Increase Authorized Capital
Quick Answer
Increase Authorized Capital India is a corporate action under the Companies Act, 2013, where a company raises its maximum share capital limit as stated in its Memorandum of Association. This is often needed when a company plans to issue additional shares to raise funds or accommodate business changes.
Increase Authorized Capital — detailed explanation below
Governing Act — Increase Authorized Capital India
The procedure for Increase Authorized Capital India is governed by Section 61 of the Companies Act, 2013, which allows a company to alter its memorandum to increase its authorized share capital. The alteration must be authorized by the company's articles and approved by a special resolution of shareholders. Additionally, Section 64 requires filing of the resolution and altered memorandum with the Registrar of Companies (ROC) within 30 days.
Government Department & Website for Increase Authorized Capital India
The Ministry of Corporate Affairs (MCA) is the governing body for Increase Authorized Capital India. All filings are done electronically through the MCA portal at www.mca.gov.in. The relevant forms are filed with the Registrar of Companies (ROC) having jurisdiction over the company's registered office.
Increase Authorized Capital India Application Process
The process for Increase Authorized Capital India involves the following steps:
- Board Meeting: Convene a board meeting to propose the increase and fix the date of a general meeting.
- Shareholder Approval: Pass a special resolution (75% majority) in a general meeting to amend the Memorandum of Association.
- Filing with ROC: File Form MGT-14 (resolution) and Form SH-7 (notice of increase) with the ROC within 30 days of passing the resolution.
- Payment of Fees: Pay the prescribed fee based on the increased capital slab.
- Updated Memorandum: Issue a fresh copy of the Memorandum reflecting the new authorized capital.
Key Forms Required for Increase Authorized Capital India
The key forms for Increase Authorized Capital India are:
- Form MGT-14: Filing of special resolution with the ROC.
- Form SH-7: Notice to ROC of increase in share capital.
- Altered Memorandum of Association: Updated document showing new authorized capital.
These forms are filed electronically on the MCA portal with digital signatures of directors.
Eligibility Criteria for Increase Authorized Capital India
Any company registered under the Companies Act, 2013, can apply for Increase Authorized Capital India provided:
- The company's Articles of Association permit alteration of capital.
- The company has passed a special resolution in a general meeting.
- The company has paid the requisite fee to the ROC.
- No court or tribunal order restricts such alteration.
Timeline for Increase Authorized Capital India
The timeline for Increase Authorized Capital India depends on the company's internal procedures and ROC processing. The process involves board meeting, notice period for general meeting (minimum 21 days), passing of resolution, and filing with ROC. No specific timeline is prescribed by law beyond the 30-day filing period.
Fees for Increase Authorized Capital India
The fees for Increase Authorized Capital India are prescribed by the Companies (Registration Offices and Fees) Rules, 2014. The fee is based on the amount of increase in authorized capital. Below is the fee structure:
| Amount of Increase (₹) | Fee (₹) |
|---|---|
| Up to 1,00,000 | 200 |
| 1,00,001 to 5,00,000 | 300 |
| 5,00,001 to 10,00,000 | 500 |
| 10,00,001 to 25,00,000 | 1,000 |
| 25,00,001 to 50,00,000 | 2,500 |
| Above 50,00,000 | 5,000 |
Note: Additional stamp duty may apply based on the state where the company is registered.
Frequently Asked Questions
What is Increase Authorized Capital India?
Increase Authorized Capital India refers to the process of raising the maximum share capital a company can issue, as stated in its Memorandum of Association. This is done under Section 61 of the Companies Act, 2013, and requires shareholder approval and ROC filing.
Why would a company need to increase authorized capital in India?
A company may need to increase authorized capital in India to issue new shares for fundraising, acquisitions, employee stock options, or to accommodate business changes like expansion or restructuring.
What is the procedure for Increase Authorized Capital India?
The procedure involves a board meeting, passing a special resolution in a general meeting, filing Form MGT-14 and Form SH-7 with the ROC, and paying the prescribed fee. The altered memorandum must be filed within 30 days.
What forms are required for Increase Authorized Capital India?
The key forms are Form MGT-14 (filing of special resolution) and Form SH-7 (notice of increase in share capital). Both are filed electronically on the MCA portal.
What is the fee for Increase Authorized Capital India?
The fee depends on the amount of increase. For example, an increase up to ₹1,00,000 costs ₹200, while an increase above ₹50,00,000 costs ₹5,000. Additional stamp duty may apply.
Can a private limited company increase its authorized capital in India?
Yes, a private limited company can increase its authorized capital in India by following the same procedure under the Companies Act, 2013, provided its articles permit it.
Is a special resolution required for Increase Authorized Capital India?
Yes, a special resolution (75% majority) is required to amend the Memorandum of Association for increasing authorized capital under Section 61 of the Companies Act, 2013.
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