Share Transfer & Increase in Capital –

Checkpoints for Increasing Authorized Capital

Every business requires additional funds over time to sustain and expand operations. While short-term financial needs can be met through loans and advances, long-term requirements often necessitate an increase in authorized capital. For Private Limited Companies, this process must comply with the Companies Act and regulatory guidelines.

What is Authorized Capital?

Authorized capital refers to the maximum share capital that a company is permitted to issue as per its Memorandum of Association (MoA). Companies may need to increase this limit to issue new shares and raise additional funds.

Authorized vs. Paid-Up Capital

A company cannot exceed its authorized capital when issuing new shares. If more funds are needed, the authorized capital must be increased first.

Key Reasons for Increasing Authorized Capital

Documents Required

Key Checkpoints for Increasing Authorized Capital

1. Review Articles of Association (AoA)

• Ensure that the AoA permits an increase in authorized capital.

• If necessary, amend the AoA as per Section 14 of the Companies Act, 2013.

2. Board Meeting & Resolution

• Convene a Board Meeting and pass a resolution to propose the increase in authorized capital.

• Schedule an Extraordinary General Meeting (EGM) to seek shareholder approval.

3. Shareholder Approval at EGM

• Issue a notice for the EGM at least 21 days in advance.

• Conduct the meeting and obtain approval through an Ordinary Resolution.

4. Regulatory Filings with Registrar of Companies (RoC)

• File Form SH-7 with the RoC within 30 days of passing the resolution.

• If applicable, file Form MGT-14 to report changes in company resolutions.

5. Stamp Duty Payment

• Complete e-stamp duty payment via the MCA portal for the increased capital amount.

6. Update Company Records

• Ensure MoA and AoA reflect the new authorized capital limit.

• Issue new shares if required.

Process Flow Chart

+----------------------------+
| Review AoA                |
+------------+---------------+
             |
             v
+----------------------------+
| Hold Board Meeting         |
+------------+---------------+
             |
             v
+----------------------------+
| Hold EGM & Pass Resolution |
+------------+---------------+
             |
             v
+----------------------------+
| File SH-7 & MGT-14 (if req.) |
+------------+---------------+
             |
             v
+----------------------------+
| Pay Stamp Duty             |
+------------+---------------+
             |
             v
+----------------------------+
| Update MoA & AoA           |
+----------------------------+

Penalties for Non-Compliance

Why Choose ClientsMaster?

ClientsMaster simplifies the process of increasing authorized capital by:

✅ Assisting in MoA & AoA amendments✅ Handling Form MGT-14 and SH-7 filings✅ Providing end-to-end expert support for a hassle-free experience

Increasing authorized capital is a crucial step for companies planning expansion or raising funds. Ensuring compliance with legal procedures safeguards the company from penalties while facilitating smooth operations.