THE COMPANIES ORDINANCE, 1972

Alteration and redemption of share capital

59.—(1) A company may by an ordinary resolution alter the contents of its memorandum as follows, that is to say, it may—

(a)   increase its share capital by new shares of such nominal value as it thinks expedient; or

(b)   consolidate and divide all or any of its shares into shares of larger nominal value ; or

(c)   convert all or any of its fully paid shares into stock, and reconvert that stock into fully paid shares ; or

(d)   subdivide its shares, or any of them, into shares of a smaller nominal value than is fixed by the memorandum, so, however, that in the subdivision the proportion between the part of the nominal value paid and the part unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived ; or

(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 nominal capital by the amount of the shares so cancelled,

(2) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Ordinance.

60.—(1) Subject to the provisions of this section, a company may issue shares which by the terms of issue will be redeemed, or at the option of the company may be redeemed :

Provided that—

(a)   no such shares shall be redeemed except out of profits or revenue reserves of the company which would otherwise be available for the payment of dividends, or out of the proceeds of a fresh issue of shares made for the purpose of the redemption;

(b)   no such shares shall be redeemed unless they are fully paid ;

(c)   the premium (if any) payable on redemption, must be provided out of the profits or the revenue reserves of the company which would otherwise be available for the payment of dividends before the shares are redeemed ;

(d)   where any such shares are redeemed otherwise than out of the proceeds of a fresh issue of shares, there shall out of the profits or the revenue reserves of the company which would otherwise have been available for dividends, be transferred to capital reserve a sum equal to the nominal value of the shares which are redeemed.

(2)  If shares are issued which may be redeemed at the option of the company, the memorandum shall state the terms of the option, and in particular, the earliest date on which the company may redeem the shares and the latest date by which it must redeem them (if any such latest date is provided for), and the manner by which the company will exercise its option, whether by itself selecting shares for rfdemption, or by drawings or ballot or otherwise.

(3)  The redemption of shares under this section by a company shall not be deemed to be a reduction of capital within the meaning of this Ordinance, but shares which have been redeemed shall be deemed not to be issued shares for the purpose of this Ordinance.

(4)  If a company has redeemed or is about to redeem any shares out of the proceeds of a fresh issue of shares, it shall have power to issue shares whose total nominal values do not exceed the total nominal value of the shares redeemed or to be redeemed as though those shares had never been issued.

(5) This section shall not apply to a proprietary company.

61.—(1) A company which has taken a transfer or surrender of shares in itself under paragraphs (a), (b) or (c) of section 54(2) of this Ordinance, may re-issue such shares on the same terms (other than as to the issue price) and with the same rights, obligations and priorities as attached to them when they were redeemed by or transferred or surrendered to the company, and with the same amounts credited as paid up thereon as were paid up at the date of the redemption, transfer or surrender.

(2)  Section 56(5) of this Ordinance (except the first two sentences thereof) shall apply to the re-issue of shares under this section

(3)  This section shall not apply if the terms of issue of the shares provide that they shall not be re-issued.

62.—(I) If a company has—

(a)   increased its share capital; or

(b)   consolidated and divided its share capital into shares of larger amount than its existing shares; or

(c)   converted any shares into stock ; or

(d)   re-converted stock into shares ; or

(e)   subdivided its shares or any of them; or

(/) redeemed any shares ; or

(g) cancelled any shares, otherwise than in connection with a reduction of share capital under section 63 and 65 ; or

(k) taken a transfer or surrender of shares under pa-graphs (a), (b) or (c) of section 54(2); or

(i) re-issued shares under sections 56(5) or 61 ;

it shall within fifteen days after so doing give notice thereof to the Registrar.

(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be 'liable to a fine not exceeding one hundred rupees for every day during the first month that default continues, two hundred and fifty rupees for every day during the next two months that default continues, and five hundred rupees for every day that default continues thereafter.