Increase in authorized share capital of company – Procedure

According to Section 2(68) of the Companies Act, 2013, Authorized share capital of the Company means maximum amount of share capital of the company as authorized by memorandum of the company. This means that issued or paid up capital of the company cannot go beyond its authorized share capital.

It may happen that in some cases company wants to expand its business by raising  its capital but the articles of the company doesn’t permit as the company cannot raise its capital beyond its authorized share capital .Here comes the provision for increase in authorized share capital of the company.

According to the provisions of Section 61 of The Companies Act 2013, A company can alter its share capital if its authorized by its articles of association.

However if articles doesn’t authorize the company has to first alter its articles for increasing its authorized share capital.

For alteration of share Capital Company, consent of shareholders in an extra ordinary general meeting.

Procedure:-

• Convene a meeting of Board of Directors where following agendas are placed-
  • Matter of approval of increase in authorized share capital
  • Approval and issuance of notice for calling Extra-ordinary general meeting.
  • Authorization to file the E-forms to Registrar.
• Further, convene an extra ordinary general meeting where shareholder’s approval is taken by passing ordinary resolution for increase in authorized share capital of the Company.
• File form SH-7 with the Registrar within 30 days of the passing of the resolution. Following attachments are required-

– Altered MOA.(Clause V of Memorandum of Association)

– Notice of general meeting along with explanatory statement.

– Certified True copy of the resolution passed in general meeting.

– Extract of the minutes of the meeting.

The payment of stamp duty is to be made online depending upon the value of altered capital.

In case of listed company, intimation to stock exchange to be made regarding the alteration of share capital.

Point to be kept in mind-

– While altering the Memorandum of Association of the Company, a foot note specifying the resolution date should be mentioned.