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Change In Share Capital

Boost investor confidence when buying shares in the company because they are confident there is no lack of access to funds, so its required to increase your capital as company grows.

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Why we need to increase the Authorized share Capital?

What procedure we need to follow to change the Authorized Share Capital of a company?

Authorized share capital of the company can be increased at any time, subject to the section 61 (read with section 13 and 14) of the Companies Act, 2013. Step-1 First verifying that the Increase in authorized capital is allowed in the Articles of the company is a pre-requisite to increasing authorised share capital. In case the Articles do not approve an increase, then Article need to amend to allow the same before proceeding as per the provision of Section 14 of the Companies Act, 2013. Step-2 A board meeting is called wherein it is decided that an EGM is to be held to discuss and vote on the matter of raising authorised share capital. Step-3 EGM will held on the date specified in Board Meeting and then the Ordinary Resolution under section 61(1)(a) of the Companies Act, 2013, will be passed to increase in authorised share capital of the Company. Step-4 File form SH-7 within 30 days of passing of Ordinary Resolution with the concerned Registrar of Companies, with p

What is the consequence of non-filing the form for Increase in Authorized capital?

According to section 117 (2) If the company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified under Section 403 with additional fee, the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

Documents Required For Name Change of Company

  • Board Meeting for Increase in Authorized Share Capital
  • Board Resolution for Increase in Authorized Share Capital
  • Notice of EGM for Increase in Authorized Share Capital
  • Altered Memorandum of Association.
  • Certified True copy of Ordinary Resolution.

Process Involved

  • STEP-1

Calling of Board Meeting

Calling of Board Meeting Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013, for convening a meeting of the Board of Directors.

  • STEP-2

Board Resolution

Resolution to get in-principal approval of Directors for Increase in authorised share Capital.

  • STEP-3

Calling of EGM

Holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Ordinary Resolution, for amendment in authorized share Capital clause of Memorandum of Association.

  • STEP-4

Ordinary Resolution

Pass the necessary Ordinary Resolution under section 61(1)(a) of the Companies Act, 2013, for increase in authorize share capital of the Company .

  • STEP-5

Form SH-7

File form SH-7 within 30 days of passing of Ordinary Resolution with the concerned Registrar of Companies, with prescribed fees and along with following attachments as desired by section 64

  • STEP-6

Approval

After Approval of Form by ROC, Authorized capital will be Increased

Change In Share Capital
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FAQs

Some professionals are of the view that for increase in authorised share capital Special Resolution is to be passed, since amendment in Memorandum of Association can be done by way of passing Special Resolution under section 13 of the Companies Act, 2013.

It means the maximum value of securities that a company can legally issue

With proper documentation the process could complete within 10 days of time If there is any complication or delay in providing the documents, the time taken for the process may vary.

After 30 days of passing ordinary resolution additional duty being levied upon the company.

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