Increase In Authorised Capital

Increase In Authorised Capital

A private company’s authorised capital specifies the maximum number of shares it may sell. There is no minimum capital required as per new Companies Act of 2013. To issue new shares or to raise the authorised capital, the capital clause of the Memorandum of Association is amended by passing an ordinary resolution by the board.

Checklist For Increasing Authorised Capital

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.

Documents Required

The documents must be filed with the MCA within 30 days after obtaining consent from the shareholders for the share capital increase. The standard resolution for private firms is merely SH-7, and MGT-14 is not required.

  • 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
  • PAN card: A copy of the company’s PAN card.
Procedure To Increase The Authorised Capital Of A Company
  • Check if the company’s AOA allows it to raise its authorised capital. If the AOA is not authorised, you must pass a special resolution to amend it
  • Hold a board meeting and pass a resolution to increase the authorised capital of the company and decide the day, date, time, and place for the extraordinary general meeting. Provide notice to all members/shareholders, directors, and auditors of the company, stating the meeting’s day, date, time, place, and agenda
  • Convene, hold, and conduct an EGM on the designated date, place, and time, and pass a resolution seeking shareholder approval. If any forms are needed, they must be submitted within a certain time frame
  • Alter the company’s Memorandum of Association to raise the authorised share capital
  • Within 30 days of passing the shareholders’ resolution, file form SH-7 with the registrar of companies. If the resolution is passed as a special resolution, you must also file form MGT-14 within 30 days of the resolution’s passage.

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Sr. No Service Name Rate
1 Increase In Authorized Capital ₹ 3,999
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