INCREASE IN AUTHORISED CAPITAL

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INCREASE IN AUTHORISED CAPITAL

To do this, you need to have the capital clause of the Memorandum of Association amended by passing a special resolution of the board.

INCREASE IN AUTHORISED CAPITAL

The maximum number of shares a private limited company can issue is decided by its authorised capital. Most start-ups start their journey with the minimum authorised capital of Rs. 1 lakh, but this is too little as the business grows. To issue new shares or raise the capital a company is authorised to raise, the capital clause of the Memorandum of Association needs to be amended by passing a special resolution of the board. If, at this point, you may also need shares to be issued to existing promoters or new shareholders.

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To Existing Promoters

If you are increasing the authorised capital and issuing new shares to existing promoters, a board meeting needs to be called and Form PAS-3 needs to be filed with the Registrar of Companies (RoC), intimating the allotment of shares.

To New Shareholders

Issuing shares to new shareholders is a complicated procedure, necessitating a valuation report from a chartered accountant.