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Alteration of Share Capital

Alteration of share capital is a significant corporate action that allows a company to modify its capital structure to meet business needs. Under the Companies Act, 2013, businesses can increase, decrease, reclassify, or restructure their share capital through authorized legal procedures. This process plays a crucial role in enabling companies to attract investments, manage financial risks, and comply with regulatory requirements.

At Company Mitra, we offer end-to-end assistance for share capital alteration, ensuring a smooth and legally compliant process. Our team of experts handles everything from documentation and approvals to regulatory filings and follow-ups with the Ministry of Corporate Affairs (MCA). With us, you get a hassle-free experience while ensuring that your company meets all legal obligations.

Requirements

✅ Board and Shareholder Approval – Approval is required through board and shareholder resolutions.
✅ Compliance with Companies Act, 2013 – Alteration must align with legal provisions.
✅ Amendment of MOA & AOA – Changes must be reflected in company documents.
✅ MCA Filing (if applicable) – Certain changes require filing with the Registrar of Companies (ROC).
✅ NCLT Approval (in specific cases) – For capital reduction, tribunal approval may be required.

Benefits of Share Capital Alteration

🔹 Attracts More Investments – Increasing authorized share capital allows for new investments.
🔹 Enhances Financial Flexibility – Enables better decision-making regarding capital allocation.
🔹 Ensures Compliance – Keeps the company aligned with regulatory norms.
🔹 Improves Valuation – Helps in business expansion and financial restructuring.
🔹 Facilitates Mergers & Acquisitions – A crucial step in corporate restructuring.

Document Required

Documents Required
- Board resolution approving alteration📌 Shareholder resolution passed in General Meeting📌 Amended MOA & AOA📌 Latest financial statements📌 List of shareholders📌 Digital Signature Certificates (DSC) of authorized persons

Professional Fees

~~₹10,000.00~~ ₹5,000.00

Additional Cost

Process time

⏳ Typically 7-15 working days (subject to MCA approval)

Steps

👉 Board Meeting to approve alteration
👉 Conduct General Meeting for shareholder approval
👉 Prepare necessary resolutions and documents
👉 File necessary forms with ROC (MGT-14, SH-7, etc.)
👉 Follow up for MCA approval
👉 Issuance of updated share certificates (if required)

FAQ

1️⃣ What are the types of share capital alteration?
Increase in authorized capital, subdivision/consolidation of shares, reduction of capital, and reclassification of shares.

2️⃣ Is shareholder approval mandatory?
Yes, an ordinary or special resolution is required in most cases.

3️⃣ Can a private company alter share capital?
Yes, as per the provisions of the Companies Act, 2013.

4️⃣ Which forms are filed with MCA?
Forms MGT-14, SH-7, and other applicable filings.

5️⃣ Is government approval required for increasing share capital?
Only ROC approval is needed unless it involves FDI or SEBI regulations.

6️⃣ What is the penalty for not filing alteration details?
Non-compliance may lead to penalties as per the Companies Act.

7️⃣ Can the share capital be reduced?
Yes, subject to NCLT approval in specific cases.

8️⃣ How long does MCA take to approve?
Typically 7-15 working days.

9️⃣ Do MOA & AOA need to be updated?
Yes, amendments must be made to reflect the new share capital structure.

🔟 Is digital signature (DSC) required?
Yes, for filing forms with MCA.

1️⃣1️⃣ What happens after approval?
The company records changes in statutory registers and updates share certificates if needed.

Compliances

Compliance Requirement	Due Date
📌 Board Resolution	Before General Meeting
📌 Shareholder Approval	Within 30 days of Board Approval
📌 Filing with MCA (SH-7 & MGT-14)	Within 30 days of Resolution
📌 Issuance of Share Certificates	Within 60 days of approval (if required)

Penalties

Non-Compliance	Penalty
🚨 Delay in Filing SH-7 (if applicable)	₹1,000 per day (Max ₹10 lakh)
🚨 Failure to Amend MOA/AOA	₹5,000 for the company + ₹1,000 per officer per day
🚨 Proceeding Without Shareholder Approval	Alteration is void and may attract penalties

📜 Legal Reference – Section 64 of the Companies Act, 2013

“Where a company alters its share capital in any manner specified under Section 61, it shall file a notice in the prescribed form (SH-7) with the Registrar within 30 days of such alteration along with the prescribed fee.”

📜 Penalty under Section 117(2) – ₹10,000 + ₹100 per day (up to ₹2 lakh) for the company and ₹50,000 for officers in default.