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1.
Introduction:
In exercise of the powers conferred by sub-section (1) of
section 641 of the Companies Act, 1956 (1 of 1956),
the Central Government has substituted para 1.3 to Schedule X
of the said Act with
effect from 12.07.2000 vide Notification No. S.O. 658(E) dated
12.07.2000.
The new para 1.3
reads as under:
"For
filing a notice of any increase in the nominal share capital
of a company, the difference between the fees payable
on the increased share capital on the date of filing the
notice for registration of company and the fees payable
on existing authorised capital at the rates prevailing on the
date of filing the notice."
For
comparison purpose, the old
para 1.3 is reproduced hereunder:
“For
filing a notice of any increase in the nominal share capital
of a company, the difference between the fees payable
on the date of filing the notice for the registration of a
company with a nominal share capital equal to the increased
share capital and the fees paid
on such date for the registration of a company with a share
capital equal to the nominal share capital of the company
filing the notice immediately before the increase.”
The
mere replacement of the word “payable” by the word
“paid” and vice-versa has significant financial impact on
the companies.
In fact, the position now prevailing after the latest
amendment was also existing prior to 21.06.1995. However, Notification No. GSR 565(E) dated 21.06.1995 entirely changed the
position by replacing the word “payable” by the word
“paid” which resulted in greater financial burden on the
companies. Refer the
illustration in para 3 ante. Now again the position
existing till 20.06.1995 is restored by the latest
Notification.
2.
Implications of Amendment:
The
Government has been increasing the registration fee payable at
the time of registration of a new company. Such frequent hike affects
the existing companies also whenever they enhance the
authorised capital.
When
an existing company enhances its authorised capital, it has to
pay the registration fee equal to the excess of the rate
presently prevailing over the aggregate amount of such fee
actually paid till the date prior to such increase in the
capital.
One
may wonder that in such a situation where the company is hit.
The answer lies in the following illustration:
I.
Position Prior to Amendment:
|
Sr.
|
Relevant
Date
|
New
Authorised Capital
(Rs.
in Lac)
|
Regn.
Fee Payable on Increased Capital
(Rs.
in Lac)
|
Regn.
Fee Actually Paid
(Rs.
in Lac)
|
DifferentialRegn.
Fee Payable
(Rs.
in Lac)
|
|
1
|
01.01.1992
|
50
|
0.11
|
0.11
|
---
|
|
2
|
01.01.1999
|
75
|
0.30
|
0.11
|
0.19
|
|
3
|
01.01.2000
|
100
|
1.56
|
0.30
|
*1.26
|
II.
Position After Amendment:
|
Sr.
|
Relevant
Date
|
New
Authorised Capital
(Rs.
in Lac)
|
Regn.
Fee Payable on Increased Capital
(Rs.
in Lac)
|
Regn.
Fee Payable
on
Existing Capital
(Rs.
in Lac)
|
DifferentialRegn.
Fee Payable
(Rs.
in Lac)
|
|
1
|
01.01.2000
|
100
|
1.56
|
1.31
(on Rs. 75 Lac)
|
*0.25
|
|
2
|
01.08.2000
|
125
|
1.69
|
1.56
|
0.13
|
*
Mere replacement of the word “payable” by the word
“paid” and vice-versa has great fiscal impact. In the
above illustration where the capital is raised from Rs. 75 Lac
to Rs. 100 Lac, the difference in additional fee may be as
high as Rs. 1.01 Lac (1.26 – 0.25), depending upon the use
of any of the two said words.
3.
Conclusion:
The
better sense has at last prevailed and the above amendment
shall provide considerable relief in payment of registration
fee on increase in authorised capital. The
long-standing demand of India Inc. for removal of unjust
provision is accepted by the Government, though belatedly.
The
two words ”payable” and “paid” have very wide
ramifications and their inter-change can play havoc. One hopes
that the Government will not again play mischief with those
two words.
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