Companies (Share Capital and Debenture) Amendment Rules, 2019

Ministry has amended Companies (Share Capital and Debenture) Rules, 2016. These rules may be called as Companies (Share Capital and Debenture) Amendment Rules, 2019.

Amendments in rules are mentioned below:


Rules Particulars Amendment made in Rules Summary of Amendment Rules
Rule 4 Equity shares with differential rights Substitution of clause (c) in sub rule (1)


Deletion of clause (d)

(i) Rule 4(c) has been substituted which required the companies limited by shares not to issue equity shares with differential rights as to dividend, voting or otherwise, in excess of 26% of the total post-issue paid-up equity share is now revised to ‘74% of total voting power at any point of time’.


(ii) Rule 4(d) the company having consistent track record of distributable profits for the last three years shall be omitted


Rule 5 Certificate of shares (Where shares are not in demat form) Amendment in sub rule (3) Rule 5(3) has been amended which required that every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed company secretary:


Provided that in case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate.


Rule 12 Issue of Equity Stock Options Amendment in sub rule (1) Rule 12(1) is amended to extend the exemption period for start-up companies, for issue of Employee Stock Options to ‘its employee who is a promoter or a person belonging to the promoter group or a director who either himself or through his relative or through anybody corporate, directly or indirectly, holds more than ten percent of the outstanding equity shares of the company’ from five years to ten years from the date of its incorporation or registration.


Rule 18 Debentures Amendment in sub rule (7) Rule 18(7) has been substituted to revise the limits for maintaining the debenture Redemption Reserve (DRR) and investments or deposits. No DRR is required to be maintained by NBFCs registered with RBI and Housing Finance Companies registered with National Housing Bank in case privately placed debentures are issued.


Notification is attached herewith for your reference.