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Authorized Capital Increase

A company may increase its authorized capital for expansion by holding board meetings, obtaining shareholder approval, and filing with the RoC.

Vyapaar Registration can help you with the process and ensure compliance. Contact us today for expert assistance!

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Authorized Capital Increase

Authorized capital is the maximum capital a company can raise, as mentioned in its memorandum. If the company needs more funds to expand, it must increase its authorized capital.
Authorized vs Paid-Up Capital:
Authorized capital is the total value of shares a company can issue, while paid-up capital is the actual value of shares that have been fully paid by shareholders. If the paid-up capital reaches the limit of authorized capital, the company has two options:
1. Increase its authorized capital and issue new shares, or
2. Allow the transfer of shares from existing shareholders to new ones.
Vyapaar Registration can help you navigate these processes smoothly and ensure full compliance!

Common Reasons for Increasing Your Company’s Authorized Capital

  • ✔ Business Expansion

To raise more funds for growth or to accommodate new projects.

  • ✔ Attracting Investors

To issue more shares to new investors or stakeholders.

  • ✔ Enhancing Financial Strength:

To increase the company’s financial capacity for better opportunities.

  • ✔ New Shareholder Addition

To make room for new shareholders as part of business development.

  • ✔ Mergers or Acquisitions

To support business consolidation or acquisition plans.

Documents required for increasing the authorized capital

Vyapaar Registration can assist in preparing and filing these documents to ensure a smooth process for increasing your company’s authorized capital!

Document Description
Board Resolution A resolution passed by the board of directors approving the increase.
Shareholder Resolution A special resolution passed by shareholders to approve the increase.
Altered Memorandum of Association A revised memorandum reflecting the new authorized capital.
Form SH-7 A form to be filed with the Registrar of Companies (RoC) detailing the change in authorized capital.
Notice of Extraordinary General Meeting (EGM) Notice sent to shareholders for approval of the increase in authorized capital.
Updated Articles of Association (if required) If necessary, update the company's Articles of Association to reflect the increase.
Payment of Fees Payment of the prescribed filing fee to the RoC for the capital increase.

Steps to Successfully Increase Your Company’s Authorized Capital

  • 1. Board Meeting

Hold a board meeting to approve the proposal for increasing authorized capital.

  • 2. Check Shareholder Approval

Ensure shareholders are notified and agree to the increase via a special resolution.

  • 3. General Meeting

Send notice to shareholders and hold an Extraordinary General Meeting (EGM) to get approval for the increase.

  • 4. File with ROC

After approval, file Form SH-7 and MGT-14 with the Registrar of Companies (ROC).

  • 5. Update Memorandum & Articles

Alter the Memorandum of Association (MOA) to reflect the new authorized capital and update the Articles of Association if needed.

  • 6. Pay Fees

Pay the necessary filing fee to the ROC for the capital increase.

  • 7. Update Financial Records

After approval, update your company’s financial records and other official documents.

FAQ

You’ll need a board resolution, shareholder resolution, revised Memorandum of Association (MOA), and forms like SH-7 and MGT-14. Vyapaar Registration can manage all paperwork for you hassle-free.

The process typically takes a few weeks, including board meetings, shareholder approval, and filing with the ROC. Vyapaar Registration ensures everything is done quickly and efficiently.

Yes, shareholder approval is required through a special resolution. Vyapaar Registration will help you get the necessary approvals and file the required documents seamlessly.

Yes, a company can increase its authorized capital as needed, following the proper procedure. Vyapaar Registration can guide you through each step for smooth and legal compliance.

Failing to file with ROC within the prescribed time can lead to penalties. Vyapaar Registration ensures all filings are completed on time, avoiding any legal issues.

There’s no specific limit, but the increase should be within reasonable business needs. Vyapaar Registration can help you determine the right amount and handle all necessary filings.

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