Authorized Capital Increase

A company's authorized share capital is the maximum amount of capital that a company can raise by issuing shares. When a company needs to raise additional funds, it may need to increase its authorized share capital.   

Here's a general process to increase authorized share capital:

1. Board Resolution:

   • The company's board of directors must pass a resolution to increase the authorized share capital.
   • The resolution should specify the amount of increase and the type of shares to be issued (e.g., equity shares, preference shares).

2. Special Resolution:

   • A special resolution needs to be passed by the shareholders in a general meeting to approve the increase in authorized share capital.
   • A special resolution requires a majority of at least three-fourths of the voting rights of the shareholders present and voting at the general meeting.

3. File Necessary Forms:

   • Form MGT-14: File this form with the Registrar of Companies (RoC) to register the special resolution passed at the general meeting.
   • Form INC-24: File this form with the RoC to seek approval from the Central Government, if required.

4. Obtain Government Approval (if required):

   • For certain types of amendments, such as changes to the company's capital structure or objects clause, the Central Government's approval may be required.

5. File for Certificate of Incorporation:

   • Once the necessary approvals are obtained, file the required documents to obtain a new Certificate of Incorporation with the amended Memorandum of Association (MoA).   
      

6. Update Records:

   • Update all official records, including the company's register of members, share certificates, and other relevant documents.
   • Notify stakeholders, such as shareholders, creditors, and tax authorities, about the increase in authorized share capital.   
      

Important Considerations:

• Legal Implications: Consult with a legal professional to ensure compliance with all relevant laws and regulations.
• Tax Implications: Consider the potential tax implications of the increase in authorized share capital, especially stamp duty and other taxes.
• Financial Implications: Assess the financial implications of the increase, such as the impact on the company's capital structure and future fundraising plans.
• Investor Relations: Communicate the reasons for the increase in authorized share capital to investors and address any concerns or questions.

By following these steps and seeking professional advice, you can successfully increase your company's authorized share capital.