The authorised capital of a company is the limit to which a company can raise its capital. The subscribed capital or paid-up capital can never be more than the amount of authorised capital as mentioned in the capital clause of the MOA and AOA. We help entrepreneurs to increase the limit imposed by the MOA on the capacity to raise capital. Our services are available at just Rs. 8,000/-
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Every business needs money to achieve its object; ideally, there is two kind of funding, one where the company need to return the investment along with interest, this is known as debt or loan. While another type of investment is, wherein the investor (read shareholder) puts their money in a company for a longer period, and in return is entitled to a share in the profits of the company, also known as the dividend, and expects an appreciation in the value of its investment. In a company form of business investment into the equity is limited to its authorised capital and the allotment of fresh shares are regulated regarding valuation and the first right of the existing shareholders of the company. The company have to follow provisions of its AOA and to obtain approval of the ROC while making any changes in its capital.
To decide on the new limit of the authorised capital, or say alteration of the capital clause of the MOA directors must meet in a legally convened board meeting. The notice sent to directors must contain the agenda of the meeting, and we suggest to include the proposed resolution so that the directors come prepared. We strongly recommend following the standards prescribed by ICSI in SS-1 for board meetings.
The next logical step is to seek approval of the shareholders of the company. The decision of shareholders can be taken only in a valid extraordinary general meeting. To convene an EGM, the directors must send notice to every shareholder of the company at least 21 clear days before the date of EGM. The notice of EGM must contain the agenda, draft of the proposed resolution to be passed as a special resolution.
The special resolution means a decision taken by more than 75% voting rights. The special resolution once adopted in the EGM is then filed before the ROC for their approval. The certified copy of the resolution is filed in Form -MGT-14 with the prescribed fee within 30 days of the passing of the resolution. The altered MOA and the copy of the minutes of the meeting of EGM where the special resolution is passed need to be attached to the form.
Once the approval of the shareholders is obtained with the passing of the special resolution in the EGM, the authorised director shall file an application in Form SH-7 with the concerned ROC with attachments like the copy of altered MOA & AOA, Special Resolution etc. With the approval of the SH-7, the authorised capital of the company stands increased.
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