Company Authorised Capital Increase
Authorised capital, also known as nominal or registered capital, is the maximum amount of share capital that a company is authorised to issue to its shareholders by its constitutional documents. It acts as a ceiling on the total value of shares a company can issue and is often set at a level higher than the current needs to allow for future growth.
Steps to Increase Authorised Capital
1. Board Meeting:
Convene a board meeting to discuss and approve the proposal for increasing the authorised capital. A resolution should be passed to call an extraordinary general meeting (EGM) to get shareholder approval.
2. Notice of EGM:
Send a notice to all shareholders informing them about the EGM, specifying the date, time, and agenda of the meeting. The notice should include the proposed resolution to increase the authorised capital.
3. Extraordinary General Meeting:
Hold the EGM where shareholders will vote on the resolution to increase the authorised capital. The resolution must be passed by a majority vote.
4. Filing with ROC:
After the resolution is passed, the company must file Form SH-7 with the Registrar of Companies (ROC) within 30 days. The form should include:
- The copy of the resolution passed in the EGM.
- Notice of EGM along with explanatory statement.
- Altered Memorandum of Association (MOA).
- Altered Articles of Association (AOA), if required.
5. Payment of Fees:
Pay the requisite fee to the ROC for filing Form SH-7. The fee varies based on the amount of authorised capital being increased.
6. Approval by ROC:
The ROC will review the application and, if everything is in order, will approve the increase in authorised capital. The approval will be updated in the company's master data on the Ministry of Corporate Affairs (MCA) portal.
Documents Required
1. Board Resolution Copy:
Resolution passed in the board meeting approving the increase.
2. Notice of EGM:
Copy of the notice sent to shareholders.
3. EGM Resolution:
Certified copy of the resolution passed in the EGM.
4. Altered MOA:
Memorandum of Association reflecting the increased capital.
5. Altered AOA:
Articles of Association if there are any changes required due to the increase.
6. Form SH-7:
Duly filled form to be filed with the ROC.
7. Fee Receipt:
Proof of payment of the requisite fee to the ROC.
How Accto Helps with Increasing Authorised Capital
- 1. Expert Consultation: Our team of legal and financial experts provides consultation to help you understand the need and process of increasing authorised capital.
- 2. Documentation Assistance: We assist in drafting and preparing all necessary documents, including resolutions, notices, and altered MOA/AOA.
- 3. Compliance Management: We ensure all compliance requirements are met, including filing the necessary forms with the ROC.
- 4. End-to-End Support: From convening the board meeting to obtaining ROC approval, Accto provides end-to-end support throughout the process.
- 5. Timely Execution: Our streamlined process ensures timely execution, minimizing delays and ensuring your business operations continue smoothly.
Pricing Plans
FAQ on Company Authorised Capital Increase
Authorised capital, also known as nominal or registered capital, is the maximum amount of share capital that a company is authorised to issue to its shareholders as stated in its constitutional documents.
Companies may increase their authorised capital for various reasons, such as business expansion, reducing debt, improving share liquidity, or attracting new investors.
The process includes convening a board meeting to propose the increase, calling an extraordinary general meeting (EGM) for shareholder approval, filing Form SH-7 with the Registrar of Companies (ROC), and paying the requisite fees.
Required documents include the board resolution, notice of EGM, EGM resolution, altered Memorandum of Association (MOA), altered Articles of Association (AOA), Form SH-7, and proof of payment of fees.
The duration can vary but typically takes a few weeks to a month, depending on how quickly the necessary meetings are convened, documents prepared, and filings processed by the ROC.
Yes, shareholder approval is necessary. The resolution to increase authorised capital must be passed by a majority vote in an extraordinary general meeting (EGM).
The fees depend on the amount of the increase and are paid to the ROC. The exact amount can be checked on the Ministry of Corporate Affairs (MCA) portal or by consulting with a legal advisor.
Yes, authorised capital can be decreased, but this also requires a formal process, including board and shareholder approval, and filings with the ROC.
Increasing authorised capital can benefit shareholders by providing the company with additional funds for growth and expansion, potentially increasing the value of their shares.
Accto provides expert consultation, documentation assistance, compliance management, end-to-end support, and ensures timely execution of all necessary steps to increase authorised capital, making the process seamless and efficient for your company.