Increase in authorised capital

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. Paid-up capital can never exceed authorised capital. Hence, if a company having an authorised capital of Rs.10 lakhs and paid-up capital of Rs.10 lakhs would like to induct new shareholders, it can do so either by

  1. Increasing authorised share capital and issuing new shares. (or)
  2. Transferring shares from existing shareholders to the new shareholders.

Once the ordinary resolution is passed at the Extra-Ordinary General Meeting, Form SH-7 must be filed by the company within 30 days of passing of ordinary resolution. Along with Form SH-7, the prescribed government fee for authorised capital must be paid and the following documents must be attached:

  1. Notice related to EGM.
  2. Authorized True copy of Ordinary Resolution.
  3. Changed Memorandum of Association. (Showing higher authorised capital)

If the procedures for increasing authorised capital are followed as mentioned in the Companies Act and Companies Rules, then the Registrar would approve the filing and increase the authorised share capital of the company. The new authorised share capital of the company would be reflected on the MCA portal

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