INCREASE OF AUTHORISED CAPITAL

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2010 PLEASE TELL ME DETAIL PROCEDURE ABOUT INCREASE OF AUTHORISED CAPITAL.

CA Sanat Pyne

CA Sanat Pyne (Expert)
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27 July 2010 Procedure For Alteration Of Share Capital Including
Increase Of Authorised Share Capital
Act: The Companies Act, 1956
Relevant Section: 31, 40 and 94(1)
1. Preliminary
I) The procedure for alteration of share capital
including increase of authorised share capital
should not contravene the provisions of Section 31
, Section 40 , Section 94(1) of The Companies Act,
1956.
II) The memorandum of every company having a
share capital must state the authorised share capital
with which the company is incorporated.
III) A limited company having a share capital, may,
only if so authorised by its articles, alter its share
capital in any of the following ways:-
a. increase its share capital by issuing new
shares;
b. consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
c. convert all or any of its fully paid up shares
into stock, and reconvert that stock into fully
paid up shares of any denomination;
d. sub-divide its shares, or any of them, into
shares of smaller amount than is fixed by the
memorandum, so that the proportion between
the amount paid and the amount, if any, unpaid
on each reduced share shall be the same as it
was in the case of the share from which the
reduced share is derived;
e. cancel shares which, at the date of the passing
of the resolution in that behalf, have not been
taken or agreed to be taken by any person, and
diminish the amount of its share capital by the
amount of the shares so cancelled.
IV) If articles do not contain an express provision for
alteration, first take necessary steps to amend the
articles so as to insert a suitable provision therein.
V) Convene a Board Meeting for the purpose of
passing resolution for the alteration of share
capital.
2. Application
I) At the Board meeting, the given decisions must be
taken:-
a. approving the proposal for alteration of share
capital and consequential alteration of the
memorandum;
b. convening a general meeting for passing an
ordinary resolution in terms of section 94 and a
special resolution if the alteration of share capital calls
for alteration of articles;
c. fixing a date, place and time of the meeting and to
approve the draft notice of the general meeting and
explanatory statement; and
d. authorising a Company Secretary (or a director or
other officer) of the company to issue the notice to
the members.
II) In the case of listed company, send 3 copies of the notice
of the general meeting to all the Stock Exchanges on
which the company's securities are listed, at the same time
when notice is sent to the members.
III) Convene a General Meeting to pass a resolution
ordinary/special resolution for the alteration of share
capital and the memorandum and articles of the company.
IV) Get the FORM NO. 5 duly stamped or franked from the
concerned Stamp authority for the stamp duty paid for
increase in the authorised share capital, in accordance with
the Stamp Act of the State in which the registered office
of the company is situated.
3. Filing And Fees
I) File FORM NO. 23 with Registrar of Companies
alongwith the requisite filing fees, alongwith the certified
copy of the a special resolution and the explanatory
statement passed at the general meeting, within 30 day of
the conclusion of the meeting.
II) File FORM NO. 5, duly stamped, with Registrar of
Companies alongwith the requisite filing fees, in respect
of increase of the authorised share capital alongwith given
documents
a. certified copy of the special resolution passed at the
general meeting; and
b. demand draft or challan for the fees paid on the
increase of the authorised share capital and the normal
filing fee.

Ankur Garg

Ankur Garg (Expert)
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27 July 2010 Hi,

Increase in AC involves alteration in capital clause of MOA u/s 94.

Procedure:

1. Simply hold a board meeting and discuss the agenda.

2. Fix the date of general meeting (GM) and approve the notice of GM.

3. Dispatch notice of GM to all shareholders. Refer section 171

4. Hold GM on due date and pass an ordinary resolution for increase in AC as desired by section 94.

5. File form 5 with ROC within 30 days of GM for increase

6. No need to file form 23.

During the entire process form 23 would be required only if you have to alter your Article.

Kindly revert if there is any doubt.

Regards

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