Alteration of share capital refers to a change in the number or type of shares issued by a company. This can include increasing or decreasing the total number of shares, issuing new shares, or converting existing shares into a different type.
The process of altering share capital usually requires approval by the shareholders and may also require regulatory approval. The alteration of share capital can have significant implications for the ownership structure and financial standing of a company.
Points | Capital Reduction | Alteration of Share Capital |
Section | Capital Reduction under section 66 of the Company Law. | Alteration of Share capital comes under Section 61 of Company Law. |
Capital Clause | It is not necessary to change the capital clause it maybe or maybe not change the capital clause. | As Authorised Capital is affected, there will always be a change or alteration in the Capital Clause. |
Procedure | Long process, as multiple stakeholders’ clearances, are required. | In comparison to the other, the entire procedure is simpler, more adaptable, and takes less time. |
Creditor's NOC | Creditors’ interests are affected in this case so NOC is needed. | The creditor’s interests are unaffected in this case. |
Approval from Court | At the time of Capital Reduction approval of the Court is required. | At the time of Alteration of Share Capital approval of the Court is not required. |
A company’s share capital can also be changed by dividing the value of the shares held by its shareholders.
Registered or nominal capital is another name for authorized capital. This is the amount of money needed to start a business.
The Company can also change the capital of its shares by converting fully paid up shares into stock. The whole number of fully paid up shares is referred to as stock.
The company can also change its share capital by combining shares of lower denominations into larger denominations.
The corporation can also cancel any outstanding debt. However, this does not result in a change in share capital.
