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Information about ALTERATION OF SHARE CAPITAL faa chandu

Published on February 17, 2014

Author: chandupulapa


ALTERATION OF SHARE CAPITAL AND REDUCTION OF SHARE CAPITAL: ALTERATION OF SHARE CAPITAL AND REDUCTION OF SHARE CAPITAL ) Presented by P. Chandra sekhar BCOM , (M.B.A.*) (12NH1E0030) DEPT OF MANAGEMENT STUDIES VKR .VNB & AGK COLLEGE OF ENGINEERING INTERNAL RECONSTRUCTION : INTERNAL RECONSTRUCTION Reconstruction of capital structure of a company with out liquidation of co MEETING ABOUT INTERNAL RECONSTRUCTION OF A CO: MEETING ABOUT INTERNAL RECONSTRUCTION OF A CO Debtors ,creditors ,shareholders ( es,ps ) debenture holders e.t.c MODES OF INTERNAL RECONSTRUCTION : MODES OF INTERNAL RECONSTRUCTION 1) Alteration of share capital 2)variation of share capital 3)scheme of compromise/arrangements 4)surrender of shares Alteration of share capital: Alteration of share capital According to sec(94) a company limited by a shares and company limited by guarantee with a share capital are empowered to make alteration in their share capita if AOA permits to do so CONDITIONS FOR ALTERATION OF CAPITAL : CONDITIONS FOR ALTERATION OF CAPITAL If authorized by Articles and approved by GM (S 62), a company may: increase its share capital ( lodgment of form 28 and 11 within 14 days of GM) consolidate and divide its shares into larger amount. convert paid up shares into stock or vice versa Subdivide its shares into smaller amount( share split) Cancel any shares that have not been taken by any person. SSM Copyrights Reserved 2011 6 ACCORDING TO COMPANIES ACT 1956 Ways of Alteration of share capital: Ways of Alteration of share capital 1)Increase in share capital 2)reduction of share capital 3)consolidation 4)subdivision 5)conversion 6)canceling unissued shares Ways cont….: Ways cont…. 1)Increase in share capital a)further issue of the unissued shares b) increase in authorized share capital 2)consolidation of shares RS10 into RS100 each 3)subdivision of shares RS 100 into RS10 each 4)conversion of stock into shares/shares into stock 5)for canceling un issued shares no adjustment has to be made just authorized capital is reduced Reduction of share capital : Reduction of share capital Means to reduce share capital A company limited by shares or guarantee can reduce CONDITIONS FOR REDUCTION OF SHARE CAPITAL: CONDITIONS FOR REDUCTION OF SHARE CAPITAL 1) Conditions to be satisfied(S64): i) Authorized by Articles ii) Court order iii) Special Resolution 2) Purposes of the capital reduction: i) extinguish or reduce liabilities on any shares not paid up. ii) cancel paid up capital lost or unrepresented by assets. iii) pay off any paid up share capital in excess of needs SSM Copyrights Reserved 2011 10 ACCORDING TO COMPANIES ACT 1956 Accounting treatment for internal reconstruction: Accounting treatment for internal reconstruction Simple logic Credit reconstruction account for any corresponding gain under reconstruction policy Debit reconstruction account with all expenses, losses ,write-offs If surplus balance any is there after reconstruction transfer to capital reserveA /c Conclusion : Conclusion Internal reconstruction is just used to “window dress” the balance sheet and to attract shareholders PowerPoint Presentation: Thank you

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