Private Limited Companies are required to have a minimum authorized share capital of Rs.1 lakh and Rs.5 lakh for public limited companies.
Increase Authorized Capital
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The company’s authorised capital is the limit to which it may raise its equity capital. We help companies increase their authorised capital by applying to the ROC in form SH-7.
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Introduction
Increase Authorized Share Capital
Each business needs more funds over time to run business. These funds can be required on a long- and short-term basis. A short-term need can be satisfied by taking loans and advances. But for the run, the company will require more funds. For a Private Limited Company, this can be done by increasing the authorized capital of the company. Since the private limited company is governed and regulated under the Company Act to make changes in the structure it is necessary to follow the Act and the rules stated.
While registering the Private Limited Company the authorized and paid-up capital is specified in the MOA of the company. The company can therefore issue new shares within the limit of the authorized capital mentioned in the MOA. If the company wishes to issue more shares than the limit that is specified then amendments need to be done in the MOA.
Benefits
Benefits of Increasing Authorized Capital
Increase Authorised Capital
A company can raise whatever authorised capital as they decide upon and the same will be mentioned in the MoA with revisions. Hence, increasing authorised capital has an incremental effect on the overall company share capital.
Enhances Borrowing Capacity
With the increase in share capital, the company’s overall net worth also increases. This further enhances the borrowing capacity of the company.
Process
Increase in Authorized Share Capital In Easy Steps
Document Checklist
Documents Required for Increase in Authorised Share Capital
Digital signature certificate Online
A copy of a DSC from any authorized director of the company.
Memorandum of Association
A copy of the modified or latest version of the MoA.
Articles of Association
A copy of the modified or latest version of the AoA.
Certificate of incorporation
A copy of the company’s incorporation certificate.
PAN card
A copy of the company’s PAN card.
Faq
Frequently Asked Questions (FAQ)
The authorized share capital of the Company is mentioned in Clause V of the MOA.
Form MGT 14 and SH 7 are required to be filed with the Registrar within 30 days from the date of passing the resolution for the increase in authorized share capital.
A company is required to increase the authorized share capital before issuing the new equity shares and increasing the paid-up capital. The Authorized share capital is the total value of the shares a company can issue.
Yes, it is necessary to increase the authorized share capital of the company.
Verify the AOA Convene Board meeting Extraordinary general meeting File ROC forms Allotment of shares.
A Pvt Ltd company can increase share capital by passing a resolution in the board of directors meeting and obtaining approval from shareholders.
The authorized capital for a private limited company can vary and is decided by the company during its incorporation.
Yes, a private company can alter its share capital by passing a resolution in the board of directors meeting and obtaining approval from shareholders.
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