5.5 Alteration and Consolidation of share capital

5.5 ALTERATION AND CONSOLIDATION OF SHARE CAPITAL

Alteration and consolidation of share capital refer to the changes made to a company’s existing share capital structure. These changes may involve increasing or decreasing the nominal value of shares, reorganizing share classes, or consolidating shares.

Alteration of share capital

– Alteration of share capital involves making changes to the existing share capital structure of a company.

– It may include increasing or reducing the nominal value of shares, altering the rights attached to shares, or reclassifying shares into different classes.

– Alterations are typically made through a special resolution passed by the shareholders and may require regulatory approvals or court sanction, depending on the jurisdiction.

Consolidation of share capital:

– Consolidation of share capital refers to the process of reducing the number of shares in circulation while increasing their nominal value proportionally.

– The purpose of consolidation is to improve the marketability and trading of shares by reducing the number of outstanding shares.

– For example, if a company consolidates its shares in a ratio of 1 new share for every 10 existing shares, it will result in reducing the number of shares by a factor of 10 while increasing their nominal value by a factor of 10.