After incorporation of the company whether Public limited Company or private limited company, there are so many compliances which happen on day to day basis. As the business expands, companies are required to do so many changes which trigger various compliance requirements. Increase in authorised share capital is one of those compliance requirements.
Usually need to increase the authorised share capital arise when there is need to issue shares beyond the existing limit which is placed by the current authorised share capital.
Compliance under the companies Act, 2013
Let’s unveil the provisions of companies act, 2013. The first requirement which comes at place before increasing the authorised share capital is to change the article of association because it is mandatory requirement to have authorisation in the article of association to increase authorised share capital.
In other words we can say that Articles of Association (AOA) contain a provision to authorise share capital. But in case of no provision in this regard in the AOA then appropriate steps have to be taken as per companies act, 2013 to change the AOA and insert the relevant clause to enable increase in the share capital of the company.
Steps to increase authorised share capital
- Call Board Meeting
You have to issue notice for holding a board meeting. Notice of the board meeting has to be sent along with proper agenda. Agenda contains all the items relating to the matter which are discussed at the board meeting. The main items must be contained with respect to increase in the authorised share capital:
- T o get approval from the board of directors to increase in authorised share capital.
- To fix the date, time, and place of holding Extra ordinary General Meeting (EGM) to get the approval of the shareholders by way of ordinary resolution to change the AOA.
- Authorise the director or company secretary to the issue the notice of EGM. The Notice must be issued to all the members of the company
- Holding EGM
Hold the EGM on the due date and pass the necessary resolution to give effect to increase in the authorised share capital.
- ROC Filing
After holding EGM and passing resolution, company needs to file the e-form SH-7 within 30 days of passing ordinary resolution with the concerned ROC. This form can be filed online. Important attachments of form SH-7:
- Notice of EGM
- Certified true copy of the resolution passed
- Altered MOA
After filing all these documents, the concerned officer checks the form. Once the form is approved the data of the company is updated on the MCA portal automatically.