Increase in Authorised Capital
Increase in Authorised Capital
₹
2,000/-*
₹
- Statutory Fees including additional fees or penalty in course of Filing of Form SH-7 is not included in the above amount.
- Stamp Duty Payable on Increased Authorised Capital is not included in above amount.
- Any advice given to the Client is only an opinion based on our knowledge of the Client’s particular circumstances.
- The client will be responsible for verifying the information contained in such returns and/or filings prior to approving/signing such return/filing.
- Fees Should be paid according to conversation held between the Legal Parivar Team and Client.
Authorised Share Capital
Every business encounters the ongoing need for increased funds, both in the short and long term. Short-term requirements may be met through loans and advances, but sustained operations demand a more substantial capital infusion. In the case of a Private Limited Company, addressing this need involves a strategic increase in the company’s authorized capital. Given the governance and regulations outlined in the Company Act, any structural modifications necessitate strict adherence to the stipulated rules. During the registration of a Private Limited Company, the Memorandum of Association (MOA) specifies the authorized and paid-up capital. To issue additional shares beyond this limit, amendments to the MOA become imperative.
According to Section 2 (8) of the Companies Act, 2013 “Authorized Capital” is the capital that is authorized by the memorandum of the company to be the maximum amount of the share capital of the company.
The company has the capacity to broaden its business operations up to the limit of the authorized capital. However, if the company intends to expand its business further by injecting additional funds, it is imperative to augment the authorized capital. The necessary steps for increasing the authorized capital are detailed in this article.
Process to Increase Authorised Capital of the Company
STEP 1 – Obtain Board of Directors Approval for Increase of Capital of Company
To determine the new authorized capital limit or modify the capital clause in the Memorandum of Association (MOA), directors need to gather for a formally arranged board meeting. The notice sent to directors should outline the meeting agenda, and it’s advisable to include the proposed resolution so that directors can be well-prepared. We highly recommend adhering to the guidelines outlined by ICSI in SS-1 for conducting board meetings.
STEP 2 – Convene an Extraordinary General Meeting (EGM) of Shareholders
The next step is to seek approval of the shareholders of the company. Shareholders can express their decision only in a proper Extraordinary General Meeting (EGM). To organize an EGM, the directors need to inform every shareholder of the company at least 21 clear days before the EGM date. The EGM notice should include the meeting agenda and a draft of the proposed resolution to be approved as a special resolution. The special resolution means a decision taken by more than 75% voting rights. The special resolution once adopted in the EGM is then filed before the ROC for their approval. The certified copy of the resolution is filed in form specified with the prescribed fee within 30 days of the passing of the resolution.
STEP 3 – Filing of application for Increase in Authorised Capital in SH-7