Template Description

This notice template outlines the details and implications of a proposed Sub-Division of shares within a company under the Companies Act 2013. It is a 2-page MS Word document mandatory for the company to ensure shareholders are well-informed about sub-division, as per the Companies Act 2013. The intended audience for this template includes company directors, legal professionals, company secretaries, and shareholders.

Understanding the Concepts of Sub-Division of Shares

Terminologies:

• Explanatory Statement: A document that provides material facts related to special business matters being transacted at a general meeting.

• Special Business: Any business conducted at an AGM that is not considered ordinary, such as amendments to the Memorandum of Association (MOA) or changes in the company’s share capital.

• Sub-division of Shares: A process that involves dividing existing equity shares into smaller denominations, increasing the number of shares while keeping the total value unchanged.

Procedure for the Sub-Division of Shares under the Companies Act, 2013:

• Board Meeting to Propose Sub-Division: The process begins with the Board of Directors convening a meeting where the board will decide the new face value of the shares and recommend amendments to the Capital Clause of the Memorandum of Association (MOA).

• Approval of Board Resolution: The Board passes a resolution to approve the sub-division of shares and the necessary amendments to the MOA. The resolution will also authorize the calling of a General Meeting to seek shareholder approval.

• Holding the General Meeting: In General Meeting, shareholders discuss and vote on the proposed sub-division of shares. A special resolution must be passed by the shareholders to approve the sub-division and the corresponding amendments to the MOA.

• Filing with the Registrar of Companies (ROC): After the resolution is passed, the company must file the necessary forms with the Registrar of Companies such as Form SH-7 for capital updation. Form MGT-14 (filing of resolution with the ROC) must be submitted within 30 days of passing the resolution. The amended MOA and any other required documents must also be submitted.

• Amendment of the Share Certificates: The company must update its share certificates to reflect the sub-division and issue new share certificates as per amendments

• Fixation of Record Date: The Board of Directors fixes a record date to determine the list of shareholders eligible for the sub-divided shares and communicate to the shareholders through appropriate means.

• Listing and Trading of Sub-Divided Shares: Listed companies must inform the stock exchanges about the sub-division and get approval for the listing and trading of the sub-divided shares. The company must also update its International Securities Identification Number if required.

Conclusion

This Explanatory Statement template offers a standardized format for presenting all necessary information. It provide the company’s fundamental document which accurately reflects relevant information necessary, for legal compliance and transparency as per the Companies Act, 2013, when proposing the sub-division of shares. By this Explanatory statement companies can efficiently communicate the purpose and implications of the sub-division, enhancing governance and shareholder relations.