Increase Authorized Capital
Essentials of Authorized Capital - an Overview
A private company's authorized capital specifies the maximum number of shares it may sell. There is no minimum capital required as per new Companies Act of 2013. To issue new shares or to raise the authorized capital, the capital clause of the Memorandum of Association is amended by passing an ordinary resolution by the board.
Package
At Actolegal, we offer various packages to increase your authorized capital
Increase of capital : ₹5499/+tax
Issue of new shares : ₹7999/+tax
Note: Govt fees and stamp duty depends on the authorized capital of the company
Checklist For Increasing Authorized Share Capital
- Check the provisions of the AoA to increase authorized share capital
- If the AoA does not permit an increase, then the AoA must be modified as per Section 14 of the Companies Act of 2013
- Issue a notice for calling a board meeting to modify the AoA in order to approve the increase in authorized share capital
- Issue a notice for calling an extraordinary general meeting to modify the AoA in order to approve the increase in authorized share capital
- Issue the notice at least 7 days before the board meeting and 21 days before the EGM.
Benefits
Increases Share Capital
A company can raise whatever authorized capital as they decide upon and the same will be mentioned in the MoA with revisions. Hence, increasing authorized capital has an incremental effect on the overall company share capital.
Enhances Borrowing Capacity
With the increase in share capital, the company’s overall net worth also increases. This further enhances the borrowing capacity of the company.
It could invite investments as the same can be easily accommodated if there is enough authorized capital.
Documents Required for share capital
The documents must be filed with the MCA within 30 days after obtaining consent from the shareholders for the share capital increase. The standard resolution for private firms is merely SH-7, and MGT-14 is not required.
- Digital signature certificate: A copy of a DSC from any authorized director of the company
- Memorandum of Association: A copy of the modified or latest version of the MoA
- Articles of Association: A copy of the modified or latest version of the AoA
- Certificate of incorporation: A copy of the company’s incorporation certificate
- PAN card: A copy of the company’s PAN card.
Procedure to Increase the Authorized Capital of a Company
- Check if the company's AoA allows it to raise its authorized capital. If the AoA is not authorized, you must pass a special resolution to amend it
- Hold a board meeting and pass a resolution to increase the authorized capital of the company and decide the day, date, time, and place for the extraordinary general meeting. Provide notice to all members/shareholders, directors, and auditors of the company, stating the meeting's day, date, time, place, and agenda
- Convene, hold, and conduct an EGM on the designated date, place, and time, and pass a resolution seeking shareholder approval. If any forms are needed, they must be submitted within a certain time frame
- Alter the company's Memorandum of Association to raise the authorized share capital
- Within 30 days of passing the shareholders' resolution, file form SH-7 with the registrar of companies. If the resolution is passed as a special resolution, you must also file form MGT-14 within 30 days of the resolution's passage.
Why Actolegal for Increase in Authorized Capital?
- We execute secretarial work for over 1000 companies and LLPs every month by leveraging our tech capabilities and the expertise of our team of legal professionals
- By handling all the paperwork, we ensure a seamless interactive process with the government
- We provide clarity on the incorporation process to set realistic expectations
- With a team of over 300 experienced business advisors and legal professionals, you are just a phone call away from the best in legal services
- Come on board and experience the ease and convenience.
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