INCREASE IN AUTHORIZED SHARE CAPITAL

 

Basic information

 

The authorized share capital is a maximum permissible amount of share capital up to which company can issue and allot its equity or preference shares as the case may be. Special resolution of the members is required to increase authorized share capital.  It can be increased for issuing new shares and/or inducting more capital into the Company. We can assist you with respect to the timelines, procedures compliances and e-filing with respect to the increase in authorized share capital of the Company.

 

The increase in authorized share capital facilitates further allotment of shares by way of Private Placement or Bonus Issue or allotment of Rights Shares or ESOP, etc.

 

The Stamp Duty is required to be paid at the time of filing of relevant Eforms with MCA and the same is different as per the respective State Stamp Duty Acts.

 

In relation to a company, it is the amount as mentioned in Clause V that is Capital Clause of the Memorandum of Association.

 

What will you receive in Increase in authorised capital package ?

 

  1. Preparation of documents for increase in authorised capital
  2. Shareholders’ Ordinary Resolution
  3. Alteration of Memorandum of Association (MOA)
  4. Govt. Stamp duty payment

 

What is the process for increase in authorised capital of Company ?

 

Step 1: Board Resolution:


The Company has to firstly conduct the Board meeting to consider and discuss the authority given in the Articles of Association (AOA) of the Company to increase in the authorised capital or not. If no, then alter the AOA and then call the general meeting for increase in the authorised capital.

 

Step 2: Ordinary Resolution for increase in authorised capital:

 

The Company will conduct General Meeting of the members and pass thereat an ordinary resolution for increase in authorised capital of company and consequential changes to the Memorandum of Association.

 

Step 3: Filing of necessary forms:

 

Once the Ordinary Resolution for increase in authorised capital of company is passed, the company will file forms MGT-14 for filing of resolutions and Form SH-7 along with necessary documents for increase in authorised capital of company with the Registrar of Companies (ROC) through MCA portal.

 

Step 4: Approval of the ROC:

 

Upon receipt of the Forms of increase in authorised capital of the Company by the Registrar of Companies, and if it is satisfied with the forms filed and compliance made, he will process the forms and approve such increase in authorised capital. Once the form is approved, the Master data of the Company will be updated on the MCA portal.

 

What can be the reasons for increase in authorised capital of the Company ?

 

  1. Requirement for huge funds
  2. Financing the new projects of the Company
  3. Combination of two businesses through merger and their capital infusion as part of scheme of arrangement
  4. Further issue of share capital
  5. Conversion of debt into share capital
  6. To meet the statutory requirements

 

 

What Documents are required for increase in authorised capital Company ?

 

  1. Details and breakup of increase in capital
  2. Ordinary resolution for increase in authorised capital
  3. Alteration of MOA
  4. DSC token of Director for filing of forms.