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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Debt and Procedural Aspects

Where a Government conversion order for debentures is not appealed, or the appeal is dismissed, and the order increases the company's authorised share capital, what is the effect on the memorandum?

The memorandum stands altered automatically, and authorised share capital stands increased by the value of shares into which the debentures or loans were converted. No separate special resolution is needed, provided no appeal was made or the appeal was dismissed.

  1. AThe company must pass a special resolution to alter its memorandum
  2. BThe memorandum stands altered and authorised capital stands increased by the value of shares into which debentures are convertedCorrect
  3. CThe Registrar must approve the increase before it takes effect
  4. DAuthorised capital remains unchanged until the next general meeting

Explanation

The Act provides that in such a case the memorandum stands altered automatically and authorised capital stands increased by the value of shares arising from the conversion. No separate resolution or approval is required.

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