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INCREASE AUTHORISED CAPITAL

Increasing the authorized capital of a company refers to the process of legally raising the maximum amount of capital that a company can issue in shares to its shareholders. This can be a strategic move for a company looking to expand its operations, finance new projects, attract investors, or meet regulatory requirements.

Here are some key points to consider about increasing authorized capital:

Shareholder Approval: Increasing authorized capital typically requires approval from the company's shareholders. This approval is obtained through a special resolution passed during a general meeting.

Board Resolution: Before seeking shareholder approval, the board of directors may need to pass a resolution recommending the increase in authorized capital.

Filing with Regulatory Authorities: Once approved by shareholders, the company must file the necessary documents and resolutions with the appropriate regulatory authority, such as the Registrar of Companies (RoC) in India.

Fees and Formalities: Companies often need to pay a fee based on the increased authorized capital. Additionally, updated Memorandum of Association (MOA) and Articles of Association (AOA) reflecting the new capital limit must be filed.

Implications for Issued Capital: Increasing authorized capital does not automatically increase the issued capital. Issued capital represents the actual shares that have been issued to shareholders. If the company wishes to issue new shares, it must follow the procedures outlined in the Companies Act and obtain shareholder approval.

Statutory Compliance: Companies must ensure they comply with all legal and regulatory requirements when increasing authorized capital. Failure to do so can result in penalties or legal issues.