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Increase in authorised capital

The authorised share capital is the maximum amount of shares value the company can allot to its shareholders. It means it is the maximum value of securities that can be legally issued by the company.The company can issue shares to its subscribers out of the authorised share capital which is called as issued share capital or paid up capital.

The need of increasing the authorised share capital is due to the prerequisite condition, that the company cannot issue securities to the subscribers more than the authorised share capital of the company. The authorised share capital of company can be increased at any time, after its incorporation, as per section 61 read with section 13 and 14 of the Companies Act, 2013.

PROCEDURE FOR INCREASE IN AUTHORISED SHARE CAPITAL

Authorisation in Article is must for Increase:
As per Section 61 of the Companies Act 2013,Company has to make sure that its Articles of Association contain a provision authorising it to increase its 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:
As per section 173 (3) of the Companies Act 2013 issue notice for convening a meeting of the Board of Directors for getting principal approval of Directors for increase in authorised share Capital.

Issue Notice of the Extra-ordinary General meeting (EGM):
Company have to issue notice to all Members, Directors and the Auditors of the company in accordance with the provisions of Section 101 of the Companies Act, 2013.

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.

ROC Form Filing:
File form SH-7 within 30 days of passing of ordinary resolution with the concerned Registrar of Companies.

DOCUMENTS REQUIRED FOR INCREASE IN AUTHORISED SHARE CAPITAL

  • Copy of Notice of EGM
  • Copy of ordinary resolution
  • Copy of altered Memorandum of Association

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