Increase Authorize Capital Services
Increase in Authorized Capital Services by Deepak Prakash & Associates
The authorized capital (also known as nominal capital) of a company is the maximum amount of capital that the company is authorized to raise through the issuance of shares. This figure is specified in the company’s Memorandum of Association (MoA). If a company wants to increase its capacity to issue more shares, it may need to increase its authorized capital.
At Deepak Prakash & Associates, we provide expert services to help companies increase their authorized capital in compliance with legal requirements. Our experienced team of Chartered Accountants ensures that the entire process is smooth, transparent, and legally compliant. We guide you through the necessary documentation, board and shareholder resolutions, and filings with the Registrar of Companies (ROC) to successfully increase your authorized capital.
What is Authorized Capital?
Authorized Capital refers to the maximum value of shares that a company is allowed to issue according to its Memorandum of Association (MoA). It sets a limit on the number of shares that can be issued and defines the total value of the company’s share capital.
- Example: If a company has an authorized capital of ₹1,00,000 with a face value of ₹10 per share, it can issue a maximum of 10,000 shares.
It’s important to note that authorized capital is different from paid-up capital. While authorized capital is the upper limit on the share capital, paid-up capital is the actual capital raised by issuing shares. Over time, a company may choose to increase its authorized capital to raise more funds for expansion, business operations, or other strategic initiatives.
Reasons for Increasing Authorized Capital
Companies typically decide to increase their authorized capital for several reasons:
Fundraising for Expansion:
- A company may need to raise additional funds for expansion, development of new projects, or entering new markets. By increasing its authorized capital, a company can issue more shares to raise the necessary funds.
- A company may need to raise additional funds for expansion, development of new projects, or entering new markets. By increasing its authorized capital, a company can issue more shares to raise the necessary funds.
Attracting Investors:
- Increasing authorized capital allows companies to issue new shares to attract external investors. This is especially beneficial when a company plans to raise capital through equity financing or private placement.
- Increasing authorized capital allows companies to issue new shares to attract external investors. This is especially beneficial when a company plans to raise capital through equity financing or private placement.
Acquisitions or Mergers:
- Companies looking to acquire or merge with another company may need additional capital to facilitate the transaction. Increasing the authorized capital gives the company the flexibility to issue more shares to fund the acquisition.
- Companies looking to acquire or merge with another company may need additional capital to facilitate the transaction. Increasing the authorized capital gives the company the flexibility to issue more shares to fund the acquisition.
Employee Stock Options:
- Companies with employee stock option plans (ESOPs) may need to increase their authorized capital to issue shares to employees or executives as part of compensation packages.
- Companies with employee stock option plans (ESOPs) may need to increase their authorized capital to issue shares to employees or executives as part of compensation packages.
Compliance with Regulatory Requirements:
- Sometimes, regulatory authorities or lenders may require companies to maintain a certain level of authorized capital to meet compliance standards or fulfill specific agreements.
Documents Required for Increasing Authorized Capital
To increase the authorized capital, the following documents are typically required:
Board Resolution:
- A certified copy of the board resolution approving the increase in authorized capital.
- A certified copy of the board resolution approving the increase in authorized capital.
Special Resolution:
- A certified copy of the special resolution passed by the shareholders in a general meeting.
- A certified copy of the special resolution passed by the shareholders in a general meeting.
Amended Memorandum of Association (MoA):
- A copy of the updated Memorandum of Association (MoA) reflecting the change in the capital clause.
- A copy of the updated Memorandum of Association (MoA) reflecting the change in the capital clause.
Form SH-7:
- Duly filled Form SH-7 with the details of the increase in authorized capital.
- Duly filled Form SH-7 with the details of the increase in authorized capital.
Form MGT-14:
- A certified copy of Form MGT-14 filed with the ROC.
- A certified copy of Form MGT-14 filed with the ROC.
Payment of ROC Fees:
- Proof of payment of the ROC fees for the filing.
Benefits of Increasing Authorized Capital
Raising Funds for Business Expansion:
- Increasing the authorized capital allows companies to raise the necessary funds for business expansion, launching new projects, or enhancing operational capabilities.
- Increasing the authorized capital allows companies to raise the necessary funds for business expansion, launching new projects, or enhancing operational capabilities.
Flexibility in Capital Issuance:
- With an increased authorized capital, a company gains the flexibility to issue more shares without the need for further amendments to the MoA.
- With an increased authorized capital, a company gains the flexibility to issue more shares without the need for further amendments to the MoA.
Attracting New Investors:
- Companies can offer additional shares to external investors, enhancing their financial base and improving the potential for growth.
- Companies can offer additional shares to external investors, enhancing their financial base and improving the potential for growth.
Facilitating Mergers or Acquisitions:
- An increase in authorized capital provides the company with the necessary flexibility to raise funds for mergers, acquisitions, or other strategic initiatives.
Why Choose Deepak Prakash & Associates for Increasing Authorized Capital?
At Deepak Prakash & Associates, we offer expert services to help companies increase their authorized capital in compliance with legal requirements. Our team of Chartered Accountants will guide you through each step of the process, ensuring that all necessary resolutions, filings, and documentation are completed efficiently and correctly.
Here’s why you should choose us for increasing your company’s authorized capital:
Expert Consultation:
- We provide expert advice on the optimal increase in authorized capital based on your company’s goals and expansion plans.
- We provide expert advice on the optimal increase in authorized capital based on your company’s goals and expansion plans.
Comprehensive Documentation:
- We handle all the necessary documentation, including board resolutions, special resolutions, and amendments to the MoA, ensuring compliance with Company Law.
- We handle all the necessary documentation, including board resolutions, special resolutions, and amendments to the MoA, ensuring compliance with Company Law.
Timely Filing:
- Our team ensures that all filings with the Registrar of Companies (ROC) are done within the stipulated timelines, preventing any penalties.
- Our team ensures that all filings with the Registrar of Companies (ROC) are done within the stipulated timelines, preventing any penalties.
Seamless Process:
- We simplify the entire process of increasing your authorized capital, making it hassle-free for you and ensuring smooth operations.
- We simplify the entire process of increasing your authorized capital, making it hassle-free for you and ensuring smooth operations.
Affordable and Transparent Fees:
- We offer competitive pricing for our services, ensuring that increasing your authorized capital is cost-effective and efficient.
