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What is Increase in Authorized Capital ?

In relation to a company, Authorized Capital is the amount mentioned in the capital clause of the Memorandum of Association of the company. The authorized capital of a Company determines the number of shares a Company can issue to its shareholders. To the extent of the amount specified in a capital clause, the company can raise capital. If the company wants more capital then the capital clause has to be amended by the members by passing a special resolution at a general meeting. An increase in the authorized capital might as well be required for issuing new shares and/or infusing more capital into the Company.

A company may need to increase its authorised share capital before issuing new equity shares and increasing paid-up capital. Authorised share capital is the total value of shares a company can issue, while paid-up capital is the total value of shares the company has issued

Documents Required to Increase Authorized Capital
  • Notice related to EGM along with Statement Of Purpose
  • Authorized True Copy of Ordinary Resolution/li>
  • Altered Memorandum of Association
  • Altered Articles of Association (if case requires)
Procedure to Increase Authorized Capital
  • The AOA of the company is the pre-condition for increasing the authorized capital. Verify that it has the provision for the sam
  • Call a board meeting to decide the date, time, place and agenda of the Extraordinary General Meeting. The statement of purpose and resolution are to be prepared. All the members need to be notified about the EGM
  • The Ordinary Resolution to Increase Authorized Capital is passed in the EGM by the approval of the members of the EGM. The company‚Äôs MOA and AOA are to be altered, thereafter.
  • Within 30 days from the EGM, the form is filed with ROC to Increase Authorized Capital along with required documents.
  • Once the ROC checks and verifies all the documents, being satisfactory, the approval to Increase Authorized Capital is given.
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