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Procedure to increase Authorised Share Capital

Every company after its registration whether its Public limited Company or private limited company, there are number of compliance which a company needs to comply on day to day basis. But after some time when the business of the company expands, then the company require fund for its expansion, and one of the way which available to company is to issue shares but in case the company is intending to issue share beyond increase its authorised share capital then it requires increasing the authorised share capital of the company. Steps to increase authorised share capital     Call Board Meeting: You have to issue notice for holding a Board Meeting. Notice of the Board Meeting has to be sent along with proper Agenda. Agenda contains all the items relating to the matter which are discussed at the Board Meeting. The main items must be contained with respect to increase in the authorised share capital: I. To get approval from the Board of Directors to increase in authorised share capital. II. To fix the date, time, and place of holding Extra ordinary General Meeting (EGM) to get the approval of the shareholders by way of ordinary resolution to change the AOA. III. Authorise the director or company secretary to the issue the notice of EGM. The Notice must be issued to all the members of the company. Holding EGM: Next, the Company will be required to hold Extra Ordinary General Meeting and pass the ordinary resolution (approval of at least 51% shareholders) as per the requirement of section 61 of the Company Act, 2013 for increase in authorized share capital and consequence of which alteration in clause V i.e. capital clause of the Memorandum of Association of the Company. ROC Filing: After holding EGM and passing resolution, company needs to file the e-form SH-7 within 30 days of passing ordinary resolution with the concerned ROC. This form can be filed online. Important attachments of form SH-7: I. Notice of Extra Ordinary General Meeting (EGM); II.Certified true copy of the resolution passed at EGM; III.Altered Memorandum of Association (MOA). After filing all these documents, the concerned officer checks the form. Once the form is approved the data of the company is updated on the MCA portal automatically. Do we need Special Resolution or Ordinary resolution is enough ? Some of the person are of view that we should pass Special resolution rather than Ordinary resolution as it involve alternation in Memorandum of Association and also involve section 13 of the companies act, 2013 which require the alternation of memorandum of association via special resolution. Please appreciate that the special resolution for change in Memorandum of Association is mainly required in case of change of name and change of registered office as governed by section 13 of the Companies Act, 2013. However, Increase in Authorized Share Capital is mainly governed y section 61 of the Companies Act, 2013, which is complete regarding the what type of shareholder resolution is required. So in such a [...]

By |2019-10-28T09:24:27+00:00October 28th, 2019|Secretarial|0 Comments
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Annual Filing of a Private Limited Company

September seems to be very crucial month for every Company. In the month of September, many compliances, especially compliances related to preparation and reporting of Financial Statements are due like Income Tax Return are to be filed, Financial statement and Directors report needs to be finalised, Annual General Meeting is to be conducted, ROC reporting is to be processed. Hence, lot of pressure and burden is on the Company as well as for the Professional. An effort has been made to explain in a simplified manner the process of annual filing in case of a private limited company for better understanding of the stakeholders. Preparation of Financial Statement The financial statement so prepared shall depict the performance of the company during the financial year.But, before moving forward, we should know what is the meaning of Financial Year. Financial Year Pursuant to Section 2(41) of the Companies Act, 2013, Financial year means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year. Every Company after ending of Financial Year,is required to report to the Registrar of Companies its financial statement as well as the Annual Return. The financial year for the purpose of Income Tax is defined as the period starting from the date of incorporation or the 1st day of April of the year and ending on the upcoming 31stday of March.Infact, the reporting is to be done even for one day, irrespective of profit earned or not, transaction entered or not. Financial Statement: Section 2 sub section 40 of the Companies Act, 2013 defines "financial statement" in relation to a company, includes— (i) Balance Sheet: basically, a statement which shows the position of a Company as on the last date of the financial year (ii) Profit and Loss Accountor an Income and Expenditure Account: Statement that reflect the transactions entered during the financial year with respect to income earned and expenses incurred; (iii) Cash Flow Statement: Statement showing inflow and outflow of funds for the financial year; (iv) a statement of changes in equity, if applicable; and (v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv): Provided that the financial statement, with small company may not include the cash flow statement. Reporting Reporting to Income Tax Every Company has to report details of its financial statement and profit and loss account with the Income Tax Department. Further, tax needs to be paid in case of any profit is earned after deducting all the relevant expenses. Tax rate on Companies are as follows: - Turnover exceeding Rs. 250 Crores: 30% - Turnover below Rs. 250 Crores: 25% Though the financial statement are prepared as per Companies Act, 2013 but the Tax Return is to be filed only after considering the Income and Expenses allowed under the Act and the rate of depreciation as [...]

By |2019-09-17T06:44:54+00:00September 17th, 2019|Secretarial|0 Comments
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