Increase in Authorised Capital

Introduction

Expand Your Business with Increased Authorized Capital through CorpIQ

As your business scales and seeks new opportunities, increasing your company's authorized capital becomes a strategic move to support growth and investment. CorpIQ offers specialized services to facilitate this significant step in your company's journey, ensuring legal compliance and a smooth transition to a higher capital base. Our team of experts, including Chartered Accountants, Company Secretaries, and Lawyers, is proficient in executing the increase of authorized share capital as per the Companies Act, 2013.

CorpIQ's SERVICE FOR INCREASE IN AUTHORIZED CAPITAL INCLUDES:

- Strategic Consultation: We provide tailored advice on the implications and benefits of increasing your authorized capital, helping you make informed decisions that align with your company's growth strategy.

- Amendment of MOA: CorpIQ manages the alteration of the capital clause in the Memorandum of Association (MOA), which is a critical step in increasing the authorized capital.

- Compliance and Filing: Our experts take charge of preparing and filing the necessary resolutions, forms, and documentation with the Registrar of Companies (ROC), including Form SH-7, to officially register the increase.

- Board and EGM Coordination: We coordinate and document the Board Meeting and Extraordinary General Meeting (EGM) resolutions required for approving the capital increase.

- Transparent Process: CorpIQ ensures a transparent process with regular updates, so you're always informed about the status of your capital increase application.

- Post-Increase Formalities: After the authorized capital increase, we assist you in updating your company's corporate records, share certificates, and statutory registers.

Elevating your company's authorized capital is a bold step towards enabling further company development and shareholder value. CorpIQ provides a streamlined and compliant pathway to achieve this goal with professional precision and strategic foresight.

LEGAL SIDE OF AUTHORISED CAPITAL INCREASE

As defined in Section 2 (8) of the Companies Act, 2013, "Authorized Capital" refers to the maximum amount of capital authorized by the memorandum of the company. By following the steps that are outlined in this article, the company can expand its business to the level of the authorized capital. If the company needs to expand the business by infusing more funds than at first, the authorized capital must be increased.

In order to issue new equity shares and increase paid-up capital, the company may needs to increase its authorized share capital. As Paid-up capital represents the total value of the shares that have been issued by a company. Authorized share capital represents the total value of the shares the company has been allowed to issue. It is not possible for the Paid-up capital to exceed the authorized capital. For example, a company with an authorized capital of Rs.10 lakh and an authorized capital of Rs.10 lakh would be able to induct new shareholders by increasing the authorized share capital and issuing new shares (or) by transferring shares from the existing shareholders to the new shareholders. An authorized capital increase usually occurs following the issue of new shares.

FEATURES

• As soon as a company is formed and incorporated, its authorized capital is determined.

• In accordance with the amount of approved capital, ROC fees will increase.

• In the Memorandum of Association and Articles of Association of a company, the authorized capital needs to be specified.

• The authorized share capital determines the nominal value of each share of a company and is the maximum amount that can be raised.

• Modifications can be made at any time after the establishment of the company.

• Authorized capital cannot be used to calculate the company's net worth.

• Firms can issue shares with a lower value than their authorized capital; they are not required to issue shares equal to their authorized capital.

 

DOCUMENTS REQUIRED

• For Form MGT-14
• DIN and DSC.
• In accordance with Section 102 of the Companies Act, 2013, the EGM notice must include an explanation.
• Certified EGM resolutions.
• Amended MOA and AOA.
• For Form SH-7
• The resolution for the capital change, certified as true and correct.
• The amended MOA and AOA.
• If there are any additional optional attachments, please include them.

 

PROCEDURE

• As part of the process of increasing the authorized share capital, it is necessary to verify the Articles of Association to ensure that there is a provision referring to the increase in authorized share capital. If there is no such provision, the company must first amend its AOA.
• For increasing the authorized share capital of the company, it is necessary to convene a Board meeting by providing notice to Directors. At the Board meeting, the Board of Directors must approve the increase. A date should be set for an Extraordinary General Meeting to obtain approval from the shareholders for increasing the authorized share capital and amending the Company's Memorandum of Association.
• A notice of an extraordinary general meeting should be presented to all shareholders, directors, and auditors of the company after the Board of Directors has approved it. The notice should be presented to all shareholders, directors, and auditors based on the approval.
• An extraordinary general meeting must be held and the shareholders must approve the increase in authorized share capital at the time, date, and place specified on the notice. An ordinary resolution must be passed by the shareholders to approve the increase in authorized capital.
• Upon passing the ordinary resolution at the Extraordinary general meeting, the company must file Form SH7 within 30 days. In addition to paying the prescribed government fee.
• To increase the authorized capital of a company, the procedure described in the Companies Act and the Companies Rules must be followed, and the registrar must approve the filing in order for the company to have its authorized shares increased. The new authorized share capital will appear on the MCA portal as soon as it has been approved.

A company can increase its paid-up share capital by issuing new equity shares once the authorized share capital is increased.