Increase of authorized capital

This query is : Resolved

Kaushik Vinod (Querist)
Follow

09 January 2014 Dear Experts,

Can we increase our capital from 100000 to 200000 OR it need to be increased to straight to 200000.
Please confirm the same..

Thanks

CS Adnan Shaikh

CS Adnan Shaikh (Expert)
Follow

09 January 2014 Your query is not clear. Which capital are you talking - Authorized or Paid up?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

01 August 2024 When increasing the authorized share capital of a company, you can increase it incrementally or directly to the desired amount, depending on the company's requirements and strategic plans. Here's a detailed explanation:

### **Increasing Authorized Share Capital**

1. **Incremental Increase:**
- You can increase the authorized capital in stages. For example, you can first increase the authorized capital from ₹1,00,000 to ₹1,50,000, and then at a later stage, increase it from ₹1,50,000 to ₹2,00,000.
- Each incremental increase requires passing the necessary resolutions, updating the Memorandum of Association (MOA), and filing the relevant forms with the Registrar of Companies (ROC) for each increase.

2. **Direct Increase:**
- You can also increase the authorized capital directly from ₹1,00,000 to ₹2,00,000 in one go.
- This approach involves passing a special resolution, updating the MOA to reflect the new capital, and filing the necessary forms with the ROC for the direct increase.

### **Steps for Increasing Authorized Capital**

1. **Pass a Special Resolution:**
- Convene a General Meeting (AGM or EGM) and pass a special resolution to approve the increase in authorized capital. The resolution should specify the new authorized capital.

2. **Alter the MOA:**
- Modify Clause V of the MOA to reflect the new authorized capital. If you are increasing the capital incrementally, make the necessary changes in the MOA for each increase.

3. **File with the ROC:**
- File Form MGT-14 with the ROC, attaching a copy of the special resolution and the altered MOA. This needs to be done within 30 days of passing the special resolution.

4. **Update the Company Records:**
- Ensure that the company's statutory books and records reflect the new authorized capital.

### **Regulatory Compliance**

- Ensure that the increase in capital complies with the provisions of the Companies Act, 2013, and the company's Articles of Association (AOA).
- The increase in capital must be within the limits allowed by the company's AOA, or if required, the AOA must be amended accordingly.

### **Summary**

- **You can increase the authorized capital in stages** (incrementally) or in a single step (directly to ₹2,00,000).
- **Each method requires proper documentation** and filing with the ROC to ensure compliance with legal requirements.

By following the appropriate procedure, you can manage the increase in authorized capital in a manner that aligns with the company's strategic and financial needs.

Upgrade to CAclubindia Pro. Subscribe Now!