To issue more shares or raise fresh funding, a company must increase its Authorized Capital limit. This involves amending the Capital Clause of the MOA and filing Form SH-7 with the ROC.
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Authorized Capital is the maximum amount of share capital that a company is authorized to issue to its shareholders as per its Memorandum of Association (MOA). To issue new shares beyond this limit, the company must first increase its authorized capital by paying stamp duty to the ROC.
Essential step before bringing in new investors or raising equity funding for business expansion.
Allows the company to issue fresh equity or preference shares to existing or new shareholders.
A higher capital base improves the company's financial image and creditworthiness with banks and vendors.
Prepares the company for future growth phases where capital infusion might be needed quickly.
Ensure Articles of Association (AOA) authorizes the increase in capital. If not, amend AOA first.
Convene a Board Meeting to approve the increase and fix the date for the Extra-Ordinary General Meeting (EGM).
Conduct the EGM and pass an Ordinary Resolution to increase the Authorized Capital.
File Form SH-7 with the ROC within 30 days along with the resolution and amended MOA.
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