Power of Limited Company to Alter its Share Capital [Section 61]
## Power of Limited Company to Alter its Share Capital – Section 61
A limited company can alter the capital clause of its MOA — if authorised by the AOA — by passing an Ordinary Resolution in any of the following ways:
1. Increase its authorised share capital by such amount as it thinks expedient;
2. Cancel shares not taken up and reduce capital accordingly. (This is NOT deemed to be a reduction of capital under Section 66.)
3. Consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares. (NCLT approval is required only if there is a change in the voting percentage of shareholders.)
4. Sub-divide its shares into shares of a smaller amount, provided that the proportion between paid and unpaid amount on the sub-divided shares remains the same as in the original share.
5. Convert fully paid-up shares into stock, or vice versa.
### Key Point
For all of the above, only an Ordinary Resolution is required (provided AOA authorises it) — no SR, no NCLT approval in most cases.
Worked example
### Example 1
Example: T Ltd. has 1,00,000 equity shares of ₹10 each. It wants to consolidate them into 10,000 shares of ₹100 each. Some shareholders' voting percentage will change because consolidation may not be exactly proportionate. What is required?
Solution: T Ltd. needs:
1. AOA authorisation;
2. Ordinary Resolution in a general meeting; AND
3. NCLT approval, since the consolidation results in a change in the voting percentage of shareholders.
⚠️ Common exam mistakes
Believing Section 61 alteration always requires a Special Resolution — it requires only an Ordinary Resolution.
Treating cancellation of un-subscribed shares as a Section 66 reduction — it is expressly not treated as reduction.
Forgetting that NCLT approval is specifically required for consolidation only when voting % changes.
Sub-dividing shares without preserving the proportion between paid and unpaid amounts — this is mandatory.
Bare-Act text Section 61 · Companies Act, 2013 · click to expand
Section 61(1): A limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting to— (a) increase its authorised share capital by such amount as it thinks expedient; (b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares: Provided that no consolidation and division which results in changes in the voting percentage of shareholders shall take effect unless it is approved by the Tribunal on an application made in the prescribed manner; (c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination; (d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum; (e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.