Authorised Share Capital is the maximum amount of the capital for which shares can be issued by the Company to shareholders, it is the capital mentioned in the Memorandum of Association of the Company under heading of ‘Capital Clause.’
As per Section 2(8) of the Companies Act, 2013 “Authorised capital or Nominal Capital” means such capital as is authorized by the memorandum of a company to be maximum amount of share capital of the company.
The Authorised Capital can be increased at any time under the Law following the required steps.
Page Contents
Procedure for Increase in Authorised capital of Company under Companies Act, 2013
1. Checking Article of Association
First to check AOA of the company to verify whether necessary authority/powers are there to increase authorized share capital of the Company.
Where no such authority is provided for in the Articles of Company, then the provisions in AOA has to be amended (Section 14 of Companies Act,2013) to include provisions authorising the company to increase its share capital , which can be done by passing of special resolution.
2. Calling and Holding Board of Directors for Board Meeting:
Notice for Board Meeting will be issue in writing (not less than seven days notice before the Meeting of Board) and convene the Board Meeting.
Board of Directors in Board Meeting will discuss and approve:
- Increase in authorized Capital of the Company subject to the Approval of the shareholders.
- Fix day, date, time and Venue of the Extra Ordinary General Meeting of the Shareholders to get approval for increase in authorized capital.
- Approval and issue of Notice of EGM (not less than 21 days before the EGM) along with agenda & explanatory statement to all members, directors & auditors of the Company.
- Authorising Director or Company Secretary to issue Notice of EGM.
3. Holding of Extraordinary General Meeting (EGM)
Holding Extraordinary General Meeting of the Members as on day,date,time and venue as was decided by the Board of Directors in the board meeting and pass the resolution for increase in authorise capital by passing ordinary resolution.
4. Forms to be filled with ROC:
- File the form SH-7 (With Copy of the Resolution for Alteration of capital, Altered Memorandum of Association, Notice of EGM with Explanatory Statement as attachment to the form) within 30 days of such alteration.
- Make payment of stamps online.
- The changed status of Authorised capital of the Company can be checked on the Company profile at MCA site.
Note: Form MGT-14 is only required to be filed in case of special resolution passed for the alteration of the AOA. (Mentioned above).
Author Bio
