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INCREASE IN AUTHORISED SHARE CAPITAL OF COMPANY

INCREASE IN AUTHORISED SHARE CAPITAL OF COMPANY

Every company after its registration whether its Public limited Company or private limited company after some time when the business of the company expands, then the company require fund for its expansion, and one of the way which available to company is to issue shares but in case the company is intending to issue share beyond increase its authorized share capital then it requires increasing the authorized share capital of the company.

At the time of private limited company registration, the authorized and paid-up capital is specified in the MOA of the company. The company can issue new shares within the limit of such specified authorized and paid-up capital. If the company wants to issue more shares than the specified limit then it has to amend the MOA. So first let us understand the authorized and paid-up share capital in a company.

PROCESS FOR INCREASE IN AUHTORISED CAPITAL OF COMPANY:

  • Firstly we should check the Articles of Association of the Company to see whether necessary authority is there to increase the authorized share capital of the Company.
  • Issue the Board Meeting notice and convene the Board Meeting for increase and to fix up to date, time, place and agenda for convening a General Meeting for passing of an Ordinary Resolution, by the Articles for the same.
  • Issue Notice of EGM alongwith Explanatory Statement 21 days before the date of the meeting.
  • Hold the General meeting and pass necessary resolution with required majority.

Filing of Form: Form SH-7 is required to be filed for Increase in Authorised Share Capital

Attachments of Form SH-7:

  • Board Resolution passed by the Company.
  • Notice of EGM Explanatory Statement
  • Resolution passed in the Extra Ordinary General Meeting,
  • Altered Copy of MOA.

Note: Clause No 5th is required to be altered in the Memorandum of Association.

HOW TO INCREASE IN AUTHORISED SHARE CAPITAL OF COMPANY:

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Documents Required For Increase of Authorised Share Capital of Company:

  • Financial StatementsDuly certified copy of latest audited Finacial Statements
  • COI OF COMPANY.CERTIFICATE OF INCORPORATION OF COMPANY.
  • MOAMOA OF COMPANY
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Frequently asked questions on Increased in Authorised Share Capital

1.Can Authorised capital be increased?

Ans.  the authorized share capital of the company can be increased at any time, subject to the constraints and clauses dictated by section 61 (read with section 13 and 14) of the Companies Act, 2013.

2. Why would a company increase Authorised share capital?

Ans.  Authorised Share Capital Increase. A company may need to increase its authorised share capital before issuing new equity shares and increasing paid-up capitalAuthorised share capital is the total value of shares a company can issue, while paid-up capital is the total value of shares the company has issued.

3. Which form is filed for increase in Authorised share capital?

Ans. Filing of form SH-7 to increase its authorised capital with the registrar of company (ROC)

4. What is the meaning of Authorised capital?

Ans. The authorized capital of a company (sometimes referred to as the authorized share capital, registered capital or nominal capital, particularly in the United States) is the maximum amount of share capital that the company is authorized by its constitutional documents to issue (allocate) to shareholders.

5. Which resolution is required for increase in Authorised capital?

Ans. The Ordinary Resolution under section 61(1) (a) of the Companies Act, 2013, is then passed to increase the Authorized Share Capital of the Company in the meeting. Shorter Consent received from the shareholders in case the meeting is held at shorter notice.

6. Is MGT 14 required for increase in Authorised capital?

Ans. For increasing in the Authorized share capital of the Company , no need to pass MGT 14 as ordinary resolution needs to be passed. File Form SH 7 for increasing in authorized share capital of the Company. By virtue of Right issue just pass Pas 3 within 30 days of allotment.

7 Is cash a capital?

Ans. In accounting, capital refers to the stake of owners in the business. On the other hand, Cash is shown on the asset side as it is an asset for the business. If you use cash to purchase current assets, your capital will not increase. It will increase the respective current assets in the balance sheet.

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