Share capital change in a private limited company refers to the process of altering the company’s ownership structure by modifying the value or quantity of its shares. This change can involve increasing or decreasing the share capital to align with the company’s financial requirements, growth plans, or restructuring needs. Here’s a brief overview of share capital change in a private limited company:

1. 1. Reasons for Change: A company might change its share capital for various reasons, including raising additional funds for expansion, reducing capital due to financial challenges, adjusting ownership percentages, or consolidating shares to simplify the capital structure.
   2. Board Resolution and Shareholder Approval: The process begins with the board of directors proposing the share capital change and passing a resolution. Subsequently, the shareholders must approve the change through a special resolution during a general meeting.
   3. Special Resolution: Changing the share capital requires the approval of at least 75% of the shareholders’ voting rights. This safeguards the interests of existing shareholders and ensures significant decisions are made with substantial consensus.
   4. Alteration of AoA & MoA: To implement the share capital change, the AoA and MoA – a document that outlines internal regulations – may need to be amended. The AoA and MoA adjustment must be filed with the Registrar of Companies (RoC).
   5. Filing with Registrar of Companies (RoC): After obtaining shareholder approval, the company must file necessary forms with the RoC, including Form SH-7 for share capital increase, Form SH-6 for share capital reduction, or other relevant forms based on the nature of the change.
   6. Legal Compliance: The share capital change process must adhere to the provisions of the Companies Act, 2013, and other relevant laws. Any changes that violate legal requirements or provisions may not be approved by the RoC.
   7. Effect of Change: Once the share capital change is approved and implemented, the company’s ownership structure, equity distribution, and valuation may be altered accordingly.
   8. Implications for Shareholders: Existing shareholders might experience diluted ownership if new shares are issued. In cases of share capital reduction, shareholders might face changes in the nominal value or number of shares they hold.

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