Process involved in Authorized Share Capital Increase
Authorisation in Article
check whether there is enabling provision in the Articles of Association regarding increase in authorised share capital. If there is no such provision then the company has to take steps for alteration of its Articles of Association in accordance with the provision of Section 14 of the Companies Act, 2013, so as to insert the clause enabling increase in the Authorised share capital of the Company
Calling of Board Meeting
Main agenda for this Board meeting would be to Get in-principal approval of Directors for Increase in authorised share Capital- and Hold the Extra-ordinary General meeting (EGM) on due date and pass the necessary Ordinary Resolution under section 61(1)(a) of the Companies Act, 2013, for increase in authorize share capital of the company
ROC Form filing
File form SH-7 within 30 days of passing of Ordinary Resolution with the concerned Registrar of Companies, with prescribed fees and along with Notice of EGM,Certified True copy of Ordinary Resolution and Altered Memorandum of Association
Notice to Registrar
The company shall file a notice in the prescribed form with the Registrar within a period of thirty days of such increase along with a copy of altered Memorandum (increased authorised capital clause altered)
Increase in Authorize or Paid Up Share Capital of Company
Process involved in Increasing Authorize Capital
1. Authorization in Article is must for Increase
Company has to make sure that its Articles of Association contain a provision authorising it to increase its authorised share capital.
2. Calling of Board Meeting Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013, for convening a meeting of the Board of Directors .
3. To Get in-principal approval of Directors for Increase in authorised share Capital.
4. Fix date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Ordinary Resolution, for amendment in authorised share Capital clause of Memorandum of Association .
5. To authorise the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) as approved by the board.
6. Issue Notice of the Extra-ordinary General meeting (EGM) to all Members, Directors and the Auditors of the company in accordance with the provisions of Section 101 of the Companies.
7. Holding of General Meeting: Hold the Extra-ordinary General meeting (EGM) on due date and pass the necessary Ordinary Resolution under section 61(1)(a) of the Companies Act, 2013, for increase in authorize share capital of the Company .
8. Concerned Registrar of Companies (ROC) will check the E-forms and attached documents and will approve the increase in authorize share capital.
File form SH-7 within 30 days of passing of Ordinary Resolution with the concerned Registrar of Companies, with prescribed fees and along with following attachments as desired by section 64
a. Notice of EGM.
b. Certified True copy of Ordinary Resolution.
c. Altered Memorandum of Association.
Process involved in Increasing Paid Up Capital
File form PAS-3 for Allotment of Shares.
Frequently Asked Questions (FAQ’s)
How much time does it take to complete the process through online?
With proper documentation the process could complete within 10 days of time If there is any complication or delay in providing the documents, the time taken for the process may vary.
When the additional duty is levied?
After 30 days of passing ordinary resolution additional duty being levied upon the company.
Is there a need to pass Special Resolution for increase in authorised share capital ?
Some professionals are of the view that for increase in authorised share capital Special Resolution is to be passed, since amendment in Memorandum of Association can be done by way of passing Special Resolution under section 13 of the Companies Act, 2013.
What is authorised capital
It means the maximum value of securities that a company can legally issue
Feature’s of Authorized Share Capital Increase
Bank and other investors are attracted more to the company by increasing the authorised capital.The ideal debt equity ratio is 2:1. So if you increase the authorised capital, you will get the loans in the above proportion.
With increase in the authorised capital, the capital of promotor also increases