Overview of Alteration of Share Capital
Alteration of Share Capital refers to the process where a company registered under the Companies Act, 2013, modifies its share capital structure as authorized by its Memorandum of Association (MoA) and Articles of Association (AoA). This alteration can include increasing the authorised capital, consolidating and dividing shares, converting shares into stock, and more. Understanding these processes is crucial for companies looking to adapt to changing business environments or strategic needs.
Legal Framework and Compliance
- Section 61 of the Companies Act, 2013 outlines the provisions for altering share capital, requiring companies to follow specific procedures and obtain necessary approvals.
- Filing Requirements: Post alteration, companies must file the changes with the Registrar of Companies (RoC) within 30 days, detailing the alteration in Form SH.7 as per Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014.
- Penalties for Non-Compliance: Failing to file the necessary documents can result in penalties for the company and its officers, emphasizing the importance of adhering to legal requirements.
Conclusion
Alteration of Share Capital is a strategic tool for companies under the Companies Act, 2013, allowing them to adjust their capital structure to meet business needs and growth objectives. By following the prescribed legal procedures and ensuring timely compliance, companies can effectively manage their share capital, contributing to their long-term success and sustainability.