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).
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.
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
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.
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.
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.
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.
A stock is a form of security that indicates the holder has proportionate ownership in the issuing corporation.
Issued shares are the number of authorised shares sold to and held by the shareholders of a company.