Increase in authorized capital | How to apply in India 2020
Authorized capital is the most important part of the share capital of the company. It represents the total amount of capital that is written in the MOA of a company. An increase in the share capital might be required for issuing new shares and inducting more capital into the company. The initial authorized capital of a company is mentioned in the Memorandum of a company which is usually 1 lakh. It can be increased by the company at any time with the approval of shareholders and by paying extra fee as prescribed to the registrar of the companies.
Share capital is referred to that part of a company's equity which is raised by selling them to the stockholders in exchange for the capital or cash. To maintain financial stability, the government states that no company can randomly issue shares to raise the capital. Therefore, Authorized share capital is the maximum value of share capital that a particular company can legally be authorized to issue to the shareholders
How to increase the share capital of a company?
- Step 1. Check the Articles of Association (AOA)
The first step is to check the Articles of Association regarding the increase in the share capital of the company.
- Step 2. Call Board meeting
The next step is to call the board meeting, to decide upon the final decision of the increase in authorized capital. The final decision of an increase in share capital totally depends on the existing board of directors of the company. After the board of resolution is passed our team will amend the AOA and increase in authorized share capital
- Step 3. File the form to increase share capital
After coming upon a final decision, the last step is to file the S-H: 7 form within 30 days of passing the resolution. The documents that are required to be filed with this form are as follows-:
- Copy of the board resolution in favor of increasing authorized share capital
- Amended copy of Articles of Association
- Amended copy of Memorandum of Association
- Notice of EGM