Authorised Share Capital
Authorised share capital is the maximum amount of the capital for which shares can be issued by the Company to shareholders. The Authorised capital is mentioned in the Memorandum of Association of the Company under heading of “Capital Clause”. It is even decided prior to incorporation of the Company.
The Authorised capital can be increased at any time by following necessary steps as required by law.
Increase Authorized Capital :
A company might need to Increase Authorized Capital in order to issue new shares so as to introduce more capital. This can be done anytime, subject to AOA and approval of shareholders. The provision to Increase Authorized Capital should be mentioned in AOA, else the AOA will have to be amended before applying for increasing authorized capital by passing a special resolution.
Procedure to Increase Authorized Capital
The AOA of the company is the pre-condition for increasing the authorized capital. Verify that it has the provision for the same.
Call a board meeting to decide the date, time, place and agenda of the Extraordinary General Meeting. The statement of purpose and resolution are to be prepared. All the members need to be notified about the EGM.
The Ordinary Resolution to Increase Authorized Capital is passed in the EGM by the approval of the members of the EGM. The company’s MOA and AOA are to be altered, thereafter.
Within 30 days from the EGM, the form is filed with ROC to Increase Authorized Capital along with required documents.
Once the ROC checks and verifies all the documents, being satisfactory, the approval to Increase Authorized Capital is given.