Increasing authorized capital is a crucial corporate action that allows companies to raise additional funds and expand their business operations. Asktrix provides comprehensive support for the entire authorized capital increase process, ensuring compliance with MCA regulations and smooth execution.
The authorized capital increase process is governed by:
Different types of companies have specific eligibility criteria:
Key requirements for capital increase include:
Our streamlined process ensures quick and hassle-free authorized capital increase:
Conduct a board meeting to propose the increase in authorized capital and pass necessary resolutions. The board must approve the capital increase proposal and decide on calling an Extraordinary General Meeting (EGM).
Board resolution must be passed approving the increase in authorized capital and calling for Extraordinary General Meeting (EGM). The resolution should specify the new authorized capital amount and the purpose of increase.
Conduct EGM and obtain special resolution approval from shareholders with 75% majority for capital increase. The special resolution must be passed as per Companies Act, 2013 requirements.
File necessary forms with Registrar of Companies including Form MGT-14 for special resolution within 30 days. This form contains details of the special resolution passed by shareholders.
File Form SH-7 with ROC within 30 days of passing special resolution, along with required documents and fees. This form notifies ROC about the increase in authorized capital.
ROC verifies the application and documents, and approves the capital increase after due verification. The approval process typically takes 15-30 days depending on ROC workload.
Upon approval, new share certificates are issued to shareholders if new shares are allotted during the process. The company can now issue shares up to the new authorized capital limit.
After approval, the following updates are made:
Limited Liability Partnerships (LLPs) have different capital increase procedures:
Companies can increase their authorized capital multiple times as per business requirements. There's no specific limit on the number of times a company can increase its authorized capital, provided all regulatory requirements are met and proper approvals are obtained.
Find answers to common questions about authorized capital increase process, eligibility, documents, timeline, costs, and compliance requirements.
To enable the company to raise more funds and infuse additional capital for business growth, expansion, and operational requirements.
There's no specific limit on the number of times a company can increase its authorized capital, provided all regulatory requirements are met and proper approvals are obtained.
No, LLPs don't have "authorized capital" concept like companies. Partners can contribute additional capital through LLP Agreement amendments.
Yes, board approval is mandatory as the first step, followed by shareholder approval through special resolution.
Form SH-7 is filed with ROC within 30 days of passing special resolution to notify about the increase in authorized capital.
Increasing authorized capital itself doesn't affect financial statements unless new shares are issued, which would increase paid-up capital.
After ROC approval, the changes typically reflect on the MCA portal within 7-15 days of approval.
Late filing attracts penalties of ₹200 per day and may lead to ROC objections and additional compliance requirements.
Yes, authorized capital can be decreased through a similar process involving board resolution, shareholder approval, and ROC filing.
Increasing authorized capital alone doesn't change shareholding pattern unless new shares are issued to specific shareholders.
Shareholders are notified through EGM notice, and the change is reflected in company records and MCA portal.
Costs include ROC filing fees (based on capital amount), stamp duty on MOA/AOA amendments, and professional consultation fees.
Yes, both Memorandum and Articles of Association must be amended to reflect the new authorized capital amount.
Yes, EGM is mandatory to obtain special resolution approval from shareholders for capital increase.
New certificates are issued only if new shares are allotted during the process. Authorized capital increase alone doesn't require new certificates.
Yes, Form MGT-14 must be filed within 30 days of passing special resolution for capital increase.
Penalties include late filing fees, ROC objections, potential legal consequences, and additional compliance requirements.
After ROC approval, the company can immediately start issuing new shares up to the increased authorized capital limit.
Benefits include ability to raise funds, enhanced valuation, improved investor confidence, and facilitation of business expansion.
Yes, Asktrix provides comprehensive support for the entire authorized capital increase process including documentation, compliance, and ROC filing.
Ensuring smooth authorized capital increase process with Asktrix provides not only regulatory compliance but also strategic guidance for business growth. Our comprehensive approach ensures your company meets all MCA requirements efficiently and accurately.