Explore all the details you need about Company Authorized Capital Increase, tailored for your needs.
Increasing authorised capital helps businesses secure long-term funding for growth.
At SoloCorp, we simplify the process of increasing your company's authorised capital, ensuring compliance with the Companies Act. Our experts guide you through every step, making the experience smooth and hassle-free.
Authorized Capital is the maximum capital a company can issue as stated in its memorandum, as per Section 2 (8) of the Companies Act 2013.
A company must increase its authorised capital to infuse more funds and expand its business beyond the initial capital.
Authorised share capital increase refers to raising the maximum amount of share capital that a company is legally permitted to issue to its shareholders. This is typically achieved through an amendment to the company's Memorandum of Association (MOA).
By increasing the authorised share capital, a company expands its capacity to issue additional shares, enabling it to raise funds from existing or new shareholders. This process is often undertaken to support business expansion, finance new projects, or meet evolving financial needs.
During the formation of a Private Limited Company, the initial authorised and paid-up capital levels are established in the company's Memorandum of Association (MOA). This sets the maximum amount of share capital that the company is allowed to issue to its shareholders.
Should the company aim to exceed this predetermined cap by issuing additional shares, it necessitates an amendment to the MOA to raise the authorised capital threshold, thereby accommodating the issuance of new shares beyond the original limit.
A company may need to raise authorized capital to meet substantial financial obligations or to fund major projects.
Increasing authorized capital allows the company to raise funds for new business ventures or expansion plans.
When companies are involved in mergers or acquisitions, they may require additional authorized capital to complete the process.
The company may wish to issue more shares to raise funds from existing or new shareholders.
To manage debt, a company might convert some of its liabilities into equity, which requires increasing its authorized capital.
Certain legal or regulatory requirements might compel a company to raise its authorized capital.
Specific documentation must be submitted within 30 days following shareholder approval to formalise an increase in authorised share capital. For private companies, this involves submitting the resolution through e-form SH-7, while the submission of e-form MGT-14 is not required. Ensure the following documents are prepared for filing:
The process involves several essential steps to ensure compliance with regulatory requirements and secure shareholder approval for the proposed increase.
The AoA outlines the company's governance, including capital management. Initially, verify if the AoA permits changes to the authorised capital.
The process is straightforward if the AoA includes a provision for altering authorized capital. Otherwise, the AoA needs amending.
In the absence of a provision, amend the AoA as per Section 14 of the Companies Act, 2013, to include the capability for authorized capital alteration.
Once the AoA allows it, the company can officially change its authorized capital.
The following documents are required for the authorized capital increase process.
Complete the e-stamp duty payment for the augmented Authorized Share Capital amount via the Ministry of Corporate Affairs (MCA) Portal, as law requires.
After the authorised share capital increase, certain steps need to be followed to ensure regulatory compliance and effective implementation of the decision.
While the Companies Act 2013, specifically in Sections 61 and 65, outlines the provisions for increasing authorised capital, it doesn't directly specify penalties within these sections. However, Section 450 of the Act addresses penalties for general non-compliance.
When a company or its officers fail to adhere to the prescribed rules, a penalty of Rs. 10,000 is imposed.
An additional daily penalty of Rs. 1,000 is levied for ongoing violations until the issue is resolved.
Specifically concerning the late submission of Form SH-7, which is required within 30 days of the resolution to increase authorised capital, the penalty accrues at Rs. 1,000 per day of delay.
This penalty continues until the default is corrected, subject to a maximum cap of Rs. 25 lakh, whichever amount is lower.
These penalties are imposed under Section 450 of the Companies Act 2013 for non-compliance.
SoloCorp is your ideal partner for increasing your company's authorised capital, offering a comprehensive suite of services tailored to your needs.
We specialize in navigating the complexities of amending your Memorandum of Association (MOA), ensuring that your documentation accurately reflects your new capital structure.
Our team efficiently handles the filing of Form MGT-14, which is required for registering changes in your company's capital with the Registrar of Companies.
We take care of filing Form SH-7, which is essential for officially recording the increase in your authorized capital.
From the initial assessment to the final submission, SoloCorp provides unwavering support, ensuring a smooth and compliant capital increase process.