Change Authorized Share Capital
Know about an Increase in Authorized Share Capital
The share capital is part of company’s capital which is raised through issue of shares. A company may raise capital only to the extent of the authorized capital mentioned in the company. To increase the capital raising capacity, the authorized capital can also be increased any time after incorporation by payment of additional fee and stamp duty.
A company can issues shares only to the extent of authorized capital. Hence, it determines the number of shares a company can issue which is mentioned in the Capital Clause of MoA. In order to increase capital raising capacity, it has to increase the authorized capital first. To alter authorized capital clause, the company need to conduct a meeting of Board and Member that is followed by application to MCA.
Benefits of increasing authorized capital
Allow further issue of capital
As said, the company cannot raise capital beyond the amount prescribed in the MoA. Therefore, if the need arises to increase the paid-up capital, first authorized capital must be increased.
Increase in borrowing capacity
Increase in internal funding capacity supports the borrowing capacity of the company. Higher the capital, higher the net worth and so the borrowing capacity.
Documents required to increase authorised capital
- DSC of one of authorised director to be provided
- A copy of latest amended MoA and AoA of the company
- Certificate of Incorporation of company to be provided
- Copy of PAN card of the company to be provided