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CA Intermediate · Corporate and Other Laws · Share Capital and Debentures

Anand Ltd issued 5,000 equity shares of ₹10 each at ₹10 per share to Mr. Rohan. The company later alters its memorandum to consolidate its shares into shares of larger denomination. Which statement is correct about the alteration of share capital?

A company authorised by its articles can consolidate its shares into larger-denomination shares through a general meeting resolution and must file notice of the alteration with the Registrar within the prescribed time. Consolidation does not reduce capital, so no Tribunal approval or unanimous member consent is required.

  1. AConsolidation of shares needs approval of the National Company Law Tribunal in all cases
  2. BConsolidation of shares can be done by the company in general meeting if authorised by its articles, and notice of the alteration must be given to the Registrar within the prescribed timeCorrect
  3. CConsolidation of shares reduces the share capital, so it follows the reduction procedure
  4. DConsolidation of shares needs the consent of every member of the company

Explanation

A limited company having share capital may, if authorised by its articles, alter its memorandum to consolidate and divide all or any of its share capital into shares of larger amount. It is done in general meeting and the company must file notice with the Registrar within the prescribed time. It does not reduce capital, as the total amount is unchanged, and no tribunal or unanimous consent is needed.

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