Procedure for Increase of Authorised Share Capital by Private Limited Company

Procedure for Increase in the Authorised Share Capital (In Case of Private Limited Company)

As per section 61 of the Companies act, 2013 a limited company having a share capital may, by passing an ordinary resolution in a general meeting, alter the capital clause of its Memorandum of Association; provided authority to alter is given to it by its Articles of Associations. A notice of alteration is required to be filed with the ROC in Form No. SH-7 within 30 days.

MANDATORY REQUIREMENTS:-

Company can increase its Authorized Share Capital, only if it is authorized by its Articles of Association and after obtaining approval of members by passing an ordinary resolution in Extra-Ordinary general meeting of the company. [Section 61(1)]

FOLLOWING PROCEDURE IS REQUIRED TO BE FOLLOWED FOR INCREASE IN THE AUTHORISED SHARE CAPITAL OF COMPANY:-

• Check the Article of Association of the Company: Check whether Articles of Association of Company contain a provision authorizing it to increase its Authorized Share Capital.

If there is no such provision in Articles then appropriate steps required to be taken to amend its Articles.

• Convene a Meeting of Board of Directors and pass the necessary Board Resolutions:
• To consider and approve increase of Authorized Share Capital and altering the Memorandum of Association, subject to the approval of shareholders in General Meeting.
• To fix day, date, time and venue for holding General Meeting of the Company.
• To approve the draft notice of General Meeting along with explanatory statement annexed to the notice as per requirement of the Section 102 of the Companies Act, 2013.
• To authorize the Director or Company Secretary to sign and issue notice of the General Meeting and to do such acts, deeds and things as may be necessary to give effect to the Board’s decision.
• Convene General Meeting : Notice of General Meeting shall be given at least clear 21 days before the actual date of a General Meeting in writing, by hand or by ordinary post or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means or a Shorter Notice can be issued with the consent of at least majority in number and ninety five percent of such part of the paid up share Capital of the company giving a right to vote at such a meeting in accordance with Section 101.

Notice shall specify the day, date, time and full address of the venue of the Meeting and contain a statement on the business to be transacted at the Meeting.

Hold the General Meeting on the fixed day and pass an Ordinary Resolution for increasing the Authorized Share Capital and make relevant changes in the Memorandum of Association (MOA).

• File Form SH-7 with the ROC: File a notice of alteration of Share Capital with the Registrar in E-Form SH-7along with the prescribed fee within 30 days of such alteration along with the following documents:
• • Certified true copy of Ordinary Resolution for increase in Authorized Share Capital
  • Copy of altered MOA
  • Copy of altered AOA, if any
  • Shorter notice consent, if any
  • Any other document, as may be applicable.
• Payment of e-Stamp Duty:
  Pay the e-stamp duty on the increased amount of the Authorized Share Capital through MCA Portal, if applicable.
• Alteration in every copy of MOA and AOA: Every Alteration made in the Memorandum of Association and Articles of Association of the Company shall be noted in every copy of the same.

FORMAT OF BOARD RESOLUTION AND ORDINARY RESOLUTION:

BOARD RESOLUTION:                                                                            

Item No. :-

 To consider the matter of increase in authorized share capital of the Company:-

“RESOLVED THAT pursuant to the provisions of section 64 (1) of the Companies Act 2013, and other applicable provisions, if any and subject to the approval of the members of the Company, the Authorized Share Capital of the company be and is hereby increased from  Rs. ______/-(____) divided into _____ (______) Equity Shares of Rs. 10/- (Rs. Ten) each to Rs.______/-(Rupees_____) divided into_____ (______) Equity Shares of Rs. 10/- (Rs. Ten) each.” 

“RESOLVED FURTHER THAT Clause V of the Memorandum of Association of the Company be and is hereby altered to read as follows:

The Authorized Share Capital of the Company is Rs. _______/-(Rupees____) divided into___ (______) Equity Shares of Rs. 10/- (Rs. Ten) each.” 

“RESOLVED FURTHER THAT an Extra Ordinary General Meeting of the members of the Company  be conveyed on  _____the ___day of ______at its registered office of the company at 11:00 A.M. for according the approval of the members and Shri _______ Director of the Company be and is hereby authorized to issue  notice of the Extra ordinary General Meeting in this regard as per draft notice placed before the table of this meeting and initialed by the chairman for the purpose of to do all such things, acts and deeds which may deem necessary to give effect to the above resolution.”

ORDINARY RESOLUTION:

Item No. :- To Increase the Authorized Share Capital of the Company:-

“RESOLVED THAT pursuant to the provisions of section 64 (1) of the Companies Act 2013, and other applicable provisions, the Authorized Share Capital of the company be and is hereby increased from Rs. _________/-(Rs._____) divided into _____                                 (______) Equity Shares of Rs. 10/- (Rs. Ten) each to Rs. ______/- (Rupees______) divided into ______ (_______) Equity Shares of Rs. 10/- (Rs. Ten) each.” 

“RESOLVED FURTHER THAT Clause V of the Memorandum of Association of the Company be and is hereby altered to read as follows:

The Authorized Share Capital of the Company is Rs. ______ (______) divided into_____ (________) Equity Shares of Rs. 10/- (Rs. Ten) each.” 

“RESOLVED FURTHER THAT any Director of the Company be and is hereby authorized to digitally sign and file requisite e-form SH-7 with the Registrar of Companies, Jaipur for notifying the said change in authorized share capital of the Company and do all such things, acts and deeds which may deem necessary to give effect to the above resolution.”