Section 85 — Power of company to alter its share capital

(1) A company
having share capital may, if so authorised by its articles, alter the conditions of its
memorandum through a special resolution, so as to-

(a) increase its authorised capital by such amount as it thinks expedient;

(b) consolidate and divide the whole or any part of its share capital into
shares of larger amount than its existing shares;

(c) sub-divide its shares, or any of them, into shares of smaller amount
than is fixed by the memorandum:

(d) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any person,

and diminish the amount of its share capital by the amount of the
share so cancelled:

Provided that, in the event of consolidation or sub-division of
shares, the rights attaching to the new shares shall be strictly
proportional to the rights attached to the previous shares so
consolidated or sub-divided:

Provided further that, where any shares issued are of a class
which is the same as that of shares previously issued, the rights
attaching to the new shares shall be the same as those attached to the
shares previously held.

(2) The new shares issued by a company shall rank pari passu with the
existing shares of the class to which the new shares belong in all matters, including
the right to such bonus or right issue and dividend as may be declared by the
company subsequent to the date of issue of such new shares.

(3) A cancellation of shares in pursuance of sub-section (1) shall not be
deemed to be a reduction of share capital within the meaning of this Act.

(4) The company shall file with the r egistrar notice of the exercise of
any power referred to in sub -section (1) within fifteen days from the exercise
thereof.
(5) Any violation of this section shall be an offence liable to a penalty
of level 1 on the standard scale.
86. Prohibition of purchase by company or giving of loans by it for
purchase of its shares. (1)27[…]

(2) No public company or a private company being subsidiary of a
public company shall give financial assistance whether directly or indirectly for the
purpose of, or in connection with, a purchase or subscription made or to be made,
by any person of any shares in the company or in its holding company.
(3) Nothing in sub-section (2) shall apply to—
(a) the lending of money by a banking company in the ordinary course
of its business;

(b) the provision by a company of money in accordance with any
scheme approved by company through special resolution and in
accordance with such requirements as may be specified, for the
purchase of, or subscription for shares in the company or its holding
company, if the purchase of, or the subscription for, the shares held

27 Omitted vide the Companies (Amendment) Act, 2021 dated 1st December, 2021. The omitted sub-
section (1) was read as under:
“(1) No company having a share capital, other than a listed company shall
have power to buy its own shares.”

by a trust for the benefit of the employees or such shares held by the
employee of the company;

(c) the provision or securing an advance to any of its employees,
including a chief executive who, before his appointment as such,
was not a director of the company, but excluding all directors of the
company, for purchase of shares of the company or of its subsidiary
or holding company.

(4) Any violation of this section shall be an offence liable to a penalty
of level 1 on the standard scale.