Authorized Capital Increase

Increase authorized Share Capital

A company is required to increase its authorized share capital prior to issuing new ordinary shares and increasing paid in capital. Authorized share capital is defined as the complete worth of shares a company can publish while paid up capital is the complete worth of shares the company has mattered.

Paid up capital should not go beyond authorized capital.

In case if a company having an authorized capital of rupees 10 lakhs and paid up capital of rupees 10 lakhs would like to admit new shareholders. This can be done by increasing authorized share capital and publishing new shares or fetching shares from shareholders to the new shareholders. In most of the cases a new share is published and authorized capital is increased.

Guidelines for increasing authorized capital.

• Examine the provisions of the Articles of Association (AOA) to increase the authorized capital.
• In case if a does not authorize increase then the AOA should be changed according to the section 14 of the Companies Act 2013.
• publish notice for calling Extraordinary Board Meeting (EOBM) to change AOA, for grand the increase in authorized share capital.
• Publish notice prior to 7 days before the meeting.

Issuing new shares to increase authorized share capital.

For existing active promoters.

The listed below are the steps required for increasing the permit for capital and to issue new shares to the existing active promoters;

• A Board meeting is called for all the shareholders.
• A form of PAS-3 is registered with the ROC to intimate the allotment of new shares.

For new shareholders.

In order to issue new shares to the new shareholders the estimator report from a authorized chartered accountant is necessary.