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Increase of Authorised Capital - An Overview

The authorised capital of a private corporation determines the maximum number of shares that can be sold. According to the new Companies Act of 2013, there is no requirement for minimum capital. The capital clause of the Memorandum of Association is changed by adopting an ordinary resolution by the board to issue additional shares or raise the authorised capital.

 

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  • Checklist For Increasing Authorised Share Capital
  • Check the AoA provisions for increasing authorised share capital.
  • If the AoA does not allow for an increase, the AoA must be updated following Section 14 of the Companies Act of 2013.
  • Invite a board meeting to amend the AoA and approve the increase in authorised share capital.
  • Declare an extraordinary general meeting to amend the AoA and approve the increase in authorised share capital.
  • Send out the notification at least seven days before the board meeting and at least 21 days before the EGM.

 

Benefits of Increasing Authorised Capital

  • Increases in Share Capital

A company can raise as much authorised capital as it wants, and this will be reflected in the MoA with amendments. As a result, raising authorised capital has a cumulative effect on overall company share capital.

  • Increases Borrowing Capacity

The rise in share capital raises the company’s total net value. This increases the company’s borrowing capability even further.

It may entice investment, since it may be readily accommodated if sufficient authorised capital is available.

  • Documents Required for Authorised Capital 

The documentation must be filed with the MCA within 30 days of receiving shareholder approval for the share capital increase. SH-7 is the usual resolution for private enterprises, and MGT-14 is unnecessary.

  • Certificate of Digital Signature:A DSC copy from any authorised director of the firm
  • Association Memorandum:A copy of the amended or most recent version of the MOA
  • Articles of Association: A copy of the most recent or updated version of the AOA
  • Incorporation Certificate:a copy of the incorporation certificate from the company
  • PAN Card: A duplicate of the company’s PAN card.

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Documents Required for GST Registration in India

The documents required for obtaining GST Registration in India are as follows:

  1. Provisional ID (obtained by the concerned department)
  2. Password obtained by the concerned department
  3. Valid email address
  4. Valid mobile number
  5. Proof of constitution of business:

For partnership deed – Partnership Deed

For others: Registration Certification of the business entity

  1. Photograph of promoters/partners/Karta of HUF
  2. Proof of appointment of authorised signatory
  3. Photograph of authorised signatory
  4. Bank account number 
  5. Address of branch
  6. Address of account holder
  7. Few transaction details

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Increase authorised capital

Frequently Asked Questions (FAQ)

The maximum limit of a company’s share that can be split with its shareholders is known as authorised capital.

The authorised capital is the maximum amount of money that a corporation can raise from the public. Thus, in order to obtain cash from the general public, you must expand your company’s authorised share capital.

Clause 4 of the articles of association must be amended. If the firm is not authorised to alter the AOA, it must be amended by a special resolution. A copy of the order granting such modification must be submitted with the registrar within 15 days of the AOA.

The company must file Form SH-7 within 30 days of the resolution date.

It is a percentage of the authorised capital that potential shareholders have committed to buy from the company’s treasury, typically as part of the company’s first public offering.