Why company increase authorised share capital?
People usually ask, “When does the capital of a company increase?” This usually happens to a company any time that it decides to expand its operations. How company increase share capital? This process involves the company changing its bylaws. In addition, they will need to submit the required documents to the ROC (Registrar Of Companies). This is how to increase capital of company. When the company has been able to increase its authorised capital, this means that it can issue additional shares to the shareholders.
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When does the capital of a company increase?
The capital of a company usually increase after the board of directors of the company have given their approval. A general meeting is held and a resolution (shareholder approval) is passed by the directors. As soon as all necessary procedures are completed, the records of the Company Registration will be updated. This will then show an increase in the authorized capital.
Why company increase authorised share capital?
Why company increase authorised share capital? When companies do this, there
are a lot of benefits. These include:
- Their ability to give out additional shares
- They can raise the capital to invest in new businesses.
- They can easily acquire more assets
- Meet all other financial needs and obligations.
Companies Act 2013: Important sections for increase authorised capital
- Section 64: Notice to Registrar for alteration of share capital
- Section 13: Alteration of memorandum
- Section 61: Power of company to alter its share capital
Important forms that you need to increase company share capital
- Form INC-28: This is a form needed for filing a notice to change the articles that relate to increasing the authorized capital of a company through the Registrar Of Companies.
- Form MGT-14: It is used to file all resolutions that a company has passed. It is submitted to the Registrar Of Companies and used to change the share capital of a company.
- Form SH-7: It is used by a company to file returns for an increase in the authorized share capital of a company. This is done through the Registrar Of Companies.
Frequently Asked Questions
This is the highest amount of shares that shareholders can get from the company.
If applicable, you will need two forms – the eForm MGT – 14 and the eForm SH-7 to file for an increase in share capital.
All applications with the forms should be submitted to the ROC within 30 days.
There could be legal actions and penalties for late submissions.
As soon as there is an approval and the resolution is based during the Extraordinary General Meeting (EGM).