Page 86 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 5: Internal Reconstruction of Companies

(b) Consolidation of all or part of its existing shares of smaller denomination into shares of notes
larger denomination.
(c) Conversion of all or part of its fully paid shares into stock and vice-versa.
(d) Sub-division of its shares or part of them of larger denominations into smaller
denominations.

(e) Cancellation of those shares which have not been issued.
!

Caution Internal reconstruction of a company is done to alter the share capital or to reduce
the share capital without going into liquidation.



Caselet reconstruction of full-thickness nasal Defect
econstruction of complex full-thickness nasal defects requires the reconstitution of
the mucous internal nasal lining, the cartilaginous framework, and the aesthetic
Rcontour of the cutaneous nasal covering. Goals of reconstruction include restoration
of a functional nasal airway and redefinition of the contours of the nose as well as its
relationship to the cheek and lip with the least amount of morbidity to the patient. This
article details a multistaged approach to repairing such a defect using an ipsilateral septal
mucoperichondrial flap, multiple cartilage grafts, a paramedian forehead flap, and a cheek
flap in a woman who had undergone Mohs surgery.
Source: http://www.ncbi.nlm.nih.gov/pubmed/21112520

Increase in Share Capital by Issue of Fresh Shares

A limited company may increase its nominal or subscribed capital by making fresh issue of shares.
To increase its nominal capital, the company has to alter its capital clause in its Memorandum of
Association. On the passing of the resolution for increasing of the nominal capital, the Registrar
of the Companies must be informed within thirty days of passing such resolution. The offer for
the issue of fresh shares must first be made to existing shareholders in the proportion of their
holdings, unless the company has decided otherwise by a special resolution or by an ordinary
resolution approved by the Central Government. If the existing shareholders fail to exercise their
option within fifteen days, the Board of Directors will be free to issue such shares. Accounting
treatment for the issue of such shares will be same as is adopted for the issue of new shares
explained earlier.
Consolidation of Shares: As per Section 94 of the Companies Act, 1956, a limited company
may consolidate its shares of smaller denomination (value) into larger denomination (value).
Generally, consolidation is done when the value of shares is in very small amount.

On consolidation of shares, the amount of paid up share capital remains at old figure, but the
number of shares decreases.

Example: XYZ Limited having a share capital of ` 10,00,000 divided into 1,00,000 shares
of ` 10 each on which ` 8 per share are paid up, resolve to consolidate 10 shares of ` 10 each into
one share of ` 100. On consolidation the paid up value of the shares will be same but the number
of shares will reduce.

lovely professional university 81