How Does a Company Increase Authorized Capital?

Authorized capital is the maximum amount of issued capital by the company to the subscribers. It is mentioned under the capital clause of the memorandum of association (MOA). It is also called nominal capital which can be increased as per the company’s requirement as it cannot issue shares more than its authorized capital. The benefits of the increase are growth in business, additional funds for shareholders, enhanced borrowing capacity, expanding share capital, etc. The following are the steps involved in the process for an increase in authorized capital as per the Companies act, 2013: A company shall check the provisions in the articles if it provides permission for changing the articles or not. In case, the provision is not given in the AOA then it needs to be changed by the company. In the EGM, an ordinary resolution is passed for increasing the capital. The approval of members is received for the resolution passed with the explanatory statement. A company is required to file Form SH-7 and Form MGT-14 for resolution with the ROC. A certified copy of the ordinary resolution for change in capital The rate of stamp duty varies as per the state where the office is situated. The MCA portal has provided an e-stamp duty rate. A listed company shall send a copy of the altered MOA to the stock exchange within twenty-four hours of sending a notice to ROC. The company must post on the website in two working days. 1. Changes in the Articles of Association (AOA) of the Company 2. Conduct a Board Meeting 3. Holding Extra Ordinary General Meeting 4. Filing Forms Form MGT-14 and Form SH-7 with Registrar of Companies 5. Payment of Stamp Duty A Memorandum of association is submitted at the time of Incorporation of the company including the authorized capital to the Registrar. At Online XBRL, you will get advanced business consultations with efficient solutions for the process of increase authorized capital. Process of Increase in Authorized Capital
Step 1: Checking the Article of Association (AOA) of the Company
Step 2: Holding the meeting of the Board of Directors for increase authorized capital
Step 3: Holding and Convening the Extraordinary General Meeting (EGM)
Step 4: Form Filed with the Registrar of Companies (ROC)
The Documents required for filing SH-7 are:
The Documents required for filing MGT-14 are:
Step 5: Payment of stamp duty on increase in authorised share capital
Step 6: Intimation sent to the Stock Exchanges for Listed Companies
Checklist for Increase in Authorized Share Capital
Conclusion