Increase Authorised Capital
Increasing authorized share capital is a means by which the company in question can legally give out shares to its shareholders, thus increasing the maximum number of its shares in circulation. Usually, the process is done this way, whereby an amendment of the memorandum is made. MOA is an abbreviation. Through increasing the authorized share capital, the company can make available more shares to be for sale, which in turn can be bought by its existing or new investors so as to raise the functioning capital.
As per the Section 61 of the Companies Act, 2013, a company can increase its authorized share capital by taking an ordinary resolution in the general meeting of the company, instead, if a companyâs articles allow such a rise. Along with the resolution’s passing, the form SH-7 should be filed with the ROC within 30 days before the due payment of the stamp duty for increase in authorized share capital.
At CompRegi, we realize the worth of the MCA increase in authorized capital for the sake of its development and the realization of its financial needs. We have a qualified team in place to take you through the whole process, that is, from amending the MOA to filling in the relevant ROC documents. The help of our experts will guarantee the full compliance with the legal obligations and efficient agenda of the procedure to increase authorized share capital.
Documents required to Increase Authorised Capital
AoA
Companyâs AoA having clause to increase Authorised Capital.
Increase Authorised Capital Cost
We at Compregi believe in complete transparency in the complete registration process of your company. Below mentioned cost structure includes all the necessary government fees required at multiple stages of registration.
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How to Increase Authorized Capital
The process of increasing authorized share capital involves several key steps:
Cross the AOA to observe that it does not have any limitations regarding an increase in the authorized capital. Then, proceed with the AOA if it is not applicable.
Hold a Board Meeting to approve Resolution No. 1 allocating the Rights Issue and Resolution No. 2 calling for an Extraordinary General Meeting (EGM).
Announce the EGM in writing with names of the shareholders, directors, and auditors. Also, send a soft copy containing the agenda and the proposed resolution.
And the EGM should be conducted and the decision of an ordinary resolution to increase the authorized share capital and make changes to the MOA should be approved.
File SH-7 Form with ROC within 30 days after the passage of the resolution on the contingency plan, together with the required documents and amount of fees.
What is the process for Increase Authorized Capital
As per Section 61 of the Companies Act, 2013 a limited liability company with the increase the authorized share capital may make a resolution of an ordinary nature in a general meeting, amend the capital clause of its Memorandum of Association; supposing that the authority for such amendment is given to it by Articles of Association. The ROC must have a notice of alteration filed in the format of form No.SH-7 within 30 days.
The company can issue additional share capital only after the approval of its memorandum and articles of association and after passing a simple resolution at the company’s extra-ordinary general meeting [Section 61(1)]. The Authorized Share Capital is found in Clause V in the MOA.
Follow the procedure to increase authorized share capital of an enterprise:
Check the Article of Association of the Company
Review if the Articles of Association of Company have just a statement that allows stamp duty for increase in authorized share capital. If the issue of such provision in the Articles of Association is not resolved, then it is essential to take action to amend the Articles of Association.
Convene a Meeting of Board of Directors
To take into account and agree with the enhanced Authorized Share Capital and modifying the Memorandum of Association, depending on the approval of shareholders during the General Meeting.
To provide for holding General Meeting of the Company with date, time, and venue fixed. The authorisation of the draft notice of General Meeting shall be along with explanatory statement as per Section 102 of the companies Act, 2013.
To empower the Director or Company Secretary to certify and summon a General Meeting; and do acts, deeds and matters to activate the Board.
Convene General Meeting (EGM)
Notice to hold a General Meeting (EGM) shall be given at least 21 unambiguous days in advance of the actual date of the EGM through a hand-delivery, or ordinary post or speed post or registered post or courier or facsimile or e-mail, or by any other electronic means and a Shorter Notice can be issued with the consent of at least majority in number and ninety five percent of such part
Notice
Taken notice shall fully state the meeting’s day, date, time, and venue and give explicit instructions on the issues about stock rises after increase in authorized capital.
Organize the EGM.
Fix the date for the General Meeting (EGM) and carry out a simple Ordinary Resolution for an increase in the Authorized Share Capital to pay up the balance of the amount and make any necessary amendments in the Memorandum of Association (MOA).
File Form SH-7 with the ROC
Certify a true copy of the Ordinary Resolution for the Augmentation of Authorized Share Capital (ASCAP).
- Copy of altered MOA
- AOA’s copy of CBO may exist.
- Meaningful consent with shorter currency.
Payment of e-Stamp Duty
If the increased amount of Authorized Share Capital requires application, pay the e-stamp duty through the MCA portal.
Alteration in every copy of MOA and AOA:
Every entry of the Memorandum of Association and Articles of Association made by the Company shall be completed in every book of the same.
Allotment of Shares
However, with the authorized share capital grows the already paid-up share capital can be augmented by allotting the fresh equity shares to the public.
What are the documents required for Increase Authorized Capital
The competent authorities must be notified of the received shareholders’ approval for the increase in the authorized share capital of the company within 30 days. The companies need to file e-form SH-7 which is a resolution. However, the e-form MGT-14 is not required for such cases. The required documents which you will do need to have near for filing the e-form:
A copy of the amended or revised version of the Memorandum of Association
A copy of the most recent or updated AoA is attached (In case of the AoA is subjected to any change)
A copy of the company's shareholders adopted an ordinary resolution.
What is MOA and AOA in Increase Authorized Capital
The competent authorities must be notified of the received shareholders’ approval for the increase in the authorized share capital of the company within 30 days. The companies need to file e-form SH-7 which is a resolution. However, the e-form MGT-14 is not required for such cases. The required documents which you will do need to have near for filing the e-form:
MOA
The MOA is a charter company document that provides its basic data, including the authorized share capital. In addition to that, the articles of association must be adjusted to incorporate the restated share capital.
AOA
AOA is the document which highlights the company’s housekeeping, and maintains its internal order through the rules and regulations. The amended constitution shall also include the stipulation of a rising share capital. But it is only if this happens, the AOA should be changed otherwise, it is better to postpone the increase.
At CompRegi, we do all the required documentation which includes drafting the appropriate resolutions and amending the MOA and AOA that is necessary and witnesses the prompt increase in the authorized share capital. The compliance issues will be handled by our highly-trained staff who stay current with the recent developments in the regulatory environment and thus will help you maintain full compliance during the process.
FAQs
What happens when authorized capital is increased?
The authorized capital is raised in order to allow the company in question to issue shares to a total amount corresponding to the increased limit. In this way, it enables a company to receive more money from them(current or new shareholders) and this helps it support its growth and financial needs.
What is the point of the authorized capital raise?
An upsurge in authorized share capital can be caused by different factors, like financing business expansion, funding new enterprises, providing infrastructure for acquisitions and mergers, and fulfilling financial compliance standards.
What is the ROC charge for capitalization of the authorized capital?
The ROC fees of increased authorized capital cover charge for filing Form SH-7 and stamp duty. This sum may be changed depending on the state and the marginal rate of the tax.