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CS Executive · Company Law and Practice · Share and Share Capital - Concepts

Himalaya Textiles Ltd, a public limited company, has authorised capital of Rs 5 crore. Its articles are silent on any power to alter share capital. The board wants the members to pass an ordinary resolution increasing the authorised capital to Rs 8 crore. Under Section 61 of the Companies Act, 2013, what is the position?

The company must first alter its articles to give the power. Section 61(1) permits a limited company to alter its memorandum in general meeting to increase authorised capital only if its articles authorise it. Silent articles mean no such power exists until they are amended.

  1. AThe increase is possible only if the articles authorise it, so the articles must first be alteredCorrect
  2. BThe increase can be made at a general meeting even though the articles are silent
  3. CThe increase needs prior approval of the Tribunal in every case
  4. DThe increase can be made by a board resolution alone

Explanation

Section 61(1) allows a limited company having share capital to alter its memorandum in general meeting only if so authorised by its articles. As the articles are silent, they must first be altered to give this power. The Tribunal is not needed for a simple increase, and the board alone cannot do it.

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