Corporate law,Private limited company
How do I increase the capital in a Private Limited Company?
An Indian Company has been incorporated under the company's act 1956 ( in 2010) with two first directors. AOA and MOA have been registered with the name of the two subscribers for 100%. Then I have invested Rs. 1 Lakh the total amount to begin the operations of the company as per a private agreement duly stamped in India. As of today - I have never received any notice from the board of directors in a shareholder meeting to notice this increase of capital in this existing private company. - I have consequently never signed nor agreed about any MOA and AOA. - the new shares of the company have never been registered to the ROC. Means that for the government, the only owners of the company are still the 2 first directors, before my increase of capital. My questions are : - What should have been the procedure for this increase of the capital , including the amendments of the AOA and MOA. - What is the responsibility of the Managing Director and the Board of Directors ? - What do I have to do to undertake an action towards the MD and the Board, to make them notice this fraud, and ask the non re-appointment of the MD?
By  Anonymous  |  15 Apr 2016  |  Upvotes: 0  | 

2 Answer(s)

Rashi Gahlaut
Advocate

1) Under Companies Act, 2013, the process of Increase in Authorise Capital is governed by Section 61 read with section 13 and 64 of Companies Act, 2013.

2) Section 61 of the Companies Act, 2013, mandates that for increasing the Authorised share capital, authorization in Articles of Association is a pre-condition. -

3) If there is no such provision then the company has to take steps for alteration of its Articles of Association in accordance with the provision of Section 14 of the Companies Act, 2013, so as to insert the clause enabling increase in the Authorised share capital of the company

4)Under fsection 173(3) of the Companies Act, 2013, notice has to be issued for convening a meeting of the Board of Directors. Main agenda for this Board meeting would be:

a. To Get in-principal approval of Directors for Increase in authorised share Capital;

b. Fix date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Ordinary Resolution, for amendment in authorised share Capital clause of Memorandum of Association. This amendment in authorised share Capital clause of Memorandum of Association shall be in accordance with the requirement of section 61 of the Companies Act, 2013;

c. To approve notice of EGM along with Agenda and Explanatory Statement to be annexed to the notice of General Meeting as per section 102(1) of the Companies Act, 2013;

d. To authorise the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) as approved by the board under clause 2(c) mentioned above

5) Notice to be given to Registrar for alteration of share capital. As per section 64 of the Companies Act, 2013, where a company alters its share capital for increase in authorised share capital in accordance with sub-section (1) of section 61, the company shall file a notice in the prescribed form with the Registrar within a period of thirty days of such increase along with a copy of altered Memorandum.

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Ravindra Purohit
Advocate

1. To increase in authorised share capital, the company has to make sure that its Articles of Association contain a provision authorising it to increase its authorized share capital. Reason being Section 61 of the Companies Act, 2013, mandates that for increasing the Authorised share capital, authorization in Articles of Association is a pre-condition. In other words Company has to make sure that its Articles of Association contain a provision authorising it to increase its authorised share capital. 2. If there is no such provision then the company has to take steps for alteration of its Articles of Association in accordance with the provision of Section 14 of the Companies Act, 2013, so as to insert the clause enabling increase in the Authorised share capital of the Company. 3. A notice is to be issued in accordance with the provisions of section 173(3) of the Companies Act, 2013, for convening a meeting of the Board of Directors. 4. A notice of the extra-ordinary general meeting (EGM) should issue to all Members, Directors and the Auditors of the company in accordance with the provisions of Section 101 of the Companies Act, 2013. The extra-ordinary general meeting (EGM) should be held on due date to pass the necessary Ordinary Resolution under section 61(1)(a) of the Companies Act, 2013, for increase in authorize share capital of the Company. 5. If you have filed the petition already before CLB seeking the reliefs against unauthorized increase in the capital then nothing else is to be done.

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