How to increase the Authorised share capital of the Company

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In the Companies Act 2013, the procedure for the increase in the Authorised share capital has been governed in sections 61 and 64 of the Companies Act 2013. In any case related with the share capital in the process of increasing the paid-up share capital of the company by issuing the fresh equity shares, the first step that needs to be taken into consideration is the Increase in the Authorised share capital of the company. The procedure for the increase in the Authorised share capital is as follows:-

  1. Check the Article of Associations for the clause regarding Increase in the share capital

The first step to initiate the process is to check the clauses of AOA regarding the increase in the share capital of the company. If there is no clause in AOA regarding the same, then the Articles of Association shall have to be altered.

Procedure for alteration of Article of Association

For alteration of the Article of Association, the Company shall have to take the approval of the shareholders in the General meeting being held by the company. The General Meeting can be either Annual General Meeting (AGM) or Extraordinary General Meeting (EGM).

The documents required for the alteration of the Articles of Association are as follows:-

  1. Notice of Annual General Meeting of Extra Ordinary General Meeting (21 days notice is required to be given to shareholders before calling AGM/EGM).
  2. Copy of the shareholder’s resolution
  3. Altered Articles of Association

To give effect to the resolution, the Company needs to file the form MGT – 14 within 30 days of passing the shareholder’s resolution.

  1. Call the Board meeting

The next step in this process is to call the Board meeting in which it is to be decided whether an AGM/EGM to be called to discuss the date, time and venue of the General Meeting After this, a notice is to be issued to each and every shareholder, directors, auditor of the company to discuss the matter of raising authorised share capital of the company.

  1. Hold Extra Ordinary General Meeting

The next step in this process is to pass an Ordinary resolution to increase the authorised share capital of the company.

  1. Filing of Form SH-7

The next and final step in this process is to file the Form SH – 7 within 30 days of passing the ordinary resolution. Along with the Form SH – 7, the attachments that need to be attached along with the form are as follows:-

  • Notice for the Board meeting
  • Board resolution for an increase in authorised share capital and amendment in capital clause of MOA
  • Notice of EGM
  • Shareholder’s resolution of EGM
  • Amended copy of MOA and AOA

 

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