Increase in authorised share capital


WHAT IS AUTHORISED SHARE CAPITAL?

An Authorized Share Capital is an amount of maximum amount of capital , Company can raise through issue of Shares. This maximum amount of capital registered through Memorandum of Association of the Company at initial stage and whenever there is change a Memorandum of Association must be altered.

WHY COMPANY INCREASE AUTHORISED SHARE CAPITAL?

In order to expand or diversify business or to meet expenses , company requires more fund to invest in business. The primary source of availing these funds are issue of private equity, hence this private equity cannot be issued until unless company has permitted limit of capital. If the Company wants to issue the shares then it is mandatory that the existing Authorized Share Capital of the Company must increase up to the extent it required to issue the shares of the Company. Therefore it is mandatory to amend the Share Capital clause in the Memorandum of Association of the Company.

REQUIREMENTS FOR INCREASE IN AUHTORISED SHARE CAPITAL

POWER IN ARTICLE OF ASSOCIATION

ORDINARY RES0LUTION TO BE PASSED (SPECIAL RESOLUTION IF REQUIRED BY AOA)

FILING OF FORM SH-7 TO REGISTRAR OF COMPANIES (SECTION 64)

PROCEDURE FOR THE ALTERATION IN SHARE CAPITAL

STEP 1. Article of Association must contain power to alter share capital , if not then first alter Article.

STEP 2. HOLD BOARD MEETING:

To decide about the alteration of share capital through increase in authorized share capital;

To fix time, date and venue for holding general meeting of the company to pass special resolution/ordinary resolution as the case may be;

To authorize company secretary or director to issue notice of the general meeting as approved by the board.

STEP 3. ISSUE NOTICE OF GENERAL MEETING: (SECTION 101)

Notice of EGM shall be given at least 21 days before the actual date of EGM. EGM can be called on Shorter Notice with the consent of at least ninety five percent holders of share capital of the company giving a right to vote at such a meeting: All the Directors.

All the Directors.

Members

Auditors of Company

The notice shall specify the place, date, day and time of the meeting and contain a statement on the business to be transacted at the EGM.

STEP 4. HOLD GENERAL MEETING: (SECTION-101)

Pass an ordinary resolution for the same with the majority consent of the Shareholder.

STEP 5. FILLING AND FEES:

File FORM SH-7 within 30 days of passing the Ordinary resolution, along with given documents:-

ATTACHEMENTS:

Certified True Copies of the Ordinary Resolutions along with explanatory statement;

Copy of the Notice of meeting send to members along with explanatory statement;

A printed copy of the Altered Memorandum of Association

PENALTY:

If a Company fails to comply, then such Company and every officer who is in default shall be liable for a penalty of rupees One Thousand for each day during which such default continues or rupees Five Lakh whichever is less.