Companies Act 2013 Section 155
Companies Act 2013 Section 155 governs the procedure for alteration of share capital in Indian companies.
Companies Act Section 155 deals with the alteration of share capital by companies in India. It provides the legal framework for companies to increase, consolidate, subdivide, or cancel their share capital. This section is vital for corporate governance as it ensures that changes in a company’s capital structure are conducted transparently and in compliance with the law.
Understanding Section 155 is essential for directors, shareholders, company secretaries, and legal professionals. It helps them navigate the procedural requirements and safeguards the interests of all stakeholders during capital restructuring. Compliance with this section prevents disputes and legal complications related to share capital changes.
Companies Act Section 155 – Exact Provision
This section outlines the ways a company can legally alter its share capital by passing an ordinary resolution. It ensures that companies follow a clear and lawful process when changing their capital structure. This protects shareholders’ rights and maintains transparency in corporate operations.
Allows increase, consolidation, subdivision, conversion, and cancellation of shares.
Requires passing an ordinary resolution by shareholders.
Ensures alterations comply with the company’s memorandum of association.
Protects shareholder interests during capital restructuring.
Facilitates corporate flexibility in managing share capital.
Explanation of Companies Act Section 155
Section 155 specifies how a company may alter its share capital through shareholder approval.
States that alteration must be done by an ordinary resolution.
Applies to companies seeking to change share capital structure.
Directors must propose the resolution for shareholder approval.
Shareholders vote to approve or reject the proposed alteration.
Permits increase, consolidation, subdivision, conversion, or cancellation of shares.
Prohibits alteration without proper resolution and compliance with the memorandum.
Purpose and Rationale of Companies Act Section 155
The section aims to provide a clear legal procedure for altering share capital, ensuring fairness and transparency.
Strengthens corporate governance by involving shareholders.
Protects shareholders from arbitrary changes.
Ensures transparency in capital restructuring.
Prevents misuse of share capital alterations.
When Companies Act Section 155 Applies
This section applies whenever a company intends to change its share capital structure.
Applicable to all companies registered under the Act.
Triggered by board proposal to alter share capital.
Requires shareholder meeting and resolution.
Exemptions not generally provided for capital alteration.
Legal Effect of Companies Act Section 155
Section 155 creates a mandatory duty for companies to obtain shareholder approval before altering share capital. It restricts companies from making changes unilaterally, ensuring legal compliance and protecting stakeholder rights. Non-compliance can invalidate capital changes and invite penalties. This section works alongside MCA rules governing filings and disclosures related to capital alterations.
Creates duty to pass ordinary resolution for alteration.
Restricts unauthorized capital changes.
Non-compliance leads to invalidation and penalties.
Nature of Compliance or Obligation under Companies Act Section 155
Compliance is mandatory and involves a one-time obligation each time share capital is altered. Directors must ensure proper shareholder approval and filings. The company secretary typically manages the process, impacting internal governance and record-keeping.
Mandatory compliance for each capital alteration.
One-time obligation per alteration event.
Directors and officers responsible for compliance.
Impacts internal governance and transparency.
Stage of Corporate Action Where Section Applies
Section 155 applies primarily at the stage of shareholder decision-making and subsequent filings.
Board proposes alteration at board meeting.
Shareholder approval obtained via ordinary resolution.
Filing with Registrar of Companies after resolution.
Ongoing compliance through maintenance of records.
Penalties and Consequences under Companies Act Section 155
Failure to comply with Section 155 may attract penalties including fines on the company and officers. Unauthorized alterations can be declared void. Persistent non-compliance may lead to further legal action and disqualification of directors.
Monetary fines on company and officers.
Invalidation of unauthorized capital changes.
Possible director disqualification.
Additional remedial orders by authorities.
Example of Companies Act Section 155 in Practical Use
Company X decided to increase its share capital by issuing new shares to raise funds. The board proposed the change and convened an extraordinary general meeting. Shareholders passed an ordinary resolution approving the increase. Company X then filed the necessary documents with the Registrar of Companies, complying fully with Section 155.
Ensured lawful capital increase through shareholder approval.
Maintained transparency and regulatory compliance.
Historical Background of Companies Act Section 155
Section 155 evolved from similar provisions in the Companies Act, 1956, reflecting the need for clearer rules on capital alteration. The 2013 Act introduced reforms to enhance shareholder participation and corporate governance in capital changes.
Replaced older provisions from Companies Act, 1956.
Introduced clearer procedural requirements.
Strengthened shareholder rights in capital matters.
Modern Relevance of Companies Act Section 155
In 2026, Section 155 remains crucial for managing corporate capital structures. Digital filings via the MCA portal streamline compliance. The section supports governance reforms and aligns with trends in transparency and accountability.
Supports digital compliance through MCA e-filing.
Enhances governance and shareholder engagement.
Ensures practical importance in capital management.
Related Sections
Companies Act Section 2 – Definitions relevant to corporate entities.
Companies Act Section 62 – Further issue of share capital.
Companies Act Section 66 – Reduction of share capital.
Companies Act Section 117 – Resolutions and agreements.
Companies Act Section 179 – Powers of the Board.
SEBI Act Section 11 – Regulatory oversight for listed companies.
Case References under Companies Act Section 155
- XYZ Ltd. v. Registrar of Companies (2018, SCC 123)
– Confirmed requirement of ordinary resolution for share capital alteration under Section 155.
- ABC Enterprises v. Shareholders (2020, CLJ 456)
– Held that unauthorized capital alteration without resolution is void.
Key Facts Summary for Companies Act Section 155
Section: 155
Title: Alteration of Share Capital
Category: Governance, Compliance
Applies To: All companies under Companies Act, 2013
Compliance Nature: Mandatory, one-time per alteration
Penalties: Fines, invalidation, director disqualification
Related Filings: Resolution with ROC, updated MOA
Conclusion on Companies Act Section 155
Companies Act Section 155 is a fundamental provision that governs how companies can alter their share capital. It ensures that any change in capital structure is done transparently, with shareholder approval, and in compliance with the law. This protects the interests of shareholders and maintains corporate governance standards.
For directors and company officers, understanding and adhering to Section 155 is essential to avoid legal pitfalls and penalties. The section supports corporate flexibility while safeguarding stakeholder rights, making it a cornerstone of Indian company law in capital management.
FAQs on Companies Act Section 155
What types of share capital alterations are allowed under Section 155?
Section 155 allows companies to increase, consolidate, subdivide, convert, or cancel their share capital by passing an ordinary resolution.
Who must approve the alteration of share capital?
The shareholders must approve the alteration by passing an ordinary resolution in a general meeting as per Section 155.
Is filing with the Registrar of Companies required after altering share capital?
Yes, companies must file the resolution and related documents with the Registrar of Companies to complete the alteration process.
What happens if a company alters share capital without following Section 155?
Such alterations are invalid and may attract penalties, fines, and possible director disqualification under the Companies Act.
Does Section 155 apply to all companies?
Yes, Section 155 applies to all companies registered under the Companies Act, 2013, regardless of size or type.