Authorised capital is that amount of share capital that a business entity is authorized to issue to the public. The authorised capital of any business entity can be increased if the same is provided in its article of association.
The amount of the authorised share capital and the clause of increase in authorised share capital by the company shall be added in the article of association at the time of registering the company. No company is empowered to issue amount of shares more than its authorised share capital. However it can increase the amount of authorised capital.
The procedure to increase the authorised share capital of the company is specified below-
- Check Article of association- In order to increase the Authorised share capital, approval in Articles of Association is a pre-condition. Hence verifying that the necessary provisions are spelled out within the Articles is a pre-requisite to increasing authorised share capital.
- Conducting Board Meeting-A board meeting for deciding that the EGM is to be held to discuss and vote on the matter of raising authorised share capital. Further the date, place, and time of the EGM should also be clearly decided.In addition to this it shall specify the method of voting.
- Extra ordinary general meeting- A resolution affecting the increase in the authorised share capital shall be passed at the appropriately conducted EGM.
- Filing forms with ROC- Within a time frame of 30 days of the passing of Ordinary Resolution, Form SH-7 must be filed with the concerned Registrar of Companies (RoC) along with the necessary fees and attachments as prescribed fees. Following documents are required to be attached with to e-form SH-7.
- Altered MOA and AOA
- Board Resolution for increase in authorised share capital
- Board resolution for modification in the capital clause of Memorandum of Association
- Shareholders’ Resolution that has been passed in the EGM.
After examining the forms and attached documentation the Registrar of Corporate Affairs shall approve the Increase Authorised Share Capital.
