{"id":14402,"date":"2018-09-10T11:20:25","date_gmt":"2018-09-10T11:20:25","guid":{"rendered":"https:\/\/www.legalraasta.com\/blog\/?p=14402"},"modified":"2026-04-08T11:35:11","modified_gmt":"2026-04-08T06:05:11","slug":"reduction-of-share-capital","status":"publish","type":"post","link":"https:\/\/www.legalraasta.com\/blog\/reduction-of-share-capital\/","title":{"rendered":"Reduction in Authorised Share Capital Procedure"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.legalraasta.com\/blog\/reduction-of-share-capital\/#Introduction\" title=\"Introduction\">Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.legalraasta.com\/blog\/reduction-of-share-capital\/#The_procedure_of_reduction_of_share_capital\" title=\"The procedure of reduction of share capital\u00a0\">The procedure of reduction of share capital\u00a0<\/a><\/li><\/ul><\/nav><\/div>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As prescribed under section 66 of the <a href=\"https:\/\/www.legalraasta.com\/companies-act-2013\/\" target=\"_blank\" rel=\"noopener\">Companies Act 2013<\/a>, A company limited by shares or limited by guarantee and having a share capital by a special resolution may do the reduction of share capital in any manner subjected\u00a0to confirmation by the NCLT on an application by the company. It can reduce in particular, may\u2014<\/p>\n<ul>\n<li>In respect of the share capital not paid-up, extinguish or reduce the liability on any of its shares; or<\/li>\n<li>Either with or without extinguish or reduction in liability on any of its shares,\u2014<\/li>\n<\/ul>\n<p>(i) Cancel any paid-up share capital that has been lost or is unrepresented by available assets,\u2014<\/p>\n<p>(ii) Pay off any paid-up share capital that has been exceeding of the wants of the company,<\/p>\n<p>It can alter its memorandum by reducing the amount of its share capital and of its shares accordingly.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_procedure_of_reduction_of_share_capital\"><\/span><strong>The procedure of reduction of share capital\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A company who wants to reduce its share capital requires to take the following procedural steps:<\/p>\n<ul>\n<li>Make sure that<a href=\"https:\/\/www.legalraasta.com\/article-of-association\/\" target=\"_blank\" rel=\"noopener\"> articles of association<\/a> contain a provision that should authorize the reduction of share capital. If there is no such kind of provision then the articles must be altered in accordance with the provisions of section 14 of the Companies Act 2013<\/li>\n<li>Convene and conduct a <a href=\"https:\/\/www.legalraasta.com\/blog\/meetings-board-powers-amendment-rules-2018\/\" target=\"_blank\" rel=\"noopener\">board meeting<\/a> to \u2014<\/li>\n<\/ul>\n<p>a. The resolution shall approve the scheme of reduction of share capital,<\/p>\n<p>b. The time, date and venue should be fixed for holding a <a href=\"https:\/\/www.legalraasta.com\/blog\/annual-general-meeting-under-companies-act\/\" target=\"_blank\" rel=\"noopener\">General Meeting of the company<\/a> for passing a special resolution for reduction of share capital subject to confirmation by National Company Law Tribunal as per provisions of section 66 of the Act. The alteration of a capital clause in the<a href=\"https:\/\/www.legalraasta.com\/memorandum-of-association-moa\/\" target=\"_blank\" rel=\"noopener\"> Memorandum of Association<\/a> of the company should also be passed as a consequence of the reduction of the share capital of a company.<\/p>\n<p>c. The notice, agenda and explanatory statement should be approved to be annexed to the notice of the general meeting as per section 102 of the act.<\/p>\n<p>d. Authorize the company secretary or some other competent officer to issue a notice\u00a0of the general meeting as approved by the board.<\/p>\n<ul>\n<li>As soon as the conclusion of the board meeting came, send it to the stock exchange where the securities of the company are listed.<\/li>\n<li>A notice should be issued for the General Meeting to all members, directors, and auditors of the company. Besides, the copies of the notice of the general meeting to the stock exchange where the securities of the companies are listed.<\/li>\n<li>Have the resolution passed and hold the general meeting.<\/li>\n<li>A copy of the proceedings of the general meeting should be forwarded to the concerned stock exchange as per the Listing Agreement.<\/li>\n<li>The certificate of a true copy of the special resolution should be attached while filing MGT-14, a copy of the explanatory statement under section 102 and copy of altered <a href=\"https:\/\/www.legalraasta.com\/memorandum-and-articles-of-association\/\" target=\"_blank\" rel=\"noopener\">Memorandum of Association and Articles of association<\/a> with the ROC within 30 days of the passing of the resolutions along with the prescribed filing fee its registration under section 117 of the act.<\/li>\n<li>Should apply to National Company Law Tribunal for confirmation of the capital reduction by way of a petition in Form No. RSC-1 of the NCLT (procedure for Reduction of the share capital of the company) Rules 2016 (notified on 15th December 2016).<\/li>\n<li>A petition should be there to confirm a reduction of share capital whether it is accompanied along with following documents or not. Required fee is Rs. 5,000\u2014<\/li>\n<\/ul>\n<p>1. The list of creditors certified by the managing director.<\/p>\n<p>2.\u00a0A certificate from the auditor of the company to the effect that the list of creditors.<\/p>\n<p>3.\u00a0A certificate from the auditor and director of the company that the company has not defaulted in repayment of deposits as well as in interest.<\/p>\n<p>4.\u00a0A certificate from the Statutory Auditor to the effect that all the accounting treatment has been in conformity to the Accounting Standards.<\/p>\n<p>5. The memorandum and articles of association of the company.<\/p>\n<p>6.\u00a0A certified true copy of the notice of the general meeting.<\/p>\n<p>7.\u00a0A certified true copy of the special resolution authorizing the reduction of share capital.<\/p>\n<p>8. A certified true copy of the latest audited balance sheet and profit and loss account of the company.<\/p>\n<p>9. A certified true copy of the minutes of proceedings at the general meeting at which the special resolution for\u00a0reduction of share capital\u00a0was passed.<\/p>\n<p>10.\u00a0An affidavit verifying the petition.<\/p>\n<p>11.\u00a0Memorandum of Appearance with the copy of board resolution.<\/p>\n<p>12.\u00a0Bank Draft of Rs. 5,000 evidencing the payment of fees.<\/p>\n<p>13. Other requisite attachment<\/p>\n<ul>\n<li>A notice will be given by the National Company Law Tribunal to the Central Government, Registrar of companies and SEBI within 15 days from the filing the petition.<\/li>\n<li>A notice in the Form RSC-3 shall be sent to each creditor within the period of seven days.<\/li>\n<li>Need to publish the notice in Form RSC-4 within 7 days from the directions of NCLT.<\/li>\n<li>The company or the person shall file an affidavit in the Form RSC-5 confirming the despatch and publication of the notice.<\/li>\n<li>All the concerned parties will make their own representations within the period of three months from the date of receipt of a notice.<\/li>\n<li>The company must submit the NCLT within the period of seven days of the expiry of time up to which the representations have been sought.<\/li>\n<li>When the NCLT at the hearing petition may think fit gives such directions as may deem fit and issue its order.<\/li>\n<li>Within 30 days from the date of Order, file the order of the NCLT with Registrar of companies in Form No. INC-28.<\/li>\n<li>Issue fresh share certificate or contact with RTA and share transfer agent.<\/li>\n<li>All the steps in accordance with the scheme of reduction of share capital of the company.<\/li>\n<li>The company has a compulsion to send to the concerned stock exchange when the listed company three copies of all the notices published in newspapers by the company in connection with the reduction of the share capital of the company.<\/li>\n<\/ul>\n<p>For further more information regarding the <a href=\"http:\/\/companyregistrationonline.in\/\" target=\"_blank\" rel=\"noopener\">Company registration<\/a>,<a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\" target=\"_blank\" rel=\"noopener\"> Private company registration<\/a>, <a href=\"https:\/\/www.legalraasta.com\/public-limited-company-registration\/\" target=\"_blank\" rel=\"noopener\">Public company registration<\/a> you can visit our website: <a href=\"https:\/\/www.legalraasta.com\/\" target=\"_blank\" rel=\"noopener\">Legal Raasta<\/a><\/p>\n<p>Send any of your query on Email: <a href=\"mailto:contact@legalraasta.com\" target=\"_blank\" rel=\"noopener\">contact@legalraasta.com<\/a>. our experts are available here to give the best advice regarding <a href=\"https:\/\/www.legalraasta.com\/business-structures\/\" target=\"_blank\" rel=\"noopener\">business structure<\/a> and activities. You can also give us a call at 8750048585.<\/p>\n<blockquote>\n<p>Related Articles:<\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/authorized-share-capital\/\" target=\"_blank\" rel=\"noopener\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Authorized Share Capital for Company Registration&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:8403901,&quot;3&quot;:{&quot;1&quot;:0},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;10&quot;:2,&quot;11&quot;:0,&quot;12&quot;:0,&quot;14&quot;:[null,2,0],&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:11,&quot;26&quot;:400}\">Authorized Share Capital for Company Registration<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/increase-authorised-share-capital\/\" target=\"_blank\" rel=\"noopener\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Increase in Authorised Share Capital&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:8403901,&quot;3&quot;:{&quot;1&quot;:0},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;10&quot;:2,&quot;11&quot;:0,&quot;12&quot;:0,&quot;14&quot;:[null,2,0],&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:11,&quot;26&quot;:400}\">Increase in Authorised Share Capital<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/blog\/sebi-restrictions-physical-transfer-of-shares\/\" target=\"_blank\" rel=\"noopener\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;SEBI Restriction on Transfer of Physical Share&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:8403841,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:0,&quot;12&quot;:0,&quot;14&quot;:[null,2,0],&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:11,&quot;26&quot;:400}\">SEBI Restriction on Transfer of Physical Share<\/span><\/a><\/p>\n<\/blockquote>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction As prescribed under section 66 of the Companies Act 2013, A company limited by shares or limited by guarantee and having a share capital by a special resolution may do the reduction of share capital in any manner subjected\u00a0to confirmation by the NCLT on an application by the company. It can reduce in particular, may\u2014 [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":14410,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[558],"tags":[439,437,438],"class_list":["post-14402","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-others","tag-reduction-in-authorised-share-capital","tag-reduction-in-authorised-share-capital-procedure","tag-reduction-in-share-capital"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Reduction of share capital procedure | Online Learning<\/title>\n<meta name=\"description\" content=\"Paying off any paid-up share capital that has been exceeding of the wants of the company, It can lead to the reduction of share capital.\" \/>\n<meta name=\"robots\" content=\"index, follow, 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