How can Authorised Share Capital be Increased

After incorporation of the company whether Public limited Company or private limited company registration, there are so many compliances which happen on day to day basis. As the business expands, companies are required to do so many changes which trigger various compliance requirements. Increase in authorised share capital is one of those compliance requirements.

Usually, the need to increase the authorised share capital arises when there is a need to issue shares beyond the existing limit which is placed by the current authorised share capital.

Compliance under the companies Act, 2013

Let’s unveil the provisions of companies act, 2013. The first requirement which comes at place before increasing the authorised share capital is to change the article of association because it is mandatory requirement to have authorisation in the article of association to increase authorised share capital.

In other words, we can say that Articles of Association (AOA) contain a provision to authorise share capital. But in case of no provision in this regard in the AOA then appropriate steps have to be taken as per companies act, 2013 to change the AOA and insert the relevant clause to enable increase in the share capital of the company.

Steps to increase authorised share capital:

1. Call Board Meeting

You have to issue notice for holding a board meeting. Notice of the board meeting has to be sent along with proper agenda. Agenda contains all the items relating to the matter which are discussed at the board meeting. The main items must be contained with respect to increase in the authorised share capital:

• To get approval from the board of directors to increase in authorised share capital.
• To fix the date, time, and place of holding Extra ordinary General Meeting (EGM) to get the approval of the shareholders by way of ordinary resolution to change the AOA.
• Authorise the director or company secretary to the issue the notice of EGM. The Notice must be issued to all the members of the company

2. Holding EGM

Hold the EGM on the due date and pass the necessary resolution to give effect to increase in the authorised share capital.

3. ROC Filing

After holding EGM and passing resolution, company needs to file the e-form SH-7 within 30 days of passing ordinary resolution with the concerned ROC. This form can be filed online. Important attachments of form SH-7:

• A Certified True Copy of the Ordinary Resolution.
• A Copy of altered Memorandum of Association (MOA) 
• Notice of Extra-Ordinary General Meeting 
• Any Other Required Document. 

4. Altered MOA

After filing all these documents, the concerned officer checks the form. Once the form is approved the data of the company is updated on the MCA portal automatically.

FAQs

Q1. What is the most money a private company can raise?

There is no limit to how much money a private company can raise in India.

Q2. How much money does a new private company need to start?

A new private company needs at least ₹1 lakh to start.

Q3. Can a company sell more shares than it is allowed to?

No, a company cannot sell more shares than it is allowed to. The number of shares it can sell is limited by its authorized share capital.

Q4. Can a company raise more money than its authorized share capital?

No, a company cannot raise more money than its authorized share capital. This is the maximum amount of money it can raise by selling shares.

Reference Site : Registrationwala