Alteration in the capital clause

Alteration in the capital clause may take any of the. following shapes:
(i) Alteration of share capital (Sections 94, 95 and 97).
(ii) Reduction of share capital (Sections 100 to 104).
(iii) Variation of the rights of the shareholders (Sections 106-107).
(iv) Re-arrangement of share capital (Section 391).
We shall explain these one by one in detail.
(z) Alteration of Capital. Power to alter capital Section 9t]. A
limited company having a share capital may, if so authorized by its Articles, alter its share capital as follows, that is to say, it may:
- increase nominal share capital by issuing new shares;
- consolidate and divide all or any parts of its share capital into shares of large amount;
- convert fully paid-up shares into stock or vice versa;
- sub-divide its shares or any of them, into shares of smaller amount; and
- cancel shares which have not been taken up and diminish the amount of its authorized capital by the amount of the shares to be cancelled.
A company can .make any of these alterations by simply passing an ordinary resolution, provided it is authorized by its Articles to do so. If the Articles do
not provide for it, then firstly Articles must be changed by passing a special resolution. Within 30 days of the date of passing the
resolution, notice must’ve given to the Registrar together with a copy of resolution and altered Memorandum, who will then register the altered
Memorandum. It is from tile date of passing the ordinary resolution that the change becomes effective. Any default will involve fine unto Rs. 500 on the
company and on every officer who is default for every day till default continues (Sec. 97). When authorized capital is increased an increased filing fee

should also be paid. In the following two cases, there is no necessity of passing a resolution by alteration of authorized capital where it stands increased

by reason of (a) an order made by the Central Government for conversion of any loans or debentures into shares of the company. .
(b) an order made by the Central Government on an application made by any public financial institution which proposes to convert any debentures or loans

with conversion clauses into shares of the company Sec. 94A (1) and (2)].
However. the company has to give the notice of increase of capital to the Registrar in the form of a return in the prescribed form within 30 days from the
date of tile receipt of the order of the Government. The Registrar will then make the necessary alteration in the Memorandum of the Company Sec. 94A
(3)].