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- Alteration of AoA.
- Alteration of MoA.
- Drafting of Resolutions.
- Filing of forms with ROC.
Increase Your Authorised Share Capital
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).
regarding your authorised capital limit.
in both basic and premium packages
authorised capital limit.
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The maximum number of shares that a private business may issue is defined by its authorised share capital. According to the 2013 New Companies Act, there is no minimum capital requirement. The capital clause of the Memorandum of Association is updated by the board approving an ordinary resolution in order to issue additional shares or increase the authorized share capital.
This sum of authorized share capital varies from business to business and could alter, but only with the consent of shareholders. Let's say a firm has an authorised capital of ₹2 lakhs; in that case, it follows that it can issue shares for up to ₹2 lakhs. However, because it is flexible, this allowed capital may be increased or decreased as needed. Let's imagine a firm has ₹1 lakh in allowed capital, but an investor wishes to put in ₹1 crore. In this case, the company can raise its authorised capital to ₹1 crore. The permitted share capital for company registration is covered here.
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
Here are the few guidelines one must know about authorised capital:
- ₹5 lakhs for including the phrases Hindustan, Bharat, and India in the company name.
- ₹10 lakhs for the use of the phrases 'Enterprise', 'Products', 'Business', and 'Manufacturing' in the company name.
- ₹10 lakhs for the use of the phrases 'Enterprise', 'Products', 'Business', and 'Manufacturing' in the company name. ₹50 lakhs for the use of the phrases global, intercontinental, continental, Asian, and international in the company's name.
- Bharat, Hindustan, and India were paid ₹50 lakhs to be the first word in the firm name.
- For employing words like 'international', 'global', 'universal', 'continental', 'intercontinental', 'asiatic', and 'industry' anywhere in the firm name, as well as 'udhyog' and 'industry', the fine is ₹1 crore.
- ₹ 5 Crore if the company name contains the word 'Corporation' even once.
Importance of Increasing the Company's Authorised Capital
A firm may only raise money from the public up to its authorised capital. You must raise your company's authorised share capital in order to raise money from the public.
- Verify whether the company's AOA has given the go-ahead to increase the authorised capital. If AOA is not permitted, a Special Resolution must be passed in order to change AOA.
- Hold a board meeting to establish the day, date, time, and location of the extraordinary general meeting as well as to enhance the company's authorised capital. Give notice of the meeting's day, date, time, location, and agenda to each member/shareholder, director, and auditor of the company.
- Convene, hold, and conduct the EGM at the time and location stated, and adopt a resolution to seek shareholder approval. If applicable, submit the required form within the timeframe.
- Change the company's Memorandum of Association to increase the permitted share capital.
- If the shareholders' resolution is approved, you have 30 days to file form SH-7 with the Registrar of Companies. Additionally, if the resolution is passed as a Special Resolution, form MGT-14 must be filed within 30 days after the resolution's passage.
What can be the reasons for increase in authorised capital of the company? There could be various reasons for a company needing to increase the authorised capital. Let us see a few:
- The need for enormous funds
- Financing the company's new projects
- Merger of two enterprises and their cash infusion as part of an arrangement strategy
- Additional share capital issuance
- Debt is converted to equity capital.
- To fulfil the legal requirements
Step 1: Board Resolution
Prior to deciding whether or not to increase the authorised capital, the company must first hold a board meeting to review and discuss the authority provided under the company's articles of association (AOA). If not, amend the AOA and hold a general meeting to discuss raising the authorised capital.
Step 2: Ordinary Resolution for an Increase in Authorized Capital
The Company will hold a general meeting of the members and adopt a regular resolution for an increase in the company's authorised capital and any necessary amendments to the memorandum of association at said meeting.
Step 3: Submitting the required paperwork
Following the passage of the Ordinary Resolution increasing the business's authorised capital, the company will file Forms MGT-14 for filing resolutions and Form
Step 4: The ROC approval
The Registrar of Companies will process the forms and approve the increase in authorised capital after receiving the Forms of Increase in Authorized Capital of the Company and verifying that it is pleased with the forms filed and compliance made. The company's master data will be updated on the MCA portal as soon as the form has been approved.
- Check the provisions of the AoA to increase authorised share capital
- If the AoA does not permit an increase, then the AoA must be modified as per Section 14 of the Companies Act of 2013
- Issue a notice for calling a board meeting to modify the AoA in order to approve the increase in authorised share capital
- Issue a notice for calling an extraordinary general meeting to modify the AoA in order to approve the increase in authorised share capital
- Issue the notice at least 7 days before the board meeting and 21 days before the EGM.
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.
Digital signature certificate:
A copy of a DSC from any authorised director of the company
Memorandum of Association:
A copy of the modified or latest version of the MoA
Articles of Association:
A copy of the modified or latest version of the AoA
Certificate of incorporation:
A copy of the company’s incorporation certificate
A copy of the company’s Pan Card.
Why CADesk India for Increase in Authorised Capital?
- We execute secretarial work for over 1000 companies and LLPs every month by leveraging our tech capabilities and the expertise of our team of legal professionals
- By handling all the paperwork, we ensure a seamless interactive process with the government
- We provide clarity on the incorporation process to set realistic expectations
- With a team of over 300 experienced business advisors and legal professionals, you are just a phone call away from the best in legal services
- Come on board and experience the ease and convenience.
FAQs on Raise Authorised Share Capital of Your Company with CAdesk India!
Authorised capital is defined as the maximum limit of the share of a company that can be shared with the shareholders of the company.
The company must file Form SH-7 within 30 days from the date of resolution.
In order to increase the authorised capital of a company, a clause regarding increase in authorised capital must be specified in articles of association along with the prior approval from the shareholders of the company.
One must attach documents such as copy of resolution along with explanatory statement and altered memorandum as well as an altered article of association.
Clause 4 of the articles of association has to be altered. In case if the company is not authorised to amend the AOA then it has to be amended by passing a special resolution. On every AOA a copy of the order approving such alteration has to be filed with the registrar within the period of 15 days.