{"id":12026,"date":"2020-07-02T17:40:01","date_gmt":"2020-07-02T12:10:01","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=12026"},"modified":"2022-11-16T15:11:57","modified_gmt":"2022-11-16T09:41:57","slug":"procedure-to-increase-the-authorized-share-capital-of-a-company","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/procedure-to-increase-the-authorized-share-capital-of-a-company\/","title":{"rendered":"Procedure to increase the authorized share capital of a company"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Every\norganization needs to procure capital to execute their day to day operations or\naccomplish their long-term goal. Credit and loans are enough to cater to the\nshort term needs of the company. Meanwhile, the long-standing requirement seeks\nmore capital. When it comes to the private company, such demand can open up an\nopportunity to increase the company&#8217;s authorized share capital. Since every\nprivate entity come under the radar of Company Act, any alteration in the\nstructure will force them to conduct their action as per Act and rules.<\/p>\n\n\n\n<p>The inclusion of the paid-up &amp; authorized capital in the MOA is mandatory, especially at the <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>company registration<\/strong><\/a> time. The company has the authority to issue new shares within the limit of paid-up and authorized capital. However, if the company is willing to roll out more shares than the given threshold, it has to make relevant MOA changes. Before we elaborate on this topic any further, let&#8217;s get to the fundamental first. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/procedure-to-increase-the-authorized-share-capital-of-a-company\/#What_is_the_authorized_capital\" >What is the authorized capital?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/procedure-to-increase-the-authorized-share-capital-of-a-company\/#Pre-requisites_of_increase_in_authorized_capital\" >Pre-requisites of increase in authorized capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/procedure-to-increase-the-authorized-share-capital-of-a-company\/#Procedure_to_increase_the_authorized_share_capital_of_a_company\" >Procedure to increase the authorized share capital of a company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/procedure-to-increase-the-authorized-share-capital-of-a-company\/#What_is_MOA_and_AOA\" >What is MOA and AOA?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/procedure-to-increase-the-authorized-share-capital-of-a-company\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_authorized_capital\"><\/span>What is the authorized capital? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The maximum limit of the share that a company can share to the shareholders is known as authorized capital. Under no conditions, the company can surpass this specified limit. However, that doesn&#8217;t mean that the company is not entitled to violate this condition. Henceforth, if the company is looking forward to rolling out more shares to the shareholder, they need to do some relevant alteration in MOA as per the Companies Act. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Pre-requisites_of_increase_in_authorized_capital\"><\/span>Pre-requisites of increase in authorized capital <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>A clause that supports an increase in authorized capital must be\nspecified articles of association. <\/li><li>The approval from the Shareholders. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_to_increase_the_authorized_share_capital_of_a_company\"><\/span>Procedure to increase the authorized share capital of a company <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"504\" height=\"345\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/07\/image-7-e1593688648438.png\" alt=\"Procedure to increase the authorized share capital\" class=\"wp-image-12027\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/07\/image-7-e1593688648438.png 504w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/07\/image-7-e1593688648438-300x205.png 300w\" sizes=\"(max-width: 504px) 100vw, 504px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Vetting of AOA and MOA <\/h3>\n\n\n\n<p>A company should\ndetermine its AOA and MOA in the context of authorized capital. If the issuing\nof shares is likely to surpass the specified limit in MOA, then the company\nmust crank up its authorized capital.<\/p>\n\n\n\n<p>Before this intentional increment, the company must determine the legality of the matter and ensures that everything complies with the norms of association of the company. Amending the AOA is one of an alternative to change such provision. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Alteration of AOA<\/h4>\n\n\n\n<p>To alter the AOA, the company must avail authorization from the shareholders in a general meeting or AGM. Any changes made in the Article of Association must be filed with MCA in the timespan of one month from the date of resolution. After the successful alteration of AOA, the company can move forward and follow the required procedures to serve the purpose.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Holding Board Meeting <\/h3>\n\n\n\n<p>The company cannot make such decisions on their own. They have to notify the relevant board members along with shareholders and get their approval. The meeting should be held via prior notification, shared with all shareholders as per the Company Act provision. The company must specify the date and time for the EGM or AGM. A Director of the company is accountable for filing all the relevant forms with the MCA.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Hold Shareholders Meeting <\/h3>\n\n\n\n<p>The company must organize the <a href=\"https:\/\/corpbiz.io\/learning\/annual-general-meeting\/\"><strong>Annual General Meeting<\/strong><\/a> on the specified time and date to get approval on such critical matters. Such matters should be resolved through ordinary resolution in the meeting.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Intimation to the ROC <\/h3>\n\n\n\n<p>As soon as the\ncompany gets the board member&#8217;s approval, a company will draft the revised MOA\nto proceed further. A company must notify about the same via filing the SH-7\nform. The form has to file within 30 days from the date of resolution. The\ndocument that needs to go along with the SH-7 form is mentioned below. <\/p>\n\n\n\n<ul><li><em>Board resolution\n(copy) for alteration in AOA <\/em><em><\/em><\/li><li><em>Board resolution\n(copy) for alteration in MOA <\/em><em><\/em><\/li><li><em>Notification\nregards AGM\/EGM&nbsp; <\/em><em><\/em><\/li><li><em>Shareholders\nresolution (copy)<\/em><em><\/em><\/li><li><em>Altered AOA\n(copy)<\/em><em><\/em><\/li><li><em>Altered MOA\n(copy)<\/em><em><\/em><\/li><\/ul>\n\n\n\n<p>Once MCA gives the green signal to the company with their approval, the MOA and AOA can be easily altered. The company needs to consolidate the relevant MOA and AOA changes and display them on its official website, if any. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/corporate-social-responsibility\/\">What is Corporate Social Responsibility? \u2013 An Overview\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_MOA_and_AOA\"><\/span>What is MOA and AOA?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>MOA stands for <a href=\"https:\/\/corpbiz.io\/learning\/alteration-of-memorandum-of-association-moa\/\"><strong>Memorandum of Association<\/strong><\/a> meanwhile; AOA is abbreviated as Articles of Association. Both these documents play a crucial role in displaying the company&#8217;s vital info company to its shareholders and other stakeholders. <\/p>\n\n\n\n<p>MOA provides the\nfollowing info to its shareholder&#8217;s<\/p>\n\n\n\n<ul><li><em>Name<\/em><em><\/em><\/li><li><em>Aims<\/em><em><\/em><\/li><li><em>Objectives<\/em><em><\/em><\/li><li><em>Registered\noffice address<\/em><em><\/em><\/li><li><em>The clause\nregarding limited liability<\/em><em><\/em><\/li><li><em>Minimum paid-up\ncapital<\/em><em><\/em><\/li><li><em>Share capital of\nthe company.<\/em><em><\/em><\/li><\/ul>\n\n\n\n<p>In short, it\nshows the connectivity of the company with the outside world.<\/p>\n\n\n\n<p>AOAs are essential documents that need to be submitted when the enterprise decided to consolidate with the Registrar of Companies (ROC). MOA, in conjunction with AOA, is known as the Constitution of the Company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To sum up, it&#8217;s all up to the company to whether or not to increase authorized share capital. However, under no circumstances, the company entitled to serve this purpose without the intervention of its board members and <strong>MCA&#8217;s<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/home.html\"><strong>[1]<\/strong><\/a><\/sup> approval. The company must comply with all the mandatory provisions while executing such action. Don\u2019t forget to get in touch with us, if in case you need any assistance. Your doubts are important to us and we will try to resolve them in an intuitive and swift manner. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/loan-and-investment-by-company-section-186\/\">Loans and Investments by Company (Section-186)\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Every organization needs to procure capital to execute their day to day operations or accomplish their long-term goal. Credit and loans are enough to cater to the short term needs of the company. Meanwhile, the long-standing requirement seeks more capital. When it comes to the private company, such demand can open up an opportunity to [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":12031,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[722],"acf":{"service_id":"1"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":6148,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/12026"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=12026"}],"version-history":[{"count":17,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/12026\/revisions"}],"predecessor-version":[{"id":50764,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/12026\/revisions\/50764"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/12031"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=12026"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=12026"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=12026"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}