Amendment in Share Capital Rules- Change in provisions of ESOP, DRR and Shares with differential rights

MCA vide notification dated 16th August, 2019 amended Companies (Share Capital and debentures) Rules, 2014. The major amendments included therein are as follows:

  • Change in condition for issuance of equity shares with differential rights:
  1. The voting power in respect of shares with differential rights shall not exceed 74% of total voting power including voting power in respect of equity shares with differential rights issued at any point of time.
  2. The requirement to have consistent track record of distributable profits for last 3 years is dispensed.
  • Change in signing requirement of physical share certificate in case of OPC- the certificate can be signed by director or the company secretary.
  • Change in requirement of issuance of ESOP by unlisted Start-up Company – the relaxation given to start up companies in complying certain conditions is now extended to 10 years (earlier it was for 5 years) from date of its incorporation.
  • The rule containing the conditions for creation of Debenture Redemption Reserve is substituted by a new rule.

The complete notification along with other amendments is attached herewith:

ShareCapitalRules_16082019 (1)

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