Authorised Capital Increase – Simplified with FilingHUB
An Authorised Capital Increase refers to the process by which a company raises its maximum share capital limit as defined in its Memorandum of Association (MoA). By increasing authorised capital, a company gains the flexibility to issue more shares, attract investors, or raise funds for business expansion, projects, or working capital requirements.
Transparent Packages
Form SH-7 filing.
- Stamp Duty Guidance
- SH-7 Filing
- Resolution Drafting
- MoA Amendment
FilingHUB helps businesses navigate the complex legal and procedural requirements for increasing authorised capital, ensuring seamless compliance with the Companies Act, 2013.
What is Authorised Capital?
Authorised capital, also called nominal capital, is the maximum amount of share capital that a company is legally allowed to issue as stated in its Memorandum of Association (MoA).
• It defines the upper limit of shares a company can issue.
• It does not necessarily represent issued or paid-up capital, which is the actual capital the company has raised.
Increasing authorised capital is essential when a company plans to issue new shares to investors, convert loans into equity, or accommodate future expansion.
**Legal Framework for Authorised Capital Increase**
Under the Companies Act, 2013, increasing authorised capital involves:
• Amending the Memorandum of Association (MoA)
• Passing a Special Resolution in the General Meeting of shareholders
• Filing relevant forms with the Registrar of Companies (ROC)
**Key Sections of Companies Act, 2013:**
• Section 61 – Power to increase share capital
• Section 13 – Procedure for amending Memorandum of Association (MoA)
Reasons to Increase Authorised Capital
Common Scenarios
- **Business Expansion** – Funding new projects or entering new markets requires additional capital.
- **Equity Financing** – To issue shares to new investors or raise capital through private placements.
- **Employee Stock Options (ESOPs)** – To allot shares under employee stock option schemes.
- **Conversion of Debentures/Loans** – When convertible debentures or loans are converted into equity.
- **Mergers and Acquisitions** – To issue new shares as consideration in acquisitions or mergers.
Procedure for Increasing Authorised Capital
Board Meeting
The Board of Directors convenes a meeting to propose the increase in authorised capital and recommend it to the shareholders.
Shareholders’ Approval
A Special Resolution is passed in the EGM or AGM (Minimum 75% shareholder approval required).
Amendment of MoA
The authorised capital clause in the MoA is amended to reflect the new capital limit.
Filing with ROC
File Form SH-7 with the ROC within 30 days of passing the resolution.
ROC Approval
Once Form SH-7 is approved by the ROC, the increase becomes legally effective.
Documents & Compliance Details
Documents Required
- Certified copy of the Special Resolution
- Altered MoA reflecting the new authorised capital
- Board resolution approving the increase
Costs and Compliance
- ROC Filing Fees – Determined based on the increased capital amount
- Stamp Duty – Applicable on the altered MoA
- Compliance with Companies Act, 2013 is mandatory to avoid penalties.
Simplify Authorised Capital Increase with FilingHUB
FilingHUB provides end-to-end assistance for increasing your company’s authorised capital, including: Drafting board and shareholder resolutions, Amending the Memorandum of Association (MoA), Filing Form SH-7 and liaising with the ROC, Ensuring timely compliance and avoiding penalties. Increase your authorised capital effortlessly with FilingHUB – Get Started Today!
Key Features of a Authorised Capital Increase
Resolution Drafting
Drafting board and shareholder resolutions.
MoA Amendment
Modifying the capital clause in the Memorandum.
Form SH-7 Filing
Filing capital increase forms with ROC.
ROC Liaison
Handling queries and approvals from Registrar.
Compliance Check
Ensuring adherence to Section 61 & 13.
Advantages
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