Setupfilings

Increase in Authorized capital

Increase in Authorized capital

When a corporation is in its incorporation stages, one among the foremost important decisions that need to be made by the promoters is that the amount of capital to take a position within the company. because the business begins to select up, the corporate may look to expand its operations, expand in size, scale or structure. to form that dream a reality, it’s going to require the pumping in of more funds into the corporate , basically increasing the share capital of the corporate .

Sometimes, the quantity of capital required might surpass the limit of the authorised capital at the time. The authorised capital is that the maximum amount of capital that the corporate can issue shares to the shareholders. As per Section 2(8) of the businesses Act, 2013, the Authorised Capital limit is laid out in the Memorandum of Association under the Capital Clause. a corporation may take the required steps required to extend the authorised capital limit so as to issue more shares, but it cannot issue shares exceeding the authorised capital limit in any case.

Board Meeting to be conducted

  • Notice to be sent to the administrators regarding the agenda of the meeting a minimum of 7 days before their respective registered addresses.
  • At the committee meeting , pass a Board Resolution to involve a unprecedented General Meeting and issue notice pursuant to the supply of Section 101 of the Act, where the altered clause on authorised capital within the Memorandum of Association are often presented for approval by passing a standard Resolution. The proposed amendment shall be in accordance with the provisions as began under Section 60 of the Act.
  • Notice to tend to the shareholders regarding the particulars of the meeting, including the agenda, date, time and place of the meeting.
  • The notice must specify the tactic of voting to be adopted for the passing of the resolution at the Extraordinary General Meeting.
  • Notice of the Extraordinary General Meeting is to be issued to all or any of the following:-
  • The notice of the EGM has got to tend not but 21 days before the date on which the EGM is to be held. However, a shorter notice period is often given if and as long as the consent is given by not but 95% of the members who are entitled to vote at the meeting. The consent has got to be obtained either through:

PROCEDURE OF INCREASE IN AUTHORISED CAPITAL

1. Authorisation must within the Article of Association(AOA):-

As per Section 149 sub section 3 of Companies Act 2013, Board of Directors of an organization , must have a minimum of 1 resident director i.e. (A one that has lived a minimum of 182 days in India within the previous calendar year)

2. Calling of committee meeting of Board of Directors (BOD)

BOD of the corporate within the committee meeting discuss and approve the following:-

  • Increase in Authorised Capital of the corporate subject to the approval of shareholders.
  • Fix Day, Date, Time, & Venue of the Extraordinary General Meeting (EGM) of the shareholders to urge approval for increase in authorise capital;
  • Approve and issue notice of EGM along side agenda & explanatory statement to all or any members, directors & auditor of the corporate .
  • Authorise director or company secretary to issue notice of EGM.

3.Holding of Extraordinary General Meeting (EGM)

Any Individual are often appointed as Additional Directors by an organization under section 161 of the New Act.

4.Alteration in Memorandum of Association(MOA)

Alter the clause of authorize capital within the MOA of the corporate.

Filing form with the Registrar of Companies

In but 30 days of the resolution being passed, a corporation must file e-Form SH-7 and e-Form MGT – 14 (if applicable) along side the prescribed fees with the Registrar.

  1. Form MGT – 14: this type has got to be filed with the ROC first within 30 days of passing the respective resolution. the shape is to be filed on the MCA portal, with the subsequent details:
  • Details of the corporate, including its CIN.
  • Purpose concerning which the shape is being filed.
  • Date of dispatch of the notice.
  • Date of passing the resolution.
  • Details regarding the resolution.
  • Digital Signatures and DINs wherever necessary.

The following attachments are to be provided:

A) Notice of the EGM alongside the Explanatory Statement as per Section 102.

B) Certified copy of the resolution passed within the EGM.

C) Copy of the new MOA (change made within the Capital Clause).

D) Copy of the new AOA (provision for the rise in authorized share capital).

2. Form SH – 7: this type has got to be filed with the ROC within 30 days of passing the respective resolution. the target of this type is to intimate the Registrar regarding the small print of the rise within the authorized capital. the shape is be filed on the MCA portal, with the subsequent details:

  • Details of the corporate, including its CIN.
  • Type of resolution.
  • Date of the meeting.
  • Service Request Number (SRN) of Form MGT – 14 already filed.
  • Details regarding the amount of original authorized share capital and the amount of latest authorized share capital.
  • Details regarding the breakup of the extra share capital.
  • Particulars regarding the stamp tax Fees paid.
  • Digital Signatures and DINs wherever necessary.

The following attachments are to be provided:

  • A licensed true copy of the resolution for the alteration of capital.
  • Copy of the new MOA (change made within the Capital Clause).
  • Copy of the new AOA (in case of alteration to incorporate provision for the rise in authorised share capital).
  • The other optional attachment, if any.

The forms must be submitted within the period of time stipulated so as to avoid any penalties or subsequent punishment wherein the corporate also its officers are going to be held liable.

PROCDURE

Basic

Increase in authorised capital of upto Rs.10 lakhs.

Rs. 4499 /-

Standard

Increase in authorised capital of upto Rs .25 lakhs.

Rs. 8999/-

Premium

Increase in authorised capital of upto Rs.100 lakhs.

Rs. 13,899/-

Frequently Asked Questions

Answer: The authorized Share Capital of the corporate is mentioned in Clause V of Memorandum of Association.

Answer: Form MGT-14 and SH-7 are required to be filed with ROC within 30 days from the date of date of passing of Resolution for increasing authorized share capital.

Answer: If there’s no such provision, then the corporate has got to take steps for alteration of its articles of association in accordance with the provisions of Section 14 of the businesses Act, 2013.

Answer: Yes, we will reduce our increased authorized share capital after increasing.