Increase Authorised Share capital Online
Complete Solution - Documentation, Filing, Approval
Authorized capital of a company/ registered capital / nominal capital, is the maximum amount of share capital that the company is authorized by its constitutional documents(MOA and AOA) to issue to shareholders.
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How to Increase Authorized Share Capital of a Company Online?
By issuing the fresh equity shares, the first step that needs to be taken into consideration is the Increase in the Authorized share capital of the company. TaxmyTax helps you in following three steps.
Understanding
We help you to understand the complete concept of increasing the authorized capital and the documents needed.
Submission of Documents
Submit the required documents required to increase the authorized share capital.
Approval
We upload the necessary forms after verifying all the documents and then the new authorized share capital of the company would be reflected on the MCA portal.
General Overview
Advantages of increasing Authorised Share Capital
- One of the attractions of raising capital via the sale of shares is that the company does not have repayment requirements for the initial investment or for interest payments. This can make it more appealing than other forms, such as bank loans and bonds, that are debts of the company.
- Raising equity via share sales is also very flexible. The business has full control over how many shares to issue, what to initially charge for them and when it wishes to issue them. It can also issue further shares in the future if it wishes to raise more money. The company can also decide on the type of shares it issues and what rights these give the shareholders, and it can also repurchase issued shares if desired.
Procedure to increase Authorised Share Capital
There are two situations-
- Where AOA permits- where there is separate clause for increase in authorised share capital in AOA then company can directly proceed for such increase.
- Where AOA does not permits- In case if AOA does not permits for increase in Authorised Share Capital, then company first needs to amend AOA and then proceed for increase in authorised share capital.
Conduct a Board Meeting
After verifying Articles of Association of the Company, next step is to conduct a board meeting. Consent of directors is required to be accorded in such board meeting. The directors shall then decide to call upon an Extra Ordinary General Meeting (EOGM ). Date, place and time of EOGM shall be decided in such board meeting. A notice of EOGM shall be issued atleast 21 days before EOGM to all the members/ shareholders of the company.
Extra Ordinary General Meeting
After board meeting, EOGM is called on the decided date, time and place. In the meeting of members/ shareholders, proposal for increase in authorised share capital of company is placed before all shareholders of the company. The Ordinary Resolution is then passed to increase in authorised share capital of Company.
Filling of Registrar of Companies (ROC) form
The Company after passing ordinary resolution in the EOGM need to file Form SH-7 with the Registrar of Companies (ROC) giving detailed particulars of increase in authorized share capital of the company.
Documents For SH-7
Following documents required while filing SH-7 Form
- Certificate of Incorporation
- PAN card of company
- DSC of Authorised director
- Board Resolution certified true copy
- Shareholders Resolution certified true copy
- Notice of Extra Ordinary General Meeting
- Altered Memorandum of Association
- Altered Articles of Association
Frequently Asked Questions
Form MGT-14 is only required to be filed in case of special resolution passed for the alteration of the AoA.
Hold the general meeting on the day fixed for the meeting and pass the Ordinary Resolution under Section 61(1)(a) for altering the Memorandum of Association by increasing the authorised share capital of the company, by simple majority in accordance with Section 114(1) of the Act.
Yes Authorized share capital can be reduced, this is known as Diminution. Diminution of capital (i.e. share capital) of a Company means reduction of the share capital by cancellation of the unsubscribed part of the issued capital.
Filing of form SH-7 to increase its authorized capital with the registrar of company (ROC).
Suppose a Company has an authorized capital of Rs 5,00,000, then it can issue shares worth up to Rs 5,00,000 to its shareholders and cannot issue anything beyond it. But however, if the company issued shares worth up to Rs 300,000 only, then the remaining capital amount will be held as an unused capital and can be used anytime by the firm in the future. The authorized capital can be increased anytime a firm wants, provided the shareholders approve it. Thus, in order to increase the limit, along with the shareholder’s approval, an additional fee has to be paid to the registrar of the companies.
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