Increase Authorized Capital

Increasing Authorized Capital involves amending a company's Articles of Association to raise the maximum value of shares that the company is allowed to issue.

    Overview About Service

    An increase in authorised share capital is required to fulfil the business's expanding financial requirements. Additional money is frequently needed by Private Limited Companies for both immediate and long-term needs. While loans and advances might cover urgent financial demands, raising the company's authorised capital will provide a reliable and significant source of funding.

    The authorised and paid-up capital is specified in the Memorandum of Association (MOA) at the time a Private Limited Company is registered. Within the parameters of the authorised capital specified in the MOA, the firm is free to issue additional shares. The MOA must be amended in accordance with the rules set forth in the Company Act and its related rules if the company intends to issue shares in excess of this limit.

    What exactly is Authorised Capital?

    According to a company's Memorandum of Association (MOA), authorised capital is the most share capital that it is legally permitted to issue. This authorised capital indicates the maximum amount the company may generate money by issuing shares, in accordance with Section 2(8) of the Companies Act of 2013.

    The limits of the company's ability for growth both financially and operationally are established by the authorised capital. The corporation must go through a formal process to increase its authorised capital if it wants to raise more money than what was initially authorised. This technique necessitates carrying out specified actions and phases, which are described in this article. The corporation gains the ability to raise more money for the growth and development of its business by expanding the authorised capital.

    Increase in Authorised Share Capital

    Before issuing additional equity, shares and increasing its paid-up capital, a company could need to increase its approved share capital. The whole value of shares the business is permitted to issue is shown by the authorised share capital, whereas the total value of shares the company has actually issued is shown by the paid-up capital.

    The authorised capital may not be greater than the paid-up capital. So, if a firm with Rs. 10 lakhs in authorised capital and Rs. 10 lakhs in paid-up capital wants to add new shareholders, it can either increase authorised share capital and issue new shares or transfer shares from existing shareholders to the new shareholders.

    The authorised capital typically rises following the issue of new shares. Please contact our experts at info@filingman.com if you need assistance increasing the authorised share capital from a qualified professional. Every step of the journey, we are always there to help you.

    How may the company's authorised share capital be increased?

    It is essential to confirm the company's Articles of Association (AOA) before moving on with the procedures to increase the authorised share capital. This confirmation verifies that the AOA has a clause allowing for an increase in the authorised share capital. In the absence of such a clause, the company is required to start the process of modifying the AOA to include the relevant clause.

    (Note: It is typical for the majority of AOA agreements to already contain a clause regarding raising the company's authorised share capital.)

    Call a Board Meeting

    The first step towards expanding the company's authorised share capital is calling a board meeting and giving the directors advance notice of it. The proposed increase in authorised share capital must be approved by the Board of Directors at this meeting.
    The company should call an Extraordinary General Meeting (EGM) after getting the Board's approval to ask the shareholders to approve the increase in authorised share capital and make the necessary amendments to the company's Memorandum of Association (MOA).
    Upon the Board's consent, the company secretary, who is present at the meeting, should then distribute the notice of the EGM to all of the business's shareholders, directors, and auditors. The proposed changes will be explained to all interested parties in this notice, and their approval will be requested at the EGM.

    Additional General Meeting

    The Extraordinary General Meeting (EGM) will be held at the time, place, and date specified in the notice. Ask the shareholders for their consent to raise the authorised share capital during the EGM.
    The ordinary resolution expressing the shareholders' agreement to the proposed modification should be used to obtain their consent to increase the authorised capital.

    Submit ROC Forms

    The corporation must file Form SH7 within 30 days after the Extraordinary General Meeting following the successful passage of the regular resolution. In addition to paying the required government charge for the higher authorised capital, the following papers should be submitted:

    • regarding the Extraordinary General Meeting notice.
    • a real and authorised reproduction of the standard resolution.
    • The updated Memorandum of Association, which reflects the increased capital authorization.

    The registrar will evaluate and accept the filing when it is submitted in accordance with the steps described in the Companies Act and the Companies Rules for increasing the authorised capital, which would officially increase the company's authorised share capital. The Ministry of Corporate Affairs (MCA) portal will update with the revised authorised share capital.

    Costs
    Changes in Director

    ₹ 2,999 / Only

    Plus Government Fees, Stamp Duty Extra.

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      Why Choose FilingMan

      For Increase Authorized Capital?

      Increasing Authorized Capital through FilingMan is a strategic move to empower your company's growth trajectory. Our expert team guides you seamlessly through the process, ensuring meticulous preparation and submission of necessary documentation to the concerned authorities. By leveraging our expertise, you can swiftly expand your company's financial capacity, enabling access to additional funding, enhanced investment opportunities, and the flexibility to undertake larger projects, all while adhering to legal regulations and industry standards.

      Trust FilingMan to be your partner in navigating the complexities of increasing Authorized Capital, unlocking new dimensions of financial potential for your business's prosperity and expansion.

      Increase Authorized Capital FAQ'S
      What is the process of increasing Authorized Capital, and how can FilingMan assist?
      Increasing Authorized Capital involves amending the company's Articles of Association and filing necessary documents with regulatory authorities. FilingMan's experts guide you through every step, from drafting resolutions to submitting the required paperwork, ensuring a smooth and compliant process.
      Why would a company need to increase its Authorized Capital?
      Companies often increase Authorized Capital to accommodate future expansion, secure additional funding, or facilitate mergers and acquisitions. It offers flexibility in issuing more shares, enabling the company to pursue larger projects and capitalize on growth opportunities.
      How does FilingMan ensure compliance during the process of increasing Authorized Capital?
      FilingMan's experienced professionals possess in-depth knowledge of legal and regulatory requirements. We ensure that all necessary documents are accurately prepared, filed, and submitted within the stipulated timelines, minimizing the risk of non-compliance.
      What benefits can a company gain from increasing Authorized Capital with FilingMan's assistance?
      By choosing FilingMan, you benefit from a streamlined process that saves time and effort. Increasing Authorized Capital can enhance your company's financial capabilities, enabling easier access to capital, improved creditworthiness, and the ability to undertake larger projects with confidence.
      Is FilingMan's Authorized Capital service suitable for businesses of all sizes and industries?
      Absolutely, FilingMan's Authorized Capital service caters to a diverse range of businesses, irrespective of size or industry. Whether you're a small startup or an established corporation, our expertise ensures that the process of increasing Authorized Capital aligns with your specific needs and objectives.