Power of company to alter its share capital

Power of company to alter its share capital

(1) Subject to the provisions contained in its articles of association, any company may, by adopting a special resolution at its general meeting, make alteration in

its share capital as follows:

• (a) By increasing its authorized share capital by such amount as it thinks expedient by issuing new shares,

• (b) By consolidating or dividing all or any of its share capital into shares of larger or smaller amount,

• (c) By canceling the shares which, at the date, the adopting of the resolution in that behalf, have not been taken or agreed to be taken by any person or the shares forfeited pursuant to Sub-section (3) of Section 53 and diminishing the amount of its share capital by the amount of the shares so canceled.

(2) When a special resolution for altering the capital pursuant to sub- section (1) is adopted, the memorandum of association and articles of association of the concerned company shall be deemed to have ...... - been amended to that extent.

(3) A submission, accompanied by the prescribed fees shall be made to the Office for the record of the resolution adopted pursuant to Sub-section (1) and the amendment to the memorandum of association and articles of association; and the Office shall accordingly record the alteration made in the capital of the company and the amendment made to the memorandum of association and articles of association and give information thereof to the company within seven days after such submission.

(4) A cancellation of shares, if any, made in pursuance of Clause ( c) of Sub-section (1) shall not be deemed to have been made for purposes of the reduction of share capital of a company.

(5) If a company is required to increase its issued capital to the extent of its authorized capital, it may increase such capital by adopting an ordinary resolution at the general meeting.

(6) If a public company is required to increase its share capital under Sub-section (5) and issue its shares publicly, it shall fulfill the procedures specified in this Act and the prevailing law on securities.

          Provided, however, that in so issuing bonus shares and right shares that they may be subscribed by its existing shareholders and employees only or issuing shares pursuant to Sub-section (9), such company shall not be required to fulfill such procedures.

(7) A public company shall publish a notice on the issue of right shares, which may be subscribed by the existing shareholders only, in a daily newspaper of national circulation for at least three consecutive times prior to fifteen days of the issue of such shares.

(8) The existing shareholders shall have the first right to subscribed the shares issued under Sub-section (7) in proportion to their respective shareholding.

(9) Notwithstanding anything contained in Sub-section (8), no shareholder of a company existing, for the time being, shall have the first right over the following shares to be issued by the company:

• (a) Shares issued by the company for any consideration other than cash,

• (b) Shares issued to any person under any right or facility provided in accordance with the terms of an agreement concluded with the company,

• (c) Shares issued under an employee share scheme,

• (d) Shares issued in accordance with an agreement concluded between the company and its creditors,

• (e) Shares existed on converting preference shares into ordinary shares or debentures into shares by the company,

• (f) Shares issued in accordance with an agreement between the concerned parties in the course of management of the company, restructuring of its capital or loan or in the course of implementation of a restructuring program agreed upon between the relevant parties in accordance with the prevailing law on insolvency or in the course of implementation of a program of conversion of a public company into another public company.

(10) No share capital shall be increased or bonus share issued by revaluating the assets of a company other than from profits made by the company or funds created out of profits.

(11) In issuing shares under this Section, a time limit of at least thirty-five days shall be given to the existing shareholders to subscribe the shares. If such shareholders fail either to subscribe the shares or to sell or transfer the right to subscribe shares to anyone else within the said time limit or, such shares may be sold in any other manner as decided by the board of directors of the company.

*Deleted by the Act Amending Some Nepal Acts, 2064