Increase Authorised Capital

Change In Authorized Share Capital And Paid Up Share Capital

Increasing authorised share capital and paid-up share capital are two separate procedures, although they can be linked. Here’s a breakdown of each:

Increase in Authorised Share Capital:
- Review Memorandum of Association (MOA): The authorised share capital is stated in the company’s Memorandum of Association (MOA). You’ll need to confirm the current limit.
- Board Meeting and Resolution: Convene a Board of Directors meeting and pass a resolution proposing the increase in authorised share capital.
- General Meeting Approval: In some cases, a General Meeting of Shareholders might be required to approve the increase. This typically applies to public companies or private companies with specific clauses in their AOA.
  - If a General Meeting is needed, proper notice needs to be sent to shareholders outlining the details and agenda of the meeting.
  - Shareholder approval usually happens through a voting process, and the resolution needs to be passed by a majority.
- Form SH-7 Filing: File eForm SH-7 with the Registrar of Companies (ROC) within 30 days of passing the board resolution (or shareholder approval, if applicable). This form electronically informs the ROC about the increase in authorised capital.
- Payment of Stamp Duty: Pay the requisite e-Stamp Duty as mandated by the state.
- ROC Approval: The ROC will review and process the filing. Upon approval, the company’s authorised share capital limit will be officially increased.

Increase in Paid-Up Share Capital:
- Authorised Share Capital Limit: The paid-up capital cannot exceed the authorised share capital limit. So, ensure you’ve increased the authorised capital if necessary before proceeding.
- Issuing New Shares: The most common way to increase paid-up capital is by issuing new shares to existing or new shareholders. This infuses additional funds into the company.
- Share Issuance Methods: There are different methods for issuing new shares, such as fresh issue of equity shares, right issue, or bonus issue. The chosen method will depend on the company’s specific goals and financial situation.
- Prospectus or Offer Document (For Public Companies): Public companies or private companies making a public issue of shares will need to prepare a prospectus or offer document as per SEBI regulations.
- ROC Filings for Share Issuance: Depending on the method of share issuance, specific ROC filings might be required (e.g., filing of PAS-3 for allotment of equity shares).