Share Capital Increase

Authorised Capital Increase

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.

As per section 64 of the Companies Act, 2013, where a company alters its share capital for increase in authorized share capital in accordance with sub-section (1) of section 61, the company shall file a notice in the prescribed form with the Registrar within a period of 30 days of along with a copy of altered Memorandum. Company has to make sure that its Articles of Association contain a provision authorizing it to increase its authorized capital, otherwise company has to take steps for alteration of its AOA in accordance with the provision of Section 14 of the Companies Act, 2013, so as to insert the clause enabling increase in the Authorized share capital of the Company.

Company can increase its Authorized Share Capital, only if it is authorized by its Articles of Association and after obtaining approval of members by ordinary resolution. [Section 61(1)]If such authority is not provided for in the Articles of Association, then the provisions in AoA has to be amended to include provisions authorising the company to increase its share capital. Such amendment could be done by passing of Special Resolution.
In less than 30 days of the resolution being passed, a company must file eForm SH-7 and eForm MGT – 14 along with the prescribed fees with the Registrar.The form is to be filed on the MCA portal, with the following details:

• Details of the company COI, MOA, AOA)
• Purpose concerning which the form is being filed.
• Date of dispatch of the notice.
• Date of passing the resolution.
• Details regarding the resolution.
• Digital Signatures and DINs wherever necessary.