Increase Authorised Share Capital

Increase Authorised Share Capital

Authorized capital, also known as authorized share capital, is the maximum amount of capital that a company is authorized to issue to its shareholders through the sale of its shares. It is the total value of shares that a company can legally offer for sale to the public or to its members.

The authorized capital is mentioned in the Memorandum of Association (MOA) of the company and represents the maximum amount of funds that the company can raise by issuing shares. The authorized capital can be increased or decreased by the company at any time, subject to the approval of its shareholders and in accordance with the Companies Act, 2013.

It is important to note that the authorized capital is not the same as the issued capital or the paid-up capital of a company. The issued capital represents the actual number of shares that have been issued by the company to its shareholders, while the paid-up capital is the actual amount of money that has been received by the company against the issued shares.

increase the authorized share capital:

To increase the authorized share capital of a company, the following steps must be taken:

1. Check the Articles of Association (AOA) of the company to ensure that it permits the increase of authorized capital. If the AOA does not permit an increase in authorized capital, then it needs to be amended first.

2. Hold a board meeting to approve the proposal to increase the authorized share capital. The notice of the board meeting and the agenda should be sent to all the directors of the company at least 7 days before the date of the meeting.

3. Pass a board resolution to recommend the increase in authorized share capital, specifying the reasons for the increase, the new authorized capital amount, and any other relevant details.

4. Hold an Extraordinary General Meeting (EGM) of the shareholders of the company and pass a special resolution approving the increase in authorized share capital. The notice of the EGM should be sent to all the shareholders of the company at least 21 days before the date of the meeting.

5. File the special resolution along with the necessary forms with the Registrar of Companies (ROC) within 30 days of passing the resolution. The forms required to be filed are:

• Form MGT-14: This form is required to be filed with the ROC within 30 days of passing the special resolution to increase the authorized share capital.

• Form SH-7: This form is required to be filed with the ROC within 30 days of the receipt of the certified copy of the special resolution passed by the shareholders.

6. Once the ROC approves the forms and the increase in authorized share capital, the company can issue new shares up to the newly authorized limit.

It is important to note that the process of increasing authorized share capital may differ based on the specific requirements and regulations of the country where the company is registered. It is recommended to consult a legal professional or a company secretary for guidance on the specific steps required for increasing authorized share capital in a particular jurisdiction.