Conversion of Shares into Stock :
“Stock” is an aggregate of fully paid shares that have been legally consolidated. The consolidated amount is divisible into fractions of any amount, regardless of the nominal value of the shares that have been consolidated. It thus represents a part of the capital of the company which is fully paid.
By virtue of the powers contained in Section 61 of the Companies Act, 2013 a company limited by shares if authorised by its articles, may by means of a resolution passed at a general meeting alter the conditions of its memorandum with a view to converting all or any if its fully paid shares into stock and also reconvert its stock into shares. However, the company cannot issue stock ab initio. It must issue shares and after they are fully paid up, convert them into stock.
So, section 64 of the Companies Act, 2013 seeks to provide for the companies to give notice to the registrar of alteration or increase of share capital along with an altered memorandum.
(1) Notice with the registrar: Where—
(a) a company alters its share capital in any manner specified in section 61(1).
(b) an order made by the Government under section 62 has the effect of increasing authorised capital of a company; or
(c) a company redeems any redeemable preference shares,
the company shall file a notice in the prescribed form with the Registrar within a period of 30 days of such alteration or increase or redemption, as the case may be, along with an altered memorandum.
(2) Punishment in contravention of the provision: If a company and any officer of the company who is in default contravenes the above provision, there the company or the officer shall be punishable with fine which may extend to 1,000 rupees for each day during which such default continues, or 5 lakh rupees, whichever is less.