INCREASE AUTHORIZED CAPITAL

Are you running a business? As a business owner, you must realize that your company requires funds for ensuring seamless operations on a daily basis.

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Board Resolution for Capital Increases
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Preparation of Records for Extra Ordinary General Meeting
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Amending to the Capital Clause in MoA (Memorandum of Association)
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Payment of Appropriate stamp Duty
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Dedicated Manager
Documents Required
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Copy of Extraordinary general meeting Resolution
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Copy of Board Resolution
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Notice to conduct extraordinary general meeting
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Signed copy of Amended MoA
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Digital Signature

How to increase the authorized share capital of a company?

Are you running a business? As a business owner, you must realize that your company requires funds for ensuring seamless operations on a daily basis. The funds that are required could be for both short-term as well as long-term requirements. While the short-term requirement will have options like taking advances and loans, a long-term funding option is known to require the involvement of more capital. When you are involved in a private limited company, the given need could lead to increasing the respective authorized share capital of the given company.
As the Company Act is known to monitor the private entity, implementing changes in the given structure would allow following a proper procedure in the respective rules and acts. During the time of the registration of the private limited company, both the paid-up and the authorized capital get specified in the company’s MOA.
The company can also consider issuing new shares within the limit of the given paid-up or authorized capital. In case the company is looking forward to issuing more shares than the given limit, then the MOA is expected to be amended.

What is Authorized Capital?

It is referred to as the maximum limit of the given share capital –up to which the company is allowed to issue the shares to the respective shareholders. Beyond the given limit, the company is not authorized to issue the respective shares. Therefore, when the company does want to issue shares beyond the specified limit, then it is expected to amend the given MOA under the Companies Act.

How to Increase the Authorized Capital of an Organization?

Step 1: Vetting of AOA & MOA
A company is required to check the respective AOA & MOA to know about the given limit of the authorized capital. In case the shares and the respective issues might be beyond the given limit, then the authorized share capital increase occurs.. Therefore, altering AOA turns out to be a viable solution for amending such provisions.
Step 2: Holding a Board Meeting
There should be an arrangement of a specialized board meeting for ensuring the approval of the board to increase the authorized share capital.
Step 3: Holding a Meeting of the Shareholders
The company should look forward to holding the AGM or EGM on the decided date for ensuring the approval of the given increase in the authorized capital.
Step 4: Informing the ROC
Once the shareholders have given approval for the same, the company can go forward with drafting the altered MOA for increasing the given capital. The company should inform the same with the help of the Form SH-7along with the MCA. It is expected that the form should be filled out within 30 days from the resolution date. Some of the essential documents that you need to submit are:
  • AOA’s altered copy
  • MOA’s altered copy
  • AGM/EGM notice
  • A true certified copy of Board Resolution for altering AOA
  • A true certified copy of Board Resolution for altering MOA