Companies Act 1956: Alteration in the share capital:

Alteration in share capital

Section 94

• According to section 94, companies may alter their share capital in different ways e.g.,
• They may increase, decrease, subdivide or consolidate their shares.
• Every Company issuing shares always has a power to alter the share capital depending upon the circumstances.
• The companies altering the share capital have to follow the procedures of company law and only then they can alter their share capital.
• The companies may convert shares into stock and stock into shares.
• Stock means that the company has created some stock capital and any person can deal in the capital and there is no limitation for purchasing fixed number of shares.
• If because of alteration there is change in memorandum then the company must pass a special resolution and submit it to the registrar of companies.
• While altering the shares a notice is given to ROC under sec 95 hence without giving a notice share capital cannot be altered.
• As per section 97 when the share capital is increased then the company must intimate the ROC accordingly and without intimating the ROC the increase in share capital will be ineffective.
• If the company makes a default in these provisions then directors of the company will be liable to penalties.