Increase Authorized Share Capital

Increase AuthorizedShare Capital

To run the business over time each business needs more funds. Long and short –term funds are required on basis by taking loans and advances a short-term loans are satisfied, but to run the company for long term more funds are to be required.

In Private Limited Company authorized capital increment can be done in a company. According to the companies act to make changes in the structures it must follow some rules stated.

When the private limited company is registered the authorized and paid-up capital in MOA is specified by the company. Therefore the company can issue new shares within the limit of authorized capital in MOA. If the company issues to increase more shares than the limit that is specified, amendments should be done in MOA.

What is authorized capital?

Authorized capital refers to the capital that is authorized by the MOA of the company according to Section 2(8) of the companies Act 2013.

Authorized capital is increased by the special resolution of the members. The company firstly conduct Board meeting to discuss the authority given to the AOA of the company in increasing authorized capital or not.If no, alteration of AOA is done and general meeting is called to pass an ordinary resolution to increase authorized capital.

Authorized Share Capital increase

The total value of the shares of the company that can be issued is authorized share capital. Before issuing new equity shares authorized share capital of the company has to be increased whereas the paid-up capital is nothing but the total value of the company of shares that are issued.
In the company the paid-up capital does not go beyond the authorized capital. If a company has its authorized capital of Rs.10lakhs and paid-up of Rs.10lakhs and like to induct new shareholders then that can be done by following way:

1. Preparing documents for increasing Authorized capital and issue new shares or

2. Share transfer takes place from existing shareholders to new shareholders.

File ROC Forms

At the Extraordinary general meeting after passing the ordinary resolution form SH7 should be filed within 30 days by the company. Along with the prescribed government fees for authorized capital documents are to be attached as mentioned below:

1. True copy of an ordinary resolution for increase in Authorized capital.
2. Shoter notice related to EGM if any
3. Copy of alternation of MOA,
4. Copy of altered AOA,if any
5.Any other documents may be applicable

In the Companies Act and Company Rules mentioned are followed to increase in authorized share capital of the company then the approval of registrar is done by filling .On the MCA portal the new authorized share capital will be reflected.