Increase in Capital
INCREASE IN SHARE CAPITAL
“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. The authorised share capital is the maximum amount of share capital that a company can issue to its members/ shareholders. Generally, the companies registered with a small authorised capital and increased as per the requirements or conditions imposed by the lender/investors, customers (particularly the government companies and large corporates where the capital and net worth of the suppliers are prescribed and when the company wants to issue the bonus shares). The Companies Act 2013 allows the companies to alter its authorised share capital with certain procedures which are governed by Section 61-64 of the Act along with Section 13 and 14 of the act which governs the alterations to the Chartered Documents being the Memorandum of Association and Articles Of Association of the company. Once the authorised share capital is increased, new shares can be issued to existing or new stakeholders and money raised shall be deposited in company’s bank account. It is always advisable to have higher authorised share capital, which may become paid-up share capital as and when required basis.
• To increase the authorise share capital company needs to be passed the ordinary resolution in the meeting of the members
• Authorise board to act as authorise person for doing the all kind of act and deeds and submitting the forms with government
• Alteration of MOA due to change in authorised capital of company
• After completion of process necessary documents has to be submitted with the government
• Good source of fund infusion for the company
• It reflects the Company’s strategic decision to expand its business in the market
• It reflects the size of a company and consequently greater chances to receive funding
• Greater flexibility for finance expansion of the company
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