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Increase Authorized Capital
As a company sets its foundation and registers itself with MCA, it also has to decide upon the share capital to be authorized that it can raise from the market and the provision to Increase the Authorized Capital in future. The share capital is that part of the company’s equity which has been raised by issuing shares and selling them to stockholders in exchange for capital. According to the government, an amount is authorized as share capital above which a company cannot legally raise equity.
However, at times a company might need to Increase Authorized Capital in order to issue new shares so as to induct more capital. This can be done anytime, subject to AOA and approval of shareholders. The provision to Increase Authorized Capital should be mentioned in AOA, else the AOA will have to be amended before applying for increasing authorized capital by passing a special resolution.
Procedure to Increase Authorized Capital
- The AOA of the company is the pre-condition for increasing the authorized capital. Verify that it has the provision for the same.
- Call a board meeting to decide the date, time, place and agenda of the Extraordinary General Meeting. The statement of purpose and resolution are to be prepared. All the members need to be notified about the EGM.
- The Ordinary Resolution to Increase Authorized Capital is passed in the EGM by the approval of the members of the EGM. The company’s MOA and AOA are to be altered, thereafter.
- Within 30 days from the EGM, the form is filed with ROC to Increase Authorized Capital along with required documents.
- Once the ROC checks and verifies all the documents, being satisfactory, the approval to Increase Authorized Capital is given.
An expert review regarding the changes required and increase in authorized capital of the company can be extremely helpful and highly recommended. Hence, Jain Divya & Associates extends there services by guiding and helping throughout the procedure to increase authorization capital. Know more about the procedures and compliance by setting up a consulting session with Jain Divya & Associates.
Documents Required to Increase Authorized Capital
- Notice related to EGM along with Statement Of Purpose
- Authorized True Copy of Ordinary Resolution
- Altered Memorandum of Association
- Altered Articles of Association (if case requires)