On January 21, 2023, the Ministry of Corporate Affairs (MCA) issued the Companies (Share Capital and Debentures) Amendment Rules, 2023, to modify the existing Companies (Share Capital and Debentures) Rules of 2014. The primary focus of these amendments is the revision of various forms, including SH-7, SH-8, SH-9, SH-11, and SH-14. These changes, effective from January 23, 2023, aim to enhance transparency, compliance, and efficiency in the processes related to share capital and debentures.
Companies (Share Capital and Debentures) Amendment Rules, 2023:
The MCA’s update on the Companies (Share Capital and Debentures) Amendment Rules, 2023, brings about changes to the regulations governing share capital and debentures in companies. The emphasis is on refining and updating the existing rules to align with current practices.
Form SH-7: Notice to Registrar of any alteration of share capital
This form informs the Registrar of Companies about any alterations in a company’s share capital structure. It ensures that the Registrar is aware of changes such as increases or decreases in authorized share capital and the issuance of additional shares.
Form SH-8: Letter of offer
Serving as a formal letter of offer to existing shareholders, this form is used when a company proposes to offer its shareholders the opportunity to acquire more shares or debentures. It includes details about the offer terms, conditions, and procedures.
Form SH-9: Declaration of Solvency
A declaration made by company directors when planning a buy-back of its own shares or debentures. Directors declare the company’s solvency, ensuring it can repurchase securities without affecting financial stability or creditor obligations.
Form SH-11: Return of buy-back
Filed with the Registrar after completing a share buy-back, this form provides detailed information about the transaction, including the number and value of shares repurchased and the funding source.
Form SH-15: Certificate of compliance in respect of the buy-back of securities
Previously used for buy-back transactions, this form, a certificate of compliance issued by auditors or company secretaries, has been omitted from the rules.
Amendments to Companies (Share Capital and Debentures) Amendment Rules:
The 2023 amendments introduce revisions to specific forms used in various processes related to share capital and debentures. These changes aim to ensure compliance and enhance transparency in such transactions.
Form SH-7:
Revisions to this form include information on voting during general meetings, the option to appeal to the Tribunal against the Central Government’s order, and a working for calculating ratios in case of conversion.
Form SH-8:
Updates to this form include instances of default, non-compliance details, and the removal of the requirement to submit information about the objective of the buyback and the expected capital structure.
Form SH-9:
The revised form no longer requires attaching the board resolution and special resolution.
Form SH-11:
Additional details have been included, such as the source of the buyback and promoter-wise shareholding information. Some previously necessary information is no longer required.
Form SH-15:
This form has been removed, indicating that a separate certificate of compliance for buy-back transactions is no longer necessary.
In summary, the Companies (Share Capital and Debentures) Amendment Rules of 2023 introduce revisions to various forms and filing requirements, aiming to enhance transparency, compliance, and streamline processes related to share capital and debentures in companies.
