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₹12,999/-
  • Perform a read-through of the Articles of Association
  • Board Meeting to be conducted
  • Holding the Extraordinary General Meeting
  • Filing with the Registrar of Companies

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    Change Authorised Capital of Company

    During the incorporation stage, one of the key decisions that promoters must make is determining the initial capital investment for the company.
    As the business grows and its operations, size, scale, or structure expand, additional funding may be required to support these developments. This often involves increasing the company’s share capital. In certain cases, the capital needed may exceed the limits of the company’s existing authorized capital. Authorized capital refers to the maximum amount of capital for which the company is permitted to issue shares to its shareholders.
    Under Section 2(8) of the Companies Act, 2013, the authorized capital limit is specified in the Memorandum of Association under the Capital Clause. While a company may take the necessary steps to increase its authorized capital in order to issue additional shares, it is not permitted to issue shares that exceed the authorized capital limit.

    Procedure to Change the Authorised Capital

    Perform a read-through of the Articles of Association :

    • The Articles of Association is the document that outlines the rules and regulations governing the internal operations of the company. Before taking any steps to increase or decrease the authorized capital, it is essential to review the Articles of Association to determine if a provision exists that permits changes to the company’s authorized capital.
      If such a provision is present, the process is straightforward. However, if no such provision exists, the Articles of Association must first be amended in accordance with Section 14 of the Companies Act, 2013. Only after the amendment can the company proceed with altering its authorized capital.

    Board Meeting to be conducted :

    • Notice to be sent to the directors regarding the agenda of the meeting at least 7 days prior to their respective registered addresses.

    • At the Board Meeting, pass a Board Resolution to call for an Extraordinary General Meeting and issue notice pursuant to the provision of Section 101 of the Act, where the altered clause on authorised capital in the Memorandum of Association can be presented for approval by passing an Ordinary Resolution.
      The proposed amendment shall be in accordance with the provisions as set out under Section 60 of the Act.

    • Notice to be given to the shareholders regarding the particulars of the meeting, including the agenda, date, time and place of the meeting.

    • The notice must specify the method of voting to be adopted for the passing of the resolution at the Extraordinary General Meeting.

    • Notice of the Extraordinary General Meeting is to be issued to all of the following:-

      • Directors

      • Shareholders

      • Auditors

      • Writing

      • Electronic mode

    Holding the Extraordinary General Meeting :

    • Once the meeting is in session, the matter of the increase in the share capital is presented forth. Voting then takes place in a predetermined manner to come to a conclusion regarding the matter. Once the approval has been obtained, and the resolution is passed, the explanatory statement to the same is attached, and the increase in the Authorised Capital is made

    Filing with the Registrar of Companies :

    • In less than 30 days of the resolution being passed, a company must file eForm SH-7 and eForm MGT – 14 (if applicable) along with the prescribed fees with the Registrar.

    • Form MGT – 14 :

      This form has to be filed with the RoC first within 30 days of passing the respective resolution. The form is to be filed on the MCA portal, with the following details:

      • Details of the company, including its CIN.
      • Purpose concerning which the form is being filed.
      • Date of dispatch of the notice.
      • Date of passing the resolution.
      • Details regarding the resolution.
      • Digital Signatures and DINs wherever necessary.

      The following attachments are to be provided:

      • Notice of the EGM along with the Explanatory Statement as per Section 102. ∙ Certified copy of the resolution passed in the EGM.
      • Copy of the new MOA (change made in the Capital Clause).
      • Copy of the new AOA (provision for the increase in authorised share capital).

    • 2. Form SH – 7 :

      This form has to be filed with the RoC within 30 days of passing the respective resolution. The objective of this form is to intimate the Registrar regarding the details of the increase in the authorised capital. The form is be filed on the MCA portal, with the following details:

      • Details of the company, including its CIN.
      • Type of resolution.
      • Date of the meeting.
      • Service Request Number (SRN) of Form MGT – 14 already filed.
      • Details regarding amount of original authorised share capital and amount of new authorised share capital.
      • Details regarding the breakup of the additional share capital.
      • Particulars regarding the Stamp Duty Fees paid.
      • Digital Signatures and DINs wherever necessary.

      The following attachments are to be provided :

      • A certified true copy of the resolution for the alteration of capital
      • Copy of the new MOA (change made in the Capital Clause).
      • Copy of the new AOA (in case of alteration to include provision for the increase in authorised share capital).
      • Any other optional attachment, if any. The forms must be submitted within the time period stipulated in order to avoid any penalties or subsequent punishment wherein the company as well its officers will be held liable.

    Frequently Asked Questions

    • What is Authorized Capital?

      Authorized capital, as per Section 2 (8) of the Companies Act 2013, represents the maximum amount of share capital a company can issue as stated in its memorandum.

    • How can a company increase its authorized share capital?

      A company can increase its authorized share capital by amending its Memorandum of Association (MOA) to raise the maximum limit and then following the prescribed legal procedures.

    • What is the difference between Authorized and Paid-Up Capital?

      Authorized capital is the maximum potential value of shares a company can issue, while paid-up capital is the actual amount of money the company has received from issuing shares

    • Can a company issue shares immediately after increasing its authorized capital?

      Yes, once the authorized capital has been increased and the necessary filings are completed, the company can issue shares up to the new limit.

    • How is the increase in authorized capital reflected in the company’s records?

      The increase in authorized capital is reflected in the Memorandum of Association (MoA) of the company and is reported to the Registrar of Companies (RoC) through the submission of Form SH-7.

    • What is the procedure to increase authorized share capital?

      The process involves steps such as reviewing the Articles of Association, convening board and shareholder meetings, obtaining approvals, filing necessary forms, and updating documents.