Increase in Authorised Capital

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Increase in Authorised Capital

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Overview

Empowering Growth: As your private limited company flourishes, its ambitions expand. To fuel this growth, you may need to increase your authorized capital which is the maximum share capital your company can legally issue. Company Avenue Advisory (CAA), India’s leading platform for corporate compliance, guides you through this process seamlessly, unlocking potential and ensuring legal certainty.
Eligibility:

Any private limited company registered in India can increase its authorized capital, unless:

● The company is under winding-up proceedings or facing legal disputes.
● The Articles of Association restrict such increase.

Unlocking Potential: Increasing authorized capital allows you to:

● Attract Investment: Demonstrates potential for future growth, making your company more attractive to investors and financiers.

● Facilitate Expansion: Provides the legal framework to issue additional shares, funding strategic acquisitions, new ventures, or increased operational capacity.

● Enhance Financial Flexibility: Creates room for issuing bonus shares or employee stock options, incentivising talent and bolstering employee loyalty.

● Strengthen Creditworthiness: Increases your borrowing capacity by showcasing a higher potential for capital generation.

A Defined Roadmap:

Increasing authorised capital involves a defined process outlined by the Companies Act, 2013. CAA guides you every step of the way, minimising disruption and ensuring legal compliance:

1. Board Resolution: Convene a Board Meeting and pass a resolution proposing the increase in authorised capital.

2. Special Resolution: Hold a General Meeting of shareholders and pass a special resolution with at least three-fourths majority vote, formally approving the increase.

3. Form SH-7 Filing: Within 30 days of the special resolution, file Form SH-7 with the Registrar of Companies (ROC), along with required documents and fees.

4. Alteration of Memorandum of Association: Upon approval, receive an updated Memorandum of Association reflecting the revised authorized capital.

Document Checklist:

Ensure you have all necessary documents readily available to avoid delays:

● Copies of Board Resolutions
● Copy of the special resolution approving the increase
● Proof of payment of stamp duty (varies depending on the state)
● Updated Articles of Association, if applicable
● Payment challan for filing fees
● Additional documents may be required depending on the state and ROC requirements.

How it works

Experience effortless financial management with our streamlined process. Simply onboard, submit documents securely, and ensuring a seamless and efficient accounting partnership.
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Common Questions

Most Popular Questions


What is an increase in authorized capital of a private limited company?




An increase in authorized capital refers to the process of raising the maximum amount of capital that a private limited company is permitted to issue to its shareholders, as stated in its Memorandum of Association (MOA).


Reasons may include business expansion, raising additional funds for investment, facilitating mergers or acquisitions, or meeting regulatory requirements.


The procedure typically involves obtaining board approval, shareholders’ approval through a special resolution, filing necessary forms with the Registrar of Companies (RoC), and paying the prescribed fees.


Yes, a private limited company can increase its authorized capital multiple times, subject to compliance with legal requirements and obtaining necessary approvals.


Documents such as board resolution, special resolution, altered Memorandum of Association (MOA), Form SH-7, and necessary forms for filing with the RoC are required.


Late filing or non-compliance can attract penalties and potential legal complications.


Absolutely! CAA offers comprehensive support, from drafting resolutions and calculating stamp duty to document filing, record updates with relevant authorities, and guidance on potential tax implications.



Is there a timeline for completing the process of increasing authorized capital?




The process must be completed within a specified timeline, including convening and conducting general meetings, filing forms with the RoC, and obtaining necessary approvals.


Non-compliance may lead to penalties, fines, legal action, rejection of application by the RoC, and adverse impact on the company’s compliance status and reputation.


Yes, Avenue Advisory provides expert assistance for increasing authorized capital, including drafting of resolutions, preparation of documents, filing with the RoC, and compliance monitoring.


Avenue Advisory ensures compliance with the authorized capital increase procedure by guiding clients through the process, preparing accurate documents, and liaising with the RoC for timely approvals.


Outsourcing to Avenue Advisory ensures accuracy, compliance, timely processing, and expert support, relieving companies from the administrative burden and ensuring smooth increases in authorized capital.


No, increasing authorized capital only creates the legal framework. Issuing additional shares is a separate process requiring further filings and shareholder approval.

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