Increase in Authorized Capital of Company

The authorized capital in a company refers to the maximum number of shares a private limited company can issue. In most of the cases, companies start their business operations with the minimum authorized capital of Rs. 1 lakh but it seems to be very less for the business. To release new shares or raise the capital a company is authorized to raise, the capital clause of the Memorandum of Association needs to be modified by passing a special resolution of the board.

To bring this change into action, the permission of the Registrar of Companies (ROC) is needed along with other filing requirements.

Procedure for altering authorized share capital:

• Confirm if the company is authorized by the Articles of association to increase the share capital if it does not authorize the proceedings are to be carried with the aim of changing them.
• To organize the board meeting for enabling the board to call for extraordinary general meeting (if not passed at Annual General Meeting) to get approval from the shareholders for increasing the authorized share capital.
• Call for an extraordinary general meeting of the shareholders of the company by sending a notice with clear agenda, explanatory statements and the resolutions to be passed to alter the Memorandum of Association and Articles of Association which are to be altered for the purpose of increasing the authorized share capital.
• Clear the resolutions for increasing the authorized share capital of the company and corresponding alterations in Memorandum of association and Articles of Association by special resolution.
• Authorize the board to file necessary forms and resolutions with ROC having jurisdiction.

The form SH-7 should be filed within 30 days of passing the resolution with the respective Registrar of Companies, with prescribed fees and along with following attachments as desired by section 64:

a. Notice of EGM;

b. Certified True copy of Ordinary Resolution;

c. Altered Memorandum of Association.

The Registrar of Companies (ROC) will examine the E-forms and attached documents and will approve the increase in authorize share capital.

According to the section 64 of the Companies Act, 2013, where a company changes its share capital for increase in authorized share capital in accord with sub-section (1) of section 61, the company shall file a notice in the prescribed form with the Registrar within a period of thirty days of such increase along with a copy of altered Memorandum.

At Trademark Bazaar, we provide full-fledged assistance to businesses looking increase in their authorized capital.