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Procedure to increase Authorised Share Capital

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Procedure to increase Authorised Share Capital

Every company after its registration whether its Public limited Company or private limited company, there are number of compliance which a company needs to comply on day to day basis. But after some time when the business of the company expands, then the company require fund for its expansion, and one of the way which available to company is to issue shares but in case the company is intending to issue share beyond increase its authorised share capital then it requires increasing the authorised share capital of the company.

Steps to increase authorised share capital    
  1. Call Board Meeting: You have to issue notice for holding a Board Meeting. Notice of the Board Meeting has to be sent along with proper Agenda. Agenda contains all the items relating to the matter which are discussed at the Board Meeting.
The main items must be contained with respect to increase in the authorised share capital:
  • I. To get approval from the Board of Directors to increase in authorised share capital.

  • II. To fix the date, time, and place of holding Extra ordinary General Meeting (EGM) to get the approval of the shareholders by way of ordinary resolution to change the AOA.

  • III. Authorise the director or company secretary to the issue the notice of EGM. The Notice must be issued to all the members of the company.

  1. Holding EGM: Next, the Company will be required to hold Extra Ordinary General Meeting and pass the ordinary resolution (approval of at least 51% shareholders) as per the requirement of section 61 of the Company Act, 2013 for increase in authorized share capital and consequence of which alteration in clause V i.e. capital clause of the Memorandum of Association of the Company.
  1. ROC Filing: After holding EGM and passing resolution, company needs to file the e-form SH-7 within 30 days of passing ordinary resolution with the concerned ROC.
This form can be filed online. Important attachments of form SH-7:
  • I. Notice of Extra Ordinary General Meeting (EGM);
  • II.Certified true copy of the resolution passed at EGM;
  • III.Altered Memorandum of Association (MOA).

After filing all these documents, the concerned officer checks the form. Once the form is approved the data of the company is updated on the MCA portal automatically.

Do we need Special Resolution or Ordinary resolution is enough ?

Some of the person are of view that we should pass Special resolution rather than Ordinary resolution as it involve alternation in Memorandum of Association and also involve section 13 of the companies act, 2013 which require the alternation of memorandum of association via special resolution.
Please appreciate that the special resolution for change in Memorandum of Association is mainly required in case of change of name and change of registered office as governed by section 13 of the Companies Act, 2013. However, Increase in Authorized Share Capital is mainly governed y section 61 of the Companies Act, 2013, which is complete regarding the what type of shareholder resolution is required. So in such a scenario, passing an Ordinary Resolution would completely be enough.

Conclusion: Hope the above article has helped you to understand the procedure for change in authorised share capital of the Company, in case of any doubt feel free to contact us at complianceship@gmail.com or +91-8010233173 or visit our website www.complianceship.com

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