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Increase Authorized Capital
- Companies often need additional capital for operations, both in the short and long term.
- Short-term needs can be met with loans and advances, while long-term needs require additional capital.
- Private limited companies can increase their authorized capital to secure more funds.
- The Company Act governs and regulates private limited companies, requiring adherence to its rules when modifying the company structure.
- During registration, the authorized and paid-up capital are specified in the company’s Memorandum of Association (MOA).
- The company can issue new shares up to the approved capital limit stated in the MOA.
- If the company wishes to issue more shares beyond the specified maximum, amendments to the MOA are necessary.
What is authorized capital?
- Authorized capital, defined by Section 2(8) of the Companies Act of 2013, is the maximum amount of share capital specified in a company’s memorandum.
- It represents the capital limit authorized by the company for its operations.
- The company can expand its operations up to the level of authorized capital.
- If the company needs to inject more funds than initially planned, it must increase its authorized capital following the procedures outlined in this article.
Authorized Share Capital increase
- Before issuing new equity shares and increasing paid-up capital, a company may need to raise its authorized share capital.
- Authorized share capital is the total value of shares a company can issue, while paid-up capital is the value of shares already issued.
- The paid-up capital cannot exceed the authorized capital.
- To induct new shareholders, the firm can:
- Increase authorized share capital and issue new shares, or
- Transfer shares from existing shareholders to new ones.
- In most cases, authorized capital increases as new shares are issued.
- For assistance in expanding authorized share capital, contact our consultants at sales@filingchamps.com.
How to increase the authorized share capital of the company?
Verify Articles of Association (AOA):
- Check if AOA includes provisions for increasing authorized share capital.
- If not, amend AOA accordingly.
Convene Board Meeting:
- Call a board meeting to approve the increase in authorized share capital.
Extraordinary General Meeting (EGM):
- Set a date for an EGM to seek shareholder approval for the increase.
- Distribute notice of the EGM to shareholders, directors, and auditors.
Conduct EGM:
- Secure shareholder approval through an ordinary resolution.
File ROC Forms:
- Within 30 days of EGM, file Form SH7 with prescribed government fee.
- Attach notice of EGM, copy of ordinary resolution, and updated Memorandum of Association.
Approval and Allotment:
- Upon following procedures as per Companies Act and Rules, registrar approves the filing, reflecting the new authorized share capital in MCA portal.
Allotment of Shares:
Increase Authorized Capital FAQs
Authorized capital is the maximum value of shares a company can issue as per its memorandum.
Authorized capital is the maximum potential value of shares, while paid-up capital is the actual value of issued shares.
By amending its Memorandum of Association and following legal procedures.
To meet financial needs, fund new initiatives, or comply with regulations.
Amended MOA, shareholder resolution, and forms like MGT-14 and SH-7.
Review Articles of Association, convene meetings, obtain approvals, and file necessary forms.
They must be amended to comply with the Companies Act, 2013.
It's held to seek shareholder approval for the increase through a resolution.
To register changes in the company's capital structure with the Registrar of Companies.
To notify the RoC about the increase in authorized capital.
Rs. 10,000 for the company and officers, plus daily penalties until rectification.
Expert guidance on MOA amendment, filing assistance, and ongoing support.
Handling all documentation and procedures meticulously.
Incorporation, tax filings, accounting, and annual compliance.
Varies based on complexity, but Filling Champs aims for efficiency.
Yes, for continued compliance and assistance.
Contact them to discuss requirements and initiate the process.
Tailored services based on specific needs and objectives.
Stress-free and compliant experience backed by expertise.
Yes, past client references or case studies are available.
