What is Authorised Capital?

The authorised capital of a company is the limit up to which a company can raise its capital. The subscribed capital or paid-up capital can never be more than the amount of authorised capital as mentioned in the capital clause of the MOA and AOA.

Need of Increase of Authorised Capital:

Every business start-up needs money to achieve its object, goals or growth of their business. In case the company has already issued equity capital upto the existing limit of authorised capital of the Company and it needs more funds for its business development it has to first follow the procedure laid down in its AOA for increase in authorised capital of the Company.

STEPS

Steps Involved for Increase of Authorised Capital:

Step-1: Convene the Meeting of Board of Directors of the Company:

To decide the new limit of the authorised capital, check whether AOA also required to be altered for capital clause. Preparation of Board Meeting notice, agenda and convene the board meeting to approve Increase of Authorised Capital of Company. Issue the notice to the shareholders to convene an Extraordinary General Meeting.

Step-2: Convene an Extraordinary General Meeting (EGM) of Shareholders:

The next step is to seek approval of the shareholders of the company. In case there is need of Amendment of AOA for capital clause then need to pass special resolution in this regard else it required ordinary resolution to be passed at duly convened Extraordinary General Meeting (EGM) of Shareholders for increase in authorised Capital of the Company.

Step-3: Filing of the Forms with ROC:

Once the approval of the shareholders is obtained for increase of authorised capital in EGM the company shall file an application in Form SH-7 within 30 days of the passing of the resolution with the concerned ROC with all attachments. Once the form is approved the authorised capital of the company stands increased and same will be updated at MCA Company Master Data of the Company.

In case special resolution has been passed for increased in authorised capital of the Company then, Form MGT-14 has to be filed within 30 days of passing of the resolution.

Documents

Documents Required for Increase of Authorised Capital:

  • Existing MOA and AOA of the Company.
  • List of directors and shareholders of the Company.
  • Proposed new limit of Authorised Capital.
  • Digital Signature (DSC) of any one of the Director of the Company.