Reason for increase in authorised capital
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Querist : Anonymous
Querist :
Anonymous
(Querist)
28 May 2013
How are Companies benefited by increase in their authorized capital?
28 May 2013
Banks prefer to give loan depending on the authorised capital. The ideal debt equity ratio is 2:1. So if you increase the authorised capital, you will get the loans in the above proportion. But you need to incur certain costs at the ROC for increasing the share capital.
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28 May 2013
Apart from the point mentioned above, a company can be banifitted by the following way if it increse its authorise capital:
1) It will be able to raise funds by issuing of equity capital to the extent of gap between paid up and authorised capital, subject to the applicable provisions of law;
2) It can reduce it's dependence on bank loans etc.;
1) It will be able to raise funds by issuing of equity capital to the extent of gap between paid up and authorised capital, subject to the applicable provisions of law;
2) It can reduce it's dependence on bank loans etc.;
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Querist : Anonymous
Querist :
Anonymous
(Querist)
03 June 2013
Dear Experts, Thank You for the replies.
I wanted to know practical reasons like stated by Mr. Verma. Are there any more such reasons?
I wanted to know these as I am currently doing analysis on a number of companies w.r.t. to components in their balance sheet.
I wanted to know practical reasons like stated by Mr. Verma. Are there any more such reasons?
I wanted to know these as I am currently doing analysis on a number of companies w.r.t. to components in their balance sheet.
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