Section 61 of the Companies Act, 2013
Section 61 of the Companies Act, 2013 – Power of Limited Company to Alter Its Share Capital
📘 Key Provisions of Section 61:
This section applies to companies limited by shares, and it gives them the power to alter their share capital, subject to provisions in their Articles of Association and with the approval of the shareholders in a general meeting.
✅ A company may, by ordinary resolution, do the following:
Increase authorized share capital
By such amount as it thinks expedient.
Consolidate and divide all or any of its share capital
Into shares of a larger amount than its existing shares.
(Example: 10 shares of ₹10 each into 1 share of ₹100)
Convert fully paid-up shares into stock, and reconvert stock into fully paid-up shares
Stock can be transferred like shares, but it doesn't have a nominal value.
Sub-divide its shares
Into shares of smaller amounts.
(Example: 1 share of ₹100 into 10 shares of ₹10 each)
Cancel shares
Which have not been taken or agreed to be taken by any person, and diminish the amount of its share capital accordingly.
⚠️ This is not treated as a reduction of share capital under Section 66.
🚫 Restrictions / Conditions:
Any such alteration must be authorized by the company’s Articles.
Changes must be recorded with the Registrar of Companies (ROC) as per prescribed rules.
No reduction of capital is allowed through cancellation unless the shares are not taken up.
📝 In Short:
Section 61 empowers a company (with shareholder approval) to increase, consolidate, subdivide, convert, or cancel shares — but not reduce capital unless legally allowed.
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