What is an Authorized Capital for a Company?

The capital which is authorized by the memorandum of the company to be the maximum amount of share capital of the company is called the Authorized Capital of the Company. It is required to be mentioned in the company’s MoA.

How can a Company increase its Authorized Capital?

A company can increase its Authorized Capital by initiating an amendment in its AoA (if needed). Consequently, the company needs to organize a Board Meeting to get approval from the Directors and the Shareholders.

Which Act of the Indian Govt. oversees the Increase in Authorized Capital process?

The procedure of Increase in Authorized Capital for a company is regulated by the Company Act, 2013 of the Indian Govt. along with the regulations of the Registrars of Companies (ROC).

Can the Company Directors approve the Increase in Authorized Capital decision alone?

Not really. The Directors can approve the same in a Board Meeting followed by the assent of the shareholders of the company.

How much time does it take to complete the Increase in Authorized Capital process?

It completely depends on how the company itself manages to conduct the essential steps like Board Meeting organizing, approval process from the Directors - Shareholders, etc. The legal process usually takes 7-10 working days of time to be completed.

Procedure to Increase Authorised Share Capital

By Ankar Kapuria Published On 23 Dec 2020 Updated On 15 Jan 2022 Category Increasing Authorised Capital

What is meant by 'Increase of Authorised Share Capital'?

The Authorised Share Capital is that part of a company's equity which has been raised by issuing shares and selling them to stockholders in exchange for capital. However, a Company may need to increase its authorised share capital before issuing new equity shares and increasing paid-up capital. Read to know more about the Increase Authorised Share Capital.

Pre-requisites of increase in authorized capital

An Articles of Association must have a clause for an increase in authorized capital
Shareholders' approval is a must.

The process to Increase Authorised Share Capital

Step 1- Verifying approval within the Articles of Association

An approval from AOA is a pre-condition for expanding the Authorised Share Capital.

Step 2- Board meeting to notify the incidence of EGM

Notice for Board Meeting is served to every member/shareholder, director, auditor of the company, where the date, place, time are mentioned where the EGM is to be held to discuss and vote on the matter of increasing of Authorised Share Capital as per Section 101 of the Companies Act 2013.

Step 3- Extraordinary General Meeting

Once the meeting is in session, voting then takes place regarding the matter of the increase in the share capital is presented forth. Once the approval has been granted, and the resolution is passed, the explanatory statement to the same is attached, and the increase in the Authorised Capital is made.

Step 4- ROC Form documenting

Within a time, the frame of 30 days of the passing of Ordinary Resolution, Form SH-7 must be filed with the concerned Registrar of Companies (RoC).

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