Increase in Authorized Share Capital Latter

Legal doc

According to the Section 2(8) of the Companies Act, 2013, an authorized capital is authorized by a memorandum of the company which can be the maximum amount of the company share capital.

The company business can be expanded to the level of authorized capital. If a company wants to infuse more funds, then in the first step, the company has to increase the authorized capital by following the above steps.

How to Increase Authorized Share Capital

Before increasing the capital, the company must issue new equity shares and increase its paid up capital. As the authorized share capital is the total value of shares a company can issue and a paid up capital is the total value of shares a company can issue.

Paid up capital should not increase the authorized capital. If the company’s share capital and paid up capital is similar then it will be done by the shareholders:

  • Increase authorized capital by issuing new shares.
  • Transfer shares to new shareholders from the existing shareholders. Mostly, when shares are increased, it increases the authorized share capital.

Documents Required

  • Notice related to Extraordinary General Meeting
  • Authorized Copy of Ordinary Resolution
  • Change Memorandum of Association

Steps Included in Increasing the Authorized Share Capital

  • First, verify the AoA of the company and if there is no provision then first make the change in AoA.
  • Convene a board meeting by providing a notice to increase the authorized share capital.
  • Conduct an extraordinary general meeting and get the approval of all the shareholders in the form of an ordinary resolution.
  • After the resolution is passed, the Form SH7 should be filed by the company within 30 days. The new authorized share capital will be reflected on the MCA portal.
  • Once the authorized share capital is increased, the paid up capital can be increased by issuing the fresh equity shares.

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