Authorized Capital is the wholesome amount of shares a company can issue which may require an increment at any period of time during its run. In that case, new shares must be issued. A board and a general meeting must be commenced, ROC forms filing is required for the allotment of new shares. It’s a nominal yet important process while running a business.
The procedure of Increased Authorized Capital
- Authorization in the AOA: For the increment, the company must check if the Article of Association contains the provision to increase the capital. It is absolutely necessary for the provision to be authorized by the AOA. If it’s not the case, an alteration in article is required as per Companies Act, 2013.
- Meeting of the Board of Directors: The BoD must discuss a few things before increasing the company’s authorized capital. Such as obtaining the approval of the shareholders by arranging an EGM, and issuing a notice of the EGM along with agenda and explanatory system.
- MOA Alteration: The clause of the MOA must be altered in case of increasing the authorized capital.
- Copy of Board Resolution and EGM.
- Copy of the Explanatory Statement.
- The altered MOA.
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