and I think that there is only one viable option to make the proposed changes. It has already been discussed by CS Subrat Sahoo, which you may have come across, i.e., cancellation of the unissued portion of the equity to the extent it serves your purpose and subsequent increase in the other class. The following images reflect the action correctly. 

1. 

2. 

I also got to know that altering the MOA and attaching it in the pdf format to MGT-14 has worked sometimes but not always. Therefore, the MGT-14 route cannot be relied upon. 

Thanks and Regards,

CS Ashutosh Shukla

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[suryapra...@gmail.com]

Dear All,

can anyone share drafts for reclassification of share.

[Anjali Sharma]

Hii, Can you share the draft documents for reclassification of shares.