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CHANGE AUTHORIZED CAPITAL
CHANGE AUTHORIZED CAPITAL
When a company is in its incorporation stages, one of the most important decisions that have to be made by the promoters is the amount of capital to invest in the company. While registering the Private Limited Company the authorized and paid-up capital is specified in the MOA of the company. The company can therefore issue new shares within the limit of the authorized capital mentioned in the MOA. If the company wishes to issue more shares than the limit that is specified then amendments need to be done in the MOA.
When a company is in its incorporation stages, one of the most important decisions that have to be made by the promoters is the amount of capital to invest in the company. While registering the Private Limited Company the authorized and paid-up capital is specified in the MOA of the company. The company can therefore issue new shares within the limit of the authorized capital mentioned in the MOA. If the company wishes to issue more shares than the limit that is specified then amendments need to be done in the MOA.
SHARE CAPITAL INCREASE/DECREASE
A company may need to increase the authorized share capital before it is issuing new equity shares and increasing the paid-up capital. As authorized share capital is the total value of the shares a company can issue. The paid-up capital is the total value of the shares of the company that have been issued.
The Paid-up capital does not exceed the authorized capital. Hence, if the company has authorized capital of Rs.10 lakh and paid-up capital of Rs.10 lakhs and would like to induct new shareholders then it can be done by:
- Increasing the Authorized share capital and issuing new shares (or)
- Transferring shares from the existing shareholders to the new shareholders.
After taking approval in shareholders’ meeting a company shall draft the altered MOA to increase authorized share capital. A company has to intimate about the same by filing form SH-7 with the MCA. The form must be filed 30 days from the date of resolution. The documents required to file the said form are as under.
- A certified true copy of the Board resolution for alteration in AOA
- A certified true copy of the Board resolution for alteration in MOA
- Notice of AGM/EGM
- A certified true copy of Shareholders’ resolution
- Altered copy of AOA
- Altered copy of MOA
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