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Share capital represents the portion of a company’s capital raised through the issuance of shares. A company can issue shares only up to the limit of its authorized capital, as specified in the Capital Clause of its Memorandum of Association (MoA).
To increase its capital-raising capacity, a company must first increase its authorized capital. This can be done at any time after incorporation by paying the required stamp duty and additional fees. The process involves conducting Board and Shareholders’ meetings to approve the change, followed by filing an application with the Ministry of Corporate Affairs (MCA) to amend the Capital Clause accordingly.
As mentioned, a company cannot raise capital beyond the limit specified in its MoA. Therefore, if there is a need to increase the paid-up capital, the authorized capital must be increased first.
An increase in internal funding capacity enhances the company’s ability to borrow. The higher the capital, the greater the net worth—resulting in improved borrowing capacity.
DSC of one of authorised director to be provided
A copy of latest amended MoA and AoA of the company
Certificate of Incorporation of company to be provided
Copy of PAN card of the company to be provided
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It is the maximum amount of capital a company may raise
It is that part of authorised capital, which is issued to raise capital
It is that part of issued capital, which is subscribed to be paid by the shareholders
It is that part of capital, which is subscribed and paid to company by the shareholders
The increase in capital requires the following approvals:
Consent of the Board of Directors;
Consent of the company’s members; and
Approval from the concerned Registrar of Companies (RoC).
Yes, the total authorized and paid-up capital is displayed on the Master Data of the company on the MCA portal.
The government fee for filing any e-form with the MCA is based on the company’s authorized capital. As the authorized capital increases, the filing fee also rises, though only by a nominal amount.
Yes, the package cost also includes the increase in paid-up capital of the company, but not the transfer of shares.
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