Authorised and Paid-up Share Capital Increase

[Jyoti Joshi]

Dear All,

Please tell me Procedure for Increase in Authorised and Paid-up Share Capital as per Companies Act, 2013.

Also provide me the formats for the same.

I guess SH-7 needs to be filed to Authorised and PAS-3 for Paid-up.

Correct me If I am wrong.

 

 

Regards,

Jyoti

[Ajit Danole]

Increase in Authorised Share Capital of a Private Limited Company

 

Key Provisions: -

 

Section 2 (8) of the Companies Act, 2013: - “authorised capital” or “nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company

 

Section 13 (1) of the Companies Act, 2013: - Save as provided in section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum

 

Section 13 (6) of the Companies Act, 2013 read with Section 117 (1) (3)  and Rule 24 of Companies (Management and Administration) Rules, 2014: - Save as provided in section 64, a company shall, in relation to any alteration of its memorandum, file with the Registrar - (a) the special resolution passed by the company under sub-section (1) in form MGT-14, within a period of thirty days of passing of special resolution

 

Section 13 (10) of the Companies Act, 2013: - No alteration made under this section shall have any effect until it has been registered in accordance with the provisions of this section

 

Section 61 (1) (a) of the Companies Act, 2013: - A limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting to increase its authorised share capital by such amount as it thinks expedient

 

Section 64 (1) of the Companies Act, 2013, read with Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014 : - Where a Company increases its authorised share capital, the Company shall file a notice with the Registrar of Companies in form SH-7, within a period of thirty days of increase along with an altered memorandum

 

Section 118 (10) of the Companies Act, 2013: Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government

 

 

 

 

 

 

 

Procedure:  -

1.                  Check whether the company is authorised by its Articles to alter its memorandum to increase its authorised share capital.

 

2.                  Check whether any article of the Articles of Association is also required to be altered (e.g. specific mention of the Authorised Capital in AoA)

 

3.                  Hold a meeting of the Board of Directors – Board Meeting

·         Notice of Board Meeting - not less than 7 days notice in writing to every director at his address registered with the Company, by hand delivery, by post or by electronic means

·         Agenda –

(1)   Approval of increase in authorised capital, subject to the approval of the members in General Meeting

(2)   Approval of alteration of MoA, subject to the approval of the members in General Meeting

(3)   Approval of alteration of AoA, subject to the approval of the members in General Meeting (if required)

(4)   Approval of notice convening General Meeting

(5)   Authority to director to digitally sign e form SH-7 and e form MGT-14, subject to passing of resolution by members for increase in authorised capital in General Meeting

·         Quorum – one third of total strength or two directors, whichever is higher

·         Attendance Register – Maintain an attendance register of board meetings, arrange signatures of directors who attended the board meeting

·         Hold the meeting on specified date and pass the resolutions as specified in the agenda above

·         Prepare minutes of the board meeting and keep the same in the minutes book after numbering, dating and signatures of the chairman of the meeting

 

4.                  Notice of General Meeting and Explanatory Statement

·         Notice of General Meeting – 21 clear days notice, in writing or through electronic means to every member, auditor and every director of the Company

·         Contents of Notice – Place, date, day, hour of meeting and a statement of business to be transacted at the meeting (agenda) and a statement setting out material facts concerning each item of special business (explanatory statement)

·         Agenda (special Resolutions)

(1)   Approval of increase in authorised capital

(2)   Approval of alteration of MoA

(3)   Approval of alteration of AoA (if required)

5.                  Hold a meeting of the members of the Company – General Meeting

·         Quorum – two members, personally present

·         Attendance Register – Maintain an attendance register of general meetings, arrange signatures of persons, who attended the meeting

·         Hold the meeting on specified date and pass the resolutions as specified in the agenda above

·         Prepare minutes of the general meeting and keep the same in the minutes book after numbering, dating and signatures of the chairman of the meeting

 

6.                  Upload e form SH-7 and e form MGT-14 on MCA portal within 30 days of increase in authorised share capital, after online payment of applicable fees, duties, etc

 

7.                  Ensure the approval of e form SH-7 and MGT-14 by ROC