Increase Authorised Share Capital

Increase In Business Capital

Actualise. Share Capital Increase.

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A company may need to increase its authorised share capital before it issues new equity shares to increase the paid-up capital. Authorised share capital refers to the total value of the shares a company is allowed to issue, while paid-up capital is the total value of the shares a company has issued.

Procedure to increase the Authorised Share Capital

01. Verify AOA of the Company::

Verify the provisions regarding increasing the Business capital of the company in the AOA. If there are none, add a provision approving increase in authorised capital.

02. Convene a Board Meeting:

Hold a Board meeting to approve the increase of authorised capital and to convene an EGM with the shareholders for the same.

03. Convene the Extra-Ordinary General Meeting:

Get the approval of majority shareholders in the form of an ordinary resolution in the EGM.

04. File ROC Forms::

File form SH-7 within 30 days of passing the ordinary resolution. Along with the Form SH-7, pay the prescribed government fee for authorized capital with documents mentioned below: Notice related to the EGM.
Authorized True copy of the Ordinary Resolution.
Altered Memorandum of Association. (If a higher authorized capital has been added)

05.

Allotment of Shares by issuing fresh equity shares upon the approval of the form and documentation.

Why should Businesses increase Authorised Capital

Paid-up capital can never exceed authorised capital. Therefore, if companies having an authorised capital of Rupees 10 lakhs and paid-up capital of Rupees 10 lakhs would like to bring in new shareholders, it can do the same either by:
Increasing their authorized share capital by issuing new shares. (or)
Transferring shares from the pre-existing shareholders to new ones.
If you need advice regarding increasing your share capital, you can reach out to our team of expert consultants to help you with the said formalities.

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