Authorized Capital Increase
Increase Your Authorized Capital with OSBS Accounting Solutions Private Limited
Authorized capital refers to the maximum amount of share capital a company is authorized to issue to shareholders, as per its Memorandum of Association (MOA). Sometimes, a company may require more capital to fund its operations, expansion, or new business ventures. In such cases, the company can increase its authorized capital.
What is Authorized Capital Increase?
An Authorized Capital Increase is the process by which a company increases its maximum limit of share capital, allowing it to issue more shares. The increase in authorized capital does not mean that the company has issued the increased shares immediately. It only expands the potential for future share issuance.
Why Should a Company Increase its Authorized Capital?
Raising Funds for Expansion: If the company needs additional capital to fund its expansion, projects, or acquisitions, it may decide to increase the authorized capital.
Attracting Investors: Increasing authorized capital makes the company more appealing to potential investors by demonstrating the company’s capability to issue more shares in the future.
Flexibility in Issuing Shares: A company may want to increase its authorized capital to provide flexibility in issuing shares as and when required.
Improved Business Operations: Companies seeking to improve their working capital or operational efficiency may require an increase in their authorized capital to meet business demands.
Steps for Authorized Capital Increase
Board Resolution: The first step is for the company’s board of directors to pass a resolution to increase the authorized capital. This is typically done in a board meeting.
Special Resolution: A special resolution must be passed by the shareholders at a general meeting (either AGM or SGM) to approve the increase in authorized capital.
Amendment in MOA: The Memorandum of Association (MOA) of the company must be amended to reflect the increase in the authorized capital.
Filing with MCA: Once the increase is approved, the company must file the amended MOA and a copy of the special resolution with the Ministry of Corporate Affairs (MCA) through Form MGT-14.
Payment of Fees: The company must pay any applicable government fees based on the increase in authorized capital.
Approval from MCA: After the filing, the MCA will approve the increase in the authorized capital, and the company will receive updated records reflecting the change.
Documents Required for Authorized Capital Increase
Board Resolution: The resolution passed by the board of directors approving the increase.
Special Resolution: The resolution passed by the shareholders approving the increase.
Amended MOA: A copy of the amended Memorandum of Association reflecting the increase in authorized capital.
Form MGT-14: The form used for filing the special resolution with the MCA.
Fee Payment Receipt: Proof of payment of the applicable fees for the increase in authorized capital.
Other Supporting Documents: Any additional documents requested by the MCA, depending on the nature of the company or its business.
Benefits of Increasing Authorized Capital
Enhanced Financial Capacity: By increasing authorized capital, the company can boost its financial standing, making it capable of supporting new business ventures or operations.
Attracting Investors and Stakeholders: A higher authorized capital can make the company more attractive to investors who may want to invest in the company’s future growth.
Future Fund Raising Flexibility: A company with a higher authorized capital has more flexibility to raise funds in the future by issuing additional shares.
Improved Credit Rating: Companies with higher authorized capital may have better access to financing from banks and financial institutions, as it reflects a stronger financial position.
Common Reasons for Increasing Authorized Capital
Funding New Business Opportunities: When a company wants to raise more capital to fund new opportunities, an increase in authorized capital may be required.
Mergers and Acquisitions: In cases of mergers, acquisitions, or takeovers, a company may increase its authorized capital to accommodate new shares.
Increased Shareholder Demand: If there is a demand from shareholders to purchase more shares, increasing the authorized capital can help meet that demand.
Business Expansion: To finance business expansion, companies may increase their authorized capital to provide sufficient resources.
Why Choose OSBS Accounting Solutions for Authorized Capital Increase?
Expert Guidance: Our team at OSBS Accounting Solutions provides expert assistance to help you navigate the process of increasing your authorized capital.
Compliance with Regulations: We ensure that your increase in authorized capital complies with the latest provisions under the Companies Act, 2013, and other relevant regulations.
Timely Filing: We handle the filing of all required forms with the Ministry of Corporate Affairs (MCA) to ensure timely approval of the authorized capital increase.
End-to-End Support: From drafting resolutions to submitting the final documents, we manage the entire process for you efficiently and hassle-free.
Affordable Services: We offer transparent and competitive pricing for our services, ensuring you get the best value for your investment.
Contact OSBS Accounting Solutions today to increase your authorized capital and support the growth of your business.
