Reference of increase authorized share capital is given in the MOA a supreme legal document that governs relations between the company and the outside world. It is termed as the charter of a company or the constitution of the company. It is a public document and may be inspected by anyone, usually at the company's registered office. The company cannot do anything against of what is mentioned in the MOA.
Capital Clause of MOA states the share capital with which the company is being registered and its division into shares. It also states the maximum capital that a company is allowed to raise; this is often also called 'increase authorized share capital" of the company.
The company cannot raise capital that is higher than the amount specified in the Capital Clause. In case a company intends to do so; first, they need to alter the MOA by increasing the authorized share capital of the company.
The Capital Clause also provides the types of shares the company have, how many types of shares the company has, and the face value of each of the shares.
An example of a capital clause in a Memorandum would be as follows:
“V. The Authorized share capital of the company shall be Rs. 1,00,000(Rupees One Lakhs) divided into 10,000(Ten Thousand) equity shares of Rs.10(Rs Ten) each.
The company intended to make an alteration in the capital clause of the MOA will have to comply with Sections 61 and 64 of the Companies Act of 2013 read with Rule 15 of Companies (Share Capital and Debenture) Rules of 2014.
According to Section 61(1), a limited company having a share capital may alter its capital clause in the following way:
Note: If only the alteration relating to such consolidation and division resulted in a change in the voting percentage of such shareholders, then the approval of the Tribunal is required, and not any other alterations thereby.
Note: if the increase authorized share capital results in alteration of articles of association special resolution is required. Otherwise, an ordinary resolution is to be passed.
Note: Requirement of form MGT-14 is applicable only when the company passes special for alteration of Article of Association.
After filling all detail in the e-form SH-7, Click the Pre-fill button MCA System will automatically display the amount of stamp duty to be paid on e-Form SH-7 based on the state-wise stamp rules.
Form SH-7 is digitally signed by the Director/ Manager/ Company Secretary/ CEO/ CFO and will be processed by the office of the Registrar of Companies in non-STP mode.
The company may increase Authorized Share Capital, only if it is authorized by its Articles of Association and after obtaining approval of members by ordinary resolution passed at the General Meeting of the company.
Fees for an increase in authorized capital are divided into three parts:
Normal fees: Depends upon the existing authorized Share Capital of the Company.
MOA registration fees: Depends upon existing share capital and type (small company and Big company) of the Company.
Stamp duty: Depends upon the stamp act applicable in the respective state in which the registered office of the Company is situated.
If the increase of share capital results in alteration of articles of association special resolution is required. Otherwise, an ordinary resolution is to be passed.
If only the alteration relating to such consolidation and division resulted in a change in the voting percentage of such shareholders, then the approval of the Tribunal required, and not any other alterations thereby