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Authorized capital is the most important part of the equity share capital of the company. The authorized share capital represents the total or the whole amount of the capital that is written in the Memorandum of Association (MOA). Authorized capital is the maximum amount of capital that can come under the category of issued capital in the balance sheet of the company, firm or the organization.
But why are we talking about the Authorized capital you ask? Because while filing your MOA (Memorandum of Association) you cannot just ram up the highest number that comes on your mind. You might not know but each and every term in the books of accounts reflects more to investors and consumers and other concerned individuals than you can ever think of. And same holds true for the Authorized capital as well. Authorized capital also gives you a very well-versed description of the company's, firm's or the organization's vision and objectives. In fact, the higher the amount of the authorized, the higher the expectations of the investors. Because no company would go on to enter such a big number without having a vision, mission or the objectives for the company.
You must therefore be careful while deciding your authorized capital because it represents something important than you might think and also it is just that, the concerned authorities might also keep an eye you and your financing. Thus, therefore just like every other step in business must be given proper thought, deciding the authorized capital of the business at the time of corporation.
Now, as for the changes in the authorized capital, you can change your authorised capital but you must not do it too often. And it is quite advisable unless and until the current needs of your company or the business are not being satisfied by your current amount of authorized capital. You must not change your authorized capital because of the several above-mentioned reasons. Moreover, you must also note that it is not advisable to just randomly put a number in the MOA (Memorandum of Association), it must be given proper thought before doing so.
The authorised capital of a company concludes the number of shares, a company can issue to its shareholders. It is required for issuing new shares and inducting more capital into the company. The early approved capital of the company is mentioned in the memorandum of the connotation of the company and is usually Rs. 1 Lakh. The approved capital can be increased by the company at any time with shareholders approval and by paying an additional fee to the registrar of companies. To begin the process for increasing approved capital, a resolution must be passed by the "Board of Managers". In the Board Determination, an approval must be provided for increasing the certified capital of the company and making the compulsory changes to the MOA and AOA of the company.
For an increase in Approve Share Capital, the company has to make sure that its Courses of Connotation cover a provision approving it to increase its approved share capital. The purpose being Division 61 of the Companies Act, 2013, commands that for increasing the Approved Share Capital, approval in Articles of Connotation is a pre-condition.
Issue notice in accordance with the necessities of section 173(3) of the Companies Act, 2013, for assembling a meeting of the Board of Managers. The main plan for this Board meeting would be:
EGM to all Participants, Managers and the Auditors of the company in accordance with the provisions of Section 101 of the Companies Act, 2013
Hold the Extra-ordinary EGM on the due date and pass the necessary Ordinary Resolution under section 61(1)(a) of the Companies Act, 2013, for an increase in authorized share capital of the Company.
File form SH-7 within 30 days of the passing of Commonplace resolve with the concerned Registrar of Companies, with arranged fees and along with the following add-ons as anticipated by section 64:a. Notice of EGM.b. Certified True copy of Ordinary Resolution.c. Reformed Memorandum of Connotation.
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