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Increase Authorized Capital

Authorized capital is the maximum number of share capital that a company can issue to its shareholders. Any company can’t issue more shares from authorized capital. To start a private limited company, it is necessary to have authorized capital of at least Rs. 1 lakh and to start a public limited company authorized capital should have to at least 5 lakh. Company can expand its business up to the level of authorized capital. For the increase in share capital, it is required to acquire the approval of the registrar of companies by filing required forms.

Company can increase its authorized share capital, only if it is authorized by its AOA (Article of Association) and after obtaining approval of members by ordinary resolution. To increase the authorized capital company has to pass an appropriate Board resolution and amend the capital clause of the Memorandum of Association (MOA). Every company requires cash in the form of share capital to maintain the business.

Know the basics

Compliances for Increase in Authorized Capital

  • Change in Article of Association (AOA):
    A Board meeting is held by the company to make changes in the authorized capital of the company in which changes are made in the AOA related to increasing the authorized capital of the company on the advice of all the shareholders and directors. AOA must be filed with MCA within 30 days from the date of the resolution.
  • Extra Ordinary General Meeting:
    An extra ordinary general meeting is organized by the company to change the company’s MOA (Memorandum of Association) and to get the approval of all the shareholders and to pass an Ordinary Resolution.
  • Form SH-7:
    SH-7 is an e-form which is filed for increase in the company’s authorized capital, share capital and to make changes in number of members independently. To increase the authorized capital of the company, it is necessary to file this form within 30 days from the date of to pass the resolution of the company.

Documents required for Increase in Authorized Capital

  • Copy of modified Memorandum of Association (MOA)
  • Copy of modified Article of Association (AOA)
  • DSC form any authorized director of the company
  • PAN Card of the company
  • Certificate of incorporation of the company
  • Notice of AGM/ EGM
  • Certified copy of shareholders resolution