One of the main sources of capital for a company is through the issue of shares. Authorized Capital or Registered Capital of a company is the upper limit of capital for which a company can issue shares and collect money from shareholders. In case of fresh issue of shares, if the unissued capital is not sufficient to cater to the issue requirements, the authorized capital can be increased to meet the requirements. Our Authorized Capital Increase service covers the following:
- Documentation for increase of capital
- Vetting of documents by certified professionals
- Filing of documents
A company can increase its authorized capital by following the prescribed procedures under company laws. It involves passing necessary resolutions by shareholders and filing documents with the ROC. The registration fee payable to the ROC depends on the authorized capital of the company. Hence, every time there is an increase in authorized capital, the differential fee is payable to the ROC. Certain states in India mandate the payment of stamp duty on authorized capital. Therefore, the required stamp duty is also required to be paid by companies while increasing the authorized capital in those states.
The increase in authorized capital involves amending the company’s MOA. In certain cases, the Articles of Association (AOA) of the company also contains the authorized capital clause. In such cases, the respective clause in the AOA also needs to be changed for every increase in capital.
- A company can increase the authorized capital at any point of time without any preconditions.
- An ordinary resolution is required to be passed at the General Meeting for amendments made to the capital clause of the company’s MOA.
- If the company’s AOA contains the authorized capital clause, then a special resolution is also required to be passed at the General Meeting for amending the same.
- Convene a Board Meeting to consider the proposal and call for a General Meeting.
- Conduct the General Meeting and pass the requisite resolutions for increase in capital.
- Prepare the minutes of the meeting and get the process/documents vetted by certified CS / CA / CWA professionals
- File Form 5 certified by a professional with the ROC within 30 days of passing the resolution for increase in capital with the requisite fee for the increase in capital.
- File the copy of resolution in Form 23 (in case it involves amendment to the AOA) certified by a professional with teh ROC within 30 days of passing the resolution.
- Make necessary changes in the MOA and AOA of the company.