The Essentials of Authorized Capital

Looking for how to change the authorized capital of any company? Here is the guide!

If you want to run a business then you need to have some funds for it and that can be a short or long term requirement. So if you need short term funds then it could be loans or advances. But in long term, it needs more capital. Such needs can able to create some ways to increase the authorized share capital of a private limited company. When any private company registers, the authorized and paid-up capital is specifically specified in the MOA of the company. So that, the specific company can be able to issue new shares within the limits. But if the company desire to issue more than their limit then it has to amend the MOA. So before anything, you need to understand the basic things about authorized capital.

What is authorized capital?

Authorized capital is the maximum limit of share capital for that a company can be able to issue its shares to shareholders. As per the rule, a company can be able to issue shares more than their specific limitation. But as per the companies act, if any company want to issue more share than their specific limit then it needs to be amended its MOA. And the full form of MOA is a Memorandum of association that is under the capital clause.

Procedure to change authorized capital

Here are some steps that are given below that will help you to understand how to change authorized capital?

• step 1:

Vetting of AOA and MOA – a company need to be checked their MOA and AOA to know about their authorized capital. If the company issue shares more than the limitation mentioned in MOA then it must need to increase its authorized capital. And before increasing, the company also need to check if it can be done legally as per the norms of their company. And besides this, AOA is one of an option in this situation as well. In an annual general meeting or an extraordinary general meeting, the company need to take approval from the shareholders before altering the AOA. From the date of the resolution within 30 days, altered AOA must be filed with MCA.

• step 2:

Board meeting conduction – it is very important to arrange a board meeting to take the approval of the board for changing the authorized share capital of a company. To arrange this board meeting you need to follow these steps that are given below.

  • The notice needs to be sent to the board of directors regarding the agenda of the meeting.
  • At the board meeting, pass board resolution and notice where all of the paints of the specific meeting will be mentioned.
  • The notice also needs to be sent to the shareholders regarding the agenda of the meeting including the date, time and place.
  • The notice needs to be issued for auditors as well.

• step 3:

Intimation to the ROC – after taking the approvals from the board, shareholders and auditors in a meeting, the company need to draft the altered MOA to change authorized capital. So for that, the company need to fill out form SH- 7 with the MCA and it needs to fill up 30 days from the resolution date. Here you need to require some documents, those are given below.

  • A certified original copy of board resolution for alteration in AOA
  • A certified original copy of board resolution for the alteration in MOA
  • Notice of EGM or AGM
  • A certified original copy of shareholders resolution

It is necessary to incorporate changes and also need to put them on the website if any.

Some rules that need to follow

There are some rules that you must need to follow. A company need to be filed forms SH- 7 and MGT 14 along with fees in less than 30 days of the resolution being passed. So you need to know all rules for changing authorized capital. To submit the forms you need to require some documents for each form. Such as,

• Form MGT 14:

Within 30 days, this form needs to be filed with the ROC first and also be filed on the MCA portal with,

  • The details of the specific company and their CIN as well.
  • Purpose of filing the form
  • The dispatch date of the notice
  • The resolution passing date
  • All details regarding the resolution
  • Digital signature and DINs if necessary.

Besides these documents, some attachments are to be provided. Those are,

  • As per the section, a notice of the EGM along with the statement.
  • The resolution passed certified copy in the EGM
  • New MOA copy
  • New AOA copy

• Forms SH- 7 :

With the 30 days of passing the respective resolution, this form needs to be filed with the ROC and also needs to be filed on the MCA portal. For that, you had to follow this compulsory thing.

  • Attach details of the company and CIN
  • The date and time of the meeting
  • Type of the resolution
  • Service request number that has already been filed.
  • Details of the old and new amount of authorized share capital.
  • Digital signature and DINs are necessary.

Here are some attachments that are to be provided.

  • The original copy of the resolution
  • New MOA copy
  • New AOA copy
  • Other optional copies.

How MyRegistration can help you?

According to the companies act, there is some vital process that needs to be done properly. So if you are looking for increasing the authorized share capital then you must fill up some necessary forms with MCA within the due dates. In this case, MyRegistration can help you to simplify your all process. As we are here to help you to deal with this kind of situation. Our expert will understand your need and can able to guide you in the right way. So for more information, contact us at our official website.

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