How to increase authorized capital of company
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What is the most important attribute for enterprises and businesses serving on different verticals? What is the prime source for measuring the growth and development of the company? The answer is one and only the capital of company. Read this article which exclusively focuses on the subject - pertaining to increase in authorized capital of the company.
The every company serving on different verticals must need capital at regular intervals to keep the momentum going. The presence of sufficient capital triggers the growth and development of business in the quick and faster way.
Why you need to increase authorised capital of company?
Authorised share capital means the maximum value of shares that a company can legally issue. Value of company’s authorised share capital including number of shares and value per share is specified in the capital clause of memorandum of association while incorporating a company in India. Authorised share capital is also known as registered or nominal capital of the company.
Generally at the time of incorporation of company, amount of authorised share capital is low but as soon as the company is started growing it needs much more capital to redeem market opportunities.
The Companies Act, 2013, the governing law of companies in India contains provisions for increase in authorised share capital. Section 61 read with section 13 and 64 of Companies Act, 2013 provides for increase in authorised share capital of the company.
Following many be reasons to increase the authorised share capital of the company:
1. Expand business from current level of operations
2. Diversify business into other sectors
3. Acquire fixed assets for the company
4. Finance working capital of the company
5. Merger, Amalgamations, Demergers and Takeovers
The procedure for increase in authorised share capital of any kind of company whether private limited company or public limited company is same.
To increase authorised capital, the company shall follow below simple steps:
1. The Articles of Association of the company must contain provision for increase in authorize capital
2. Issue notice to directors and call board meeting
3. Hold board meeting to recommend members to increase authorised share capital and issue notice of extra-ordinary general meeting
4. Hold extra-ordinary general meeting and pass ordinary resolution
5. File Form SH-7 with the Registrar of Companies within 30 of passing ordinary resolution along with notice of extra-ordinary general meeting, certified true copy of ordinary resolution, and altered copy of memorandum of association.
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