Increase Authorized Capital

Overview

A company may have to extend its authorized share capital before issuing new equity shares and increasing paid-up capital. Authorized share capital is that the total value of shares a company can issue, while paid-up capital is that the total value of shares the company has issued. Paid-up capital can never exceed authorized capital. Hence, if a company having an authorized capital of Rs.10 lakhs and paid-up capital of Rs.10 lakhs would like to induct new shareholders, it can do so either by:

Increasing authorized share capital and issuing new shares. (or) Transferring shares from existing shareholders to the new shareholders. In most cases, new shares are issued and authorized capital is increased.

Our Process

Step 1

Alteration of MOA and AOA

Step 2

Holding Board Meeting

Step 3

Hold Shareholders Meeting

Step 4

Filing of Form SH-7

Step 5

Intimation to the ROC

Choose Your Package

All Inclusive Pricing – No Hidden Fee

Basic
- ₹ 3250
- - Increase in authorised capital of upto Rs.10 lakhs.
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Premium
- ₹ 3750
- - Increase in authorised capital of upto Rs.25 lakhs.
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Ultimate
- ₹ 5250
- - Increase in authorised capital of upto Rs.100 lakhs.
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Benefits

Increases Share Capital

A company can only raise its share capital beyond what it's prescribed in its MOA (Memorandum of Association) if authorized capital. Hence, increasing authorized capital has an incremental effect on the general 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.

Checklists

Check provisions of AoA (Articles of Association) to increase Authorized Share Capital.

If AoA does not permit an increase, then AoA must be modified as per section 14 of the companies act 2013.

Issue notice for calling EOBM (Extraordinary Board Meeting) to modify AoA, for approving the increase in authorized share capital.

Issue notice at least seven days before the meeting

Documents Required

The documents must be filed within 30 days after obtaining consent from boards for the share capital increase with the MCA (Ministry of Corporate Affairs). The resolution passed is notified in MGT-14 and notice of increase is filed in SH-7

Digital Signature Certificate: A copy of a DSC from any authorized director of the company

Memorandum of Association: A copy of the modified or the latest version of MoA

Articles of Association: A copy of the modified or the latest version of AoA

Certificate of Incorporation: A copy of the company’s incorporation certificate.

PAN card: A copy of the company PAN card.

A limited company shall file form SH-7 with the Registrar of Company within the period of period of 30 days of such alteration along with the following attachment:-

Copy of Board Resolution

Copy of EGM Ordinary Resolution

Copy of of EGM along with Explanatory Statement

Copy of altered MOA

Clear All Your Doubts !

What is an authorized capital of the company?

Authorized capital is a maximum share capital of the company which sets limit within which the shares are issued by the company.

Which resolution is required to be passed for increasing the authorized share capital?

The Ordinary Resolution in General Meeting is required to be passed for increasing the authorized share capital.

Which form is required to be filed for Increasing the Authorized capital?

A. Form SH 7 is required to be filed with the resolution passed in general meeting and amended MOA within 30 days of passing the resolution.

Will the increase in the authorized share capital of the company be reflected on the MCA portal?

Yes, the increase in authorized capital will be reflected in the Master Data of the company on the MCA portal.

What fees will have to be paid for increase of authorized capital?

The fees that is required to be paid will depend on the paid-up capital of the company.

Who has the power to increase the authorized share capital?

Shareholders of the company with the majority voting rights have the power to increase the authorized share capital of the company.

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