Increase in Share Capital

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As per Section 2(8) of Companies Act, 2013 “authorised capital” or “nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company.

The share capital is part of company’s capital which is raised through issue of shares. A company may raise capital only to the extent of the authorized capital mentioned in the company. To increase the capital raising capacity, the authorized capital can also be increased any time after incorporation by payment of additional fee and stamp duty.

ComplianceIndia can help you understand how to register and maintain Increase in Share capital quickly and hassle-free.

Types of Share Capital in Companies

1. Authorised capital : It is the maximum amount of capital a company may raise
2. Issued Capital : It is that part of authorised capital, which is issued to raise capital
3. Subscribed Capital : It is that part of issued capital, which is subscribed to be paid by the shareholders
4. Paid-up Capital : It is that part of capital, which is subscribed and paid to company by the shareholders

Advantages of Increase in Share Capital

Allow further issue of capital

The company cannot raise capital beyond the amount prescribed in the MoA. Therefore, if the need arises to increase the paid-up capital, first authorized capital must be increased.

Increase in borrowing capacity

Increase in internal funding capacity supports the borrowing capacity of the company. Higher the capital, higher the net worth and so the borrowing capacity.

Prerequisites for Increase in Share Capital

The company’s AoA must have a clause for an increase in capital in the future. If not, the organization is required to modify the Articles as per Section 14 of the Companies Act, 2013.
A Board Meeting should be organized to approve the Increase in Authorized Capital from the Board of Directors.
Shareholders’ Approval : Following the Board Meeting, the company’s shareholders should be addressed to get approval on the Increase in Authorized Capital.
Adaptation in Company’s MoA : After getting approval from the Board and the Shareholders, the Company’s MoA should be modified for increasing the Authorized Capital.
Acquaint with ROC : The alteration in the company’s MoA, AoA, increase in the Authorized Capital, should be informed to the Registrar of Companies (ROC) and the Ministry of Corporate Affairs (MCA).

Forms needs to be filed for Increase in Authorized Capital

– E Form SH – 7
– E Form MGT – 14

How we Work?

Step 1

Fill-up our Contact Form and Submit

Step 2

Our Expert/ Legal Professional will contact you and provide brief guidance into the related context

Step 3

All Required Documents and Details to be provided as discussed with our Expert

Step 4

Once all required documents and details are received, Our Expert will prepare and verify your application.

Step 5

Filing of E-Form MGT-14

Step 6

Payment of Stamp Duty and filing of E-Form SH-7

Step 7

Follow up with the authority and resolve the queries, if any.

Step 8

On Successful verification of the documents submitted, The Authorized Capital of the Company Increased.

Documents Required for Increase in Share Capital

MOA & AOA

A copy of latest amended MoA and AoA of the company

Notice for conducting Board Meeting

Notice to convey Board Meeting to decided about the increase in share capital and fix date, time and venue of General Meeting for shareholders’ approval.

Board Resolution

A certified copy of Board Resolution for conveying General Meeting to obtain shareholders’ approval for increase in share capital.

Notice for conducting General Meeting

Notice to convey General Meeting alongwith with Explanatory Statement as required under Section 102 of the Companies Act 2013.

Shareholders Resolution

A certified copy of Resolution passed by shareholders at General Meeting for increase in share capital

Digital Signature Certificate (DSC)

Digital Signature Certificate of one of authorised director of the Company for filing E-form MGT-14 and E-form SH-7

Our Charges

Our charges for filing of Increase in Share Capital starts from Rs. 2,999/-.

Frequently Asked Questions

1. Which approvals are required for increase in share capital of Private Limited Company?

The increase in capital shall receive following consent or approval:
– Consent from the Board;
– Consent from the members of the company; and
– Approval from concerned RoC.

2. When should the forms be filed with MCA?

The form must be filed within 30 days after obtaining consent from shareholders for the share capital increase. The resolution passed is notified in MGT-14 and notice of increase is filed in SH-7 with altered MoA and AoA.

3. Which Act of the Indian Govt. oversees the Increase in Authorized Capital process?

The procedure of Increase in Authorized Capital for a company is regulated by the Company Act, 2013 of the Indian Govt. along with the regulations of the Registrars of Companies (ROC).

4. Can the Company Directors approve the Increase in Authorized Capital decision alone?

Not really. The Directors can approve the same in a Board Meeting followed by the assent of the shareholders of the company.

5. How does the increase in capital impact the company in filing fee?

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