Increase Your Authorised Share Capital
To increase the authorised capital, you need to pass an appropriate board and shareholders resolution and amend the capital clause of the Memorandum of Association (MoA).
Essentials of Authorised Capital - an Overview
A private company's authorised 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 authorised capital, the capital clause of the Memorandum of Association is amended by passing an ordinary resolution by the board.
Package
At Vakilsearch, we offer various packages to increase your authorised capital
Increase of capital : ₹5499/+tax
Issue of new shares : ₹7999/+tax
Note: Govt fees and stamp duty depends on the authorised capital of the company
Checklist For Increasing Authorised Capital
- Check the provisions of the AoA to increase authorised 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 authorised share capital
- Issue a notice for calling an extraordinary general meeting to modify the AoA in order to approve the increase in authorised 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 authorised capital as they decide upon and the same will be mentioned in the MoA with revisions. Hence, increasing authorised 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 authorised 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 authorised 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 Authorised Capital of a Company
- Check if the company's AoA allows it to raise its authorised capital. If the AoA is not authorised, you must pass a special resolution to amend it
- Hold a board meeting and pass a resolution to increase the authorised 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 authorised 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 Vakilsearch for capital increase?
- 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.
The Glossary
Authorised share capital
It refers to the maximum number of shares a company is legally allowed to issue or offer based on its corporate charter.
Subscribed capital
It represents a portion of the authorised capital that potential shareholders have agreed to purchase from the company's treasury, often as part of the company's initial public offering.
Stock
A stock is a form of security that indicates the holder has proportionate ownership in the issuing corporation.
Issued shares
Issued shares are the number of authorised shares sold to and held by the shareholders of a company.
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