How to increase Authorised Capital of a Private Limited Company

How to increase Authorised Capital of a Private Limited Company

During registration of the Private limited company, an authorised capital and paid up capital is determined and stated in the MOA of the company. According to sec 2(8), The authorised capital mentioned in the MOA is the maximum limit of share capital of the company. If the company wishes to accumulate more capital than the authorised capital specified in the MOA, it is necessary to make proper amendments in the MOA to increase the limit of the capital.

A company will need a significant amount of money to expand and extend its business and may expect to issue more share capital for the same. Certain procedures are to be followed to make certain amendments in the MOA to increase the authorised share capital of the company which is as follows:

Ascertain Articles of Association (AOA)

The company has to check whether the AOA has the provision to increase the authorised share capital. Generally, the AOA of companies consist provision to increase the authorised share capital and if not then the company has to start with making alteration in the AOA  according to sec 14 of the Companies Act, 2013 to amend MOA further.

Alteration in the Articles of Association (AOA)

To make necessary alterations in the AOA for the increase in authorised capital, A board of directors meeting should be convened after passing notice and agendas of the meet. The changes are to be discussed and drafted. A General meeting should be held to pass the resolution to alter the AOA of the company. Form MGT-14 should be filed with the registrar of the companies after passing the resolution along with the concerning documents.

Carry a Board Meeting

A Board of Directors meeting should be conveyed to approve the provision of increasing the authorised share capital of the company in the MOA. For that, a notice should be passed to all the directors regarding the meeting along with the Agenda. The discussion in hand would be the limit of increase in capital, approval of shareholders, date and time to hold EGM for the approval of shareholders.

Conduct Extraordinary General Meeting    

After passing the notice for EGM, 21 days prior to all the shareholders, an Extraordinary General Meeting should be held to take their approval to increase the authorised share capital of the company. An ordinary resolution should be passed regarding the same and necessary amendments should be made in the MOA. Minutes of the meeting should be prepared simultaneously. Listed companies have to submit the conclusion of  resolution with voting results with the SEBI.

Filing of Form SH-7 with ROC

The company has to file Form SH-7 with ROC within 30 days of passing the resolution along with the copy of Notice of EGM with its minute, Copy of Altered AOA, Copy of Altered MOA, and other necessary documents.

Payment of Government fees

Necessary government fees related to the filing of form should be paid and if applicable e-stamp duty on the MCA portal should be paid. 

Alteration in AOA and MOA

All alteration and amendments of AOA and MOA should be made and verified. 

Intimation to Stock Exchange

Every listed company should submit a copy of altered AOA & MOA with the stock exchange.

Shares allotment

New equity shares can be issued according to the clause of increase in the authorised share capital. 

 

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