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CS Executive · Setting Up of Business, Industrial and Labour Laws · Conversion of Business Entities

Himalaya Agro Ltd. is an unlimited company with share capital that passes a resolution for registration as a limited company. Which step does the Companies Act, 2013 specifically permit it to take in that resolution?

The company may provide that a specified portion of its uncalled share capital will be callable only in the event and for the purposes of winding up. It may also increase the nominal amount of shares, with the increase similarly callable only on winding up.

  1. ACancel all its uncalled share capital with no restriction
  2. BProvide that a specified portion of its uncalled share capital cannot be called up except in the event and for the purposes of winding upCorrect
  3. CIncrease the nominal amount of shares so that the increased part can be called up at any time by the Board
  4. DConvert its share capital into debentures automatically

Explanation

Section 65 lets an unlimited company increase the nominal value of its shares or provide that part of its uncalled capital is callable only on winding up. The increased capital under (a) is also callable only on winding up, so the option allowing calls at any time is wrong. Cancelling capital or converting it to debentures is not provided.

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