Increase the company's Authorized Capital in order to satisfy financial needs.

Do you want to expand the capital basis of your business? KNAP Advisory's professionals will quickly formed your compliances and documentation so that your company may raise funding.

Services Includes

  • Alteration of MOA
  • Alteration of AOA
  • Preparation of Statutory Documents and resolutions
  • Preparation and filing of required forms to the ROC
  • Issue of Share Certificates to the investors.

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Increase Authorised Share Capital

An Overview - Increase Authorised Share Capital

Section 2(8) of the Companies Act , 2013 defines 'authorised capital' or 'nominal capital' as the maximum share capital authorised by the company's memorandum.

Based on the above definition, it is clear that a company can grow up to the amount of its authorised capital. If you desire to expand your business through the injection of more funds, you must first raise your authorised capital by completing the procedures outlined in the method for expanding authorised capital.

Each company needs rising money to run over time. These funds may be required throughout the long or short term. Loans and advances may be utilised to satisfy a short-term need. However, extra cash will be required for the run. With a Private Limited Company, this may be performed by raising the company's authorised capital. Due to the fact that the Company Act governs and regulates the private limited company, any adjustments to the structure must comply with the Act and its regulations.

Benefits

Benefits of Increasing Authorised Capital

Increases the Company's capital

A business may raise as much authorised capital as it desires, with the amount indicated in the amended Articles of Association. Therefore, raising authorised capital has a cumulative effect on the company's total share capital.

Significantly raises borrowing potential

The increase in share capital increases the company's total net worth. This significantly increases the company's borrowing capacity.

Development of Business

Each business need extra money to expand over time. These funds may be required throughout the long or short term. Loans and advances may be utilised to satisfy a short-term need. To expand, the company will require further capital.

Development of Business

Each business need extra money to expand over time. These funds may be required throughout the long or short term. Loans and advances may be utilised to satisfy a short-term need. To expand, the company will require further capital.

A detailed process to Increase Authorised Capital

  • Determine if the Articles of Association allows the firm to increase its authorised capital. To change the AoA if it is not authorised, a special resolution must be approved.
  • Call a board meeting and approve an increase in the company's authorised capital, as well as the date, time, place, and agenda for the extraordinary general meeting. Notify all company members/shareholders, company directors, and company auditors of the meeting's date, time, venue, and agenda.
  • Convene, hold, and conduct an EGM on the specified date, venue, and time, and adopt a resolution requesting shareholder approval. If forms are necessary, they must be completed and filed within a given timeframe.
  • Amend the company's Articles of Association in order to enhance the authorised share capital.
  • Submit form SH-7 to the registrar of corporations within 30 days following shareholder approval. If the resolution is adopted as a special resolution, form MGT-14 must also be filed within 30 days.

 

Documents required to Increase Authorised Share Capital

The needed documentation for increasing the Authorized Share Capital are:

  • Notification of the EGM and an Explanatory Statement according to Section 102.
  • A copy of the EGM resolution that has been certified.
  • A copy of the new articles of association (changes made in the Capital Clause).
  • A copy of the modified AOA (provision for the increase in authorised share capital).

 

HELP & FAQs

Why do companies raise their authorised share capital?

Each business need extra money to expand over time. These funds may be required throughout the long or short term. Loans and advances may be utilised to satisfy a short-term need. To expand, the company will require further capital.

Can the authorised share capital of the company be increased?

Yes, the company's share capital can be expanded by following the appropriate method.

What are the advantages of increasing authorised share capital?

There are several advantages to expanding authorised share capital, including:

• Facilitates business expansion
• Increase the capability for borrowing
• Increase company share capitalisation

Who has the authority to enhance the company's share capital?

If the company's Articles of Association allows an increase in authorised share capital, the company may raise its share capital. Additionally, the firm is needed to get member consent by passing a special resolution at the annual meeting.

 

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We have been especially crucial in ensuring startups are compliant with India's complex legal structure. We accept responsibility and obligation on behalf of the business owners and co-founders for adhering to all legal requirements. We strive to deliver a wide range of quick, effective, and compliance-focused services to any company or individual with a startup mentality. We are abide by our motto:- We Care, We Deliver, We Honor.