Share capital is a major source of funding for the companies. There can be various reasons for increase in authorised share capital of the company such as company may requires more funds for diversifying itself and its paid up capital is already at par with its authorised capital. In such situations companies are required to increase its authorised capital before increasing its paid up capital.
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1. Preparation of Board Meeting & General Meeting documents for increase in authorised share capital;
2. Preparation of documents for attachment in e-forms;
3. Preparation of e-forms;
4. Arranging for Certification of e-forms;
5. Resubmission of e-forms, if any.
A company may need to increase the authorized share capital before it is issuing new equity shares and increasing the paid-up capital. As authorized share capital is the total value of the shares a company can issue. The paid-up capital is the total value of the shares of the company that have been issued.
At the Board Meeting, pass a Board Resolution to call for an Extraordinary General Meeting and issue notice pursuant to the provision of Section 101 of the Act, where the altered clause on authorised capital in the Memorandum of Association can be presented for approval by passing an Ordinary Resolution.
Unless a special resolution, as authorised by the articles, is passed for reduction of share capital, a company cannot effect share capital reduction.
It is the amount of money for which shares of the Company were issued to the shareholders and payment was made by the shareholders. At any point of time, paid-up capital will be less than or equal to authorised share capital and the Company cannot issue shares beyond the authorised share capital of the Company.
Form SH-7 is required to be file for Increase in Authorized Share Capital.