INCREASE THE SHARE CAPITAL
A company may need to increase its authorized share capital before issuing new equity shares and increasing paid-up capital. Authorized share capital is the total value of shares a company can issue, while paid-up capital is the total value of shares the company has issued.
The company can increase its paid-up capital by issuing shares either to an existing shareholder or to any other person whether it is a public limited company or it is a private limited company.
Pre-requisites of increase in authorized capital
1. An Articles of Association must have a clause for an increase in authorized capital
2. Shareholders’ approval is a must.
THE PROCEDURE TO INCREASE THE SHARE CAPITAL
- 1.Call a board meeting to take the approval of the board to increase authorized share capital.
- 2.Issue notice to the members of the company for calling a extra ordinary general meeting.
- 3.A Special Resolution must be passed in the meeting for increasing the Authorized Capital.
- 4.File MGT-14 within 30 days from the date of passing Special Resolution.
- 5.Make alteration in MOA and Submit form SH-7 to the Registrar.
- 6.Issue and allot shares to the shareholders of the company within 60 days of depositing the application amount.