Increase in Authorized Share Capital

Introduction

The maximum limit of share capital up to which a company can issue its share to shareholders is known as authorized capital. A company is not authorized to issue paid-up capital beyond authorized capital. If the company proposes to issue shares beyond authorized share capital amount, if do so then it has to increase the authorized share capital after fluffing the particular compliance.

For increasing authorized capital company has to follow the provisions led down under section 61, section 13 and section 64 of the company’s act 2013.

Process of increasing authorized capital of a company:

➲ Article authorizes for this: Article of the company must contain the provision related to the increase of authorized capital. Means article must allow for increasing the share capital of the company. If the company article doesn’t have such provision then the first step is to amend the article of the company and add such provision.

➲ Commence Board meeting: Pass resolution for:

1.  increasing the authorized capital of the company
2. Fixing date for commencing EGM to get approval from shareholders
3. To approve notice and agenda for EGM

➲ Issue Notice of EGM: send notice to all the shareholders of the company including directors and auditor of the company at least 21days before the EGM date

➲  Commence EGM: hold EGM on the due date and passing an ordinary resolution under section 61(1)(a) for increasing the authorized share capital

➲  File form SH-7: in within 30 days from the date of passing resolution company need to file SH-7 along with following attachments;

1. EGM’s Notice
2. True certified copy of the passed resolution

➲  Concerned ROC (registrar of the company ) will scrutinize the form and attachment and will approve for increasing authorized share capital