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EGM Resolution for Reclassification of Authorised Share Capital

draft resolution for reclassification of authorised share capitalIn accordance with section 61 of the Companies Act, 2013, a limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting with regard to its authorised share capital as it thinks expedient.

In order to reclassify the authorised share capital, a company has to obtain the prior approval of the board of directors and shareholders.

Templates of shareholders' resolutions in this regard are as follows—


SAMPLE #1

#. Reclassification of Authorised Share Capital and Consequent Amendment to Memorandum

To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of sections 61 and 64 of the Companies Act, 2013 and any other applicable provisions, including any statutory modification(s) thereto or re-enactment(s) thereof for the time being in force, the Authorised Share Capital of the company be and is hereby reclassified:

 from INR 500,000 (Indian Rupees Five Lakhs Only) divided into 50,000 (Fifty Thousand) equity shares of INR 10 (Indian Rupees Ten Only) each;

 to INR 400,000 (Indian Rupees Four Lakhs Only) divided into 40,000 (Forty Thousand) equity shares of INR 10 (Indian Rupees Ten Only) each and INR 100,000 (Indian Rupees One Lakh Only) divided into 5,000 (Five Thousand) preference shares of INR 20 (Indian Rupees Twenty Only) each.

FURTHER RESOLVED THAT pursuant to the provisions of Section 13 and other applicable provisions, if any, of the Companies Act 2013, the existing Clause V of the Memorandum of Association of the company be and is hereby altered by deleting the same and substituting in its place the following as new Clause V: 

 V. The Authorised Share Capital of the Company is INR 500,000 (Indian Rupees Five Lakhs) divided into 40,000 (Forty Thousand) equity shares of INR 10 (Indian Rupees Ten) each and 5,000 (Five Thousand) preference shares of INR 20 (Indian Rupees Twenty) each.

RESOLVED FURTHER THAT the Board of Directors of the company be and is hereby authorized to delegate all or any of the powers herein conferred to any Committee of the Board or any Director(s) or Officer(s) of the company and to generally do all such acts, deeds and things as may be required in connection with the aforesaid resolutions, including making necessary filings with the Registrar of Companies & Stock Exchanges and execution of any documents on behalf of the company and to represent the company before any governmental authorities as and when necessary.”




Explanatory Statement pursuant to Section 102 of the Companies Act, 2013

Item No. ...

The Board of Directors, in their meeting held on (date), approved the preferential issue of compulsorily convertible preference shares, subject to the approval of the members of the company. In view of the proposed issue of preference shares, it is proposed that the Authorised Share Capital of the company be reclassified as mentioned in the resolution set out in Item no. ... of this Notice.

Article ... of the Articles of Association of the company, permits the company to alter its authorised share capital. In accordance with Section 61(1) of the Companies Act, 2013 (the "Act"), the company can alter its authorised share capital with the approval of the members of the company by passing an ordinary resolution.

In order to alter the authorised share capital of the company, the memorandum of association will also undergo a change, subject to the approval of the members by way of an ordinary resolution, in terms of Section 13 of the Companies Act, 2013.

The Board at its meeting held on (Date), considered and approved the reclassification of authorised share capital of the company and consequent amendment to the memorandum of association of the company, subject to approval of the shareholders.

All the documents as referred to in this Notice and the explanatory statement are open for inspection by the members of the company at the Registered Office of the company on all working days, during business hours and between 11:00 a.m. till 01:30 p.m., up to the date of the ensuing general meeting.

None of the directors, managers and key managerial personnel of the Company or their respective relatives are concerned with or interested, financially or otherwise, in the foregoing resolution.

The Board commends the resolution proposed at Item No. ... for your approval by way of an Ordinary Resolution.




SAMPLE #2

#. Re-classification of Authorised Share Capital

To consider and if thought fit, to pass, with or without modification(s), the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of section 13, 61, 64 and all other applicable provisions, if any of the Companies Act, 2013 read with rules framed thereunder and the Articles of Association of the company and applicable provisions of Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 issued by the Securities Exchange Board of India (SEBI) and the other Rules, Regulations, Circular, Notifications, etc. issued thereunder, the consent of the members of the company be and is hereby accorded for re-classification of the Authorized Share Capital under ‘Clause V’ of the Memorandum of Association of the company as mentioned below:
 a. by converting 50,000 Compulsorily Convertible Preference Shares (‘CCPS’) of Rs. 20 each aggregating to Rs. 1,000,000 into 100,000 Equity Shares of Rs. 10 each aggregating to Rs. 1,000,000;
 b. by converting 50,000 Preference Shares of Rs. 20 each aggregating to Rs. 1,000,000 into 100,000 Equity Shares of Rs. 10 each aggregating to Rs. 1,000,000.

FURTHER RESOLVED THAT consequent upon the above stated re-classification, the existing Clause V of the Memorandum of Association of the company be and hereby deleted and substituted by the following new Clause V:

 "The authorized share capital of the company is Rs. 4,000,000 (Rupees Forty Lakh only) divided into 400,000 (Rupees Four Lakh only) Equity Shares of Rs. 10 (Rupees Ten only) each.".

FURTHER RESOLVED THAT the Board of Directors of the company be and is hereby authorized on behalf of the company to do all such acts, deeds and things as may be required or considered necessary or incidental thereto to give effect to the foregoing resolutions.”




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Imp. Note: Please refer the latest provisions of the Act and rules thereunder, and any other applicable provisions before finalising the resolution. The above mentioned resolutions are only specimen copy of resolutions for reference purpose only.

Comments

  1. Jay Brajraj7/30/2019

    Glad to be learning the drafting of resolutions from your site

    ReplyDelete

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