Increase in Authorized Share Capital

To increase the authorized share capital of the company, here are some compliances that need to be complied with to increase the authorized share capital of the company.

1. To begin with, it is important to check whether the AOA allows the company to increase the authorized share capital or not. AOA i.e. the Article of Association, being the most important document of the company must contain the provision referring to increasing the authorized share capital of the company only then, a company can make an alteration. Most of the company’s AOA contains the provision for increasing the authorized share capital of the company but not all. SO, at the first step before proceeding to increase the authorized share capital of the company, it is necessary to see and verify in AOA.
2.  In addition to it, conducting a board meeting is required to be held by the company after sending a notice to Directors for increasing the authorized capital.    A board meeting is necessary to conduct to obtain approval from the Board of Directors for increasing the authorized capital.
   After the board meeting is held where the Board of Directors (BOD) has given the approval, a specific day shall be decided for convening an Extra Ordinary General Meeting (EGM) to get approval from the shareholders of the company for increasing the authorized capital and making changes to the MOA of the company.
   And after conducting EGM, again obtain approval from BOD and the Company Secretary who is present in the meeting to present the notice of Extra Ordinary General Meeting to shareholders. Basing the approval, the notice of extraordinary general meeting should be presented to all the shareholders, directors and auditors of the company.
3. Furthermore, passing the ordinary resolution at the Extra Ordinary General Meeting to obtain approval from the shareholders to increase the share capital of the company.
4. Second last step is, filing of form SH-7 after the ordinary resolution is passed at EGM. Form SH-7 is required to be filed within 30 days of passing the resolution and some necessary documents must be attached along with form SH-7, namely: –

• Notice stating conducting Extra Ordinary General Meeting
• Authorized true copy of the ordinary resolution
• The changed Memorandum of Association(depicting increase in authorized capital)
  Where all the compliance are in accordance with the Companies Act 2013, then the registrar i.e. the ROC would approve the filing and will allow the company to increase its authorized capital of the company.

5. In Conclusion, once the authorized capital is increased then, the paid up capital can also be increased by issuing the fresh equity shares.