Tuesday, 31 January 2012

Procedure of Increase in Authorized Capital

Increase in authorized capital is considered as a major event as it implies increasing the upper limit of a company to raise capital through shares. The Company Law Compliances in this regard includes the following:
Meetings to be held:
  • A board meeting is to be convened to discuss the agenda and fix general meeting date for passing ordinary resolution of shareholders.
  • Convene general meeting and pass ordinary resolution. Special resolution to be passed in case of alteration of MOA or AOA.
Alteration in MOA and AOA:
If the Memorandum of Association (MOA) and the Articles of Association (AOA) does not contain a clause permitting the company to raise its share capital then MOA and AOA is to be altered by filing E-Form 23 with an explanatory statement within 30 days of passing the resolution.
Forms to be filed with Ministry of Corporate Affairs:
File E-Form 5 with ROC (Registrar of Companies) within 30 days and accordingly the Registrar of Companies will make necessary changes in the Company’s Memorandum & Articles of Association.
Documents / Signatures to be attached:
  • All the E – Forms must be digitally signed by the managing director or director or manager of the company.
  • True Copy of certified MOA & AOA to be attached with e-form 5 after necessary alteration
  • Demand Draft in favour of Registrar of Companies, for the requisite filling fees.
  • The FORM NO. 5 should be duly stamped from the concerned Stamp authority in accordance with the Stamp Act of the State in which the registered office of the company is situated.

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