Increase in Authorised Capital

What is Authorised Capital?
  • The Authorised capital of a company (sometimes referred to as the Authorised share capital, registered capital or nominal capital) is the maximum amount of share capital that the company is Authorised by its constitutional documents to issue (allocate) to shareholders.
  • The maximum value of securities that a company can legally issue. This capital is specified in the memorandum of association and articles of association during the incorporation of the company. This Authorised capital can be increased or decreased by the company at any time with the approval of its members or shareholders.
Procedure to Increase the Authorised Capital of a Company:
  • In order to increase your Authorised share capital of your company, it should be permitted by your Articles of Association. In short, the company should make sure that its AOA contains a provision authorising it to increase its authorised share capital.
  • If there is no such provisions, then the company has to make changes in its Articles of Association, so as to insert a clause enabling them to increase the authorised capital of the company.
  • The Board of Directors in their meeting approve the increase of authorised capital, and fix a date, time and venue for holding Extra-Ordinary General Meeting to get the approval of shareholders.
  • Notice has to be issued to the shareholders for conducting Extra-Ordinary General Meeting, also to the Directors and Auditors of the Company.
  • Hold the EGM on the due date and pass the necessary resolution for increasing the authorised capital of the company.
  • File Form SH-7 within 30 days from the date of passing the resolution with the Registrar of Companies along with the prescribed fee.