Increase Authorised/Paid Up Capital

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Overview
Required Documents
Benefits
Process
FAQs

Overview

Increasing authorised capital or paid up capital is a common requirement for growing companies in India. As a business expands, it may need additional funds to support operations, take up larger projects, bring in new investors, or improve its financial position. Under the provisions of the Ministry of Corporate Affairs and the Companies Act, 2013, companies can legally increase their capital by following the prescribed procedure.

Authorised capital refers to the maximum amount of share capital that a company is legally permitted to issue as per its Memorandum of Association. If a company wishes to issue more shares than the existing authorised capital, it must first increase the authorised capital by altering the capital clause of the Memorandum of Association. This requires approval from shareholders and filing of Form SH 7 with the Registrar of Companies.

Paid up capital, on the other hand, is the amount of money actually received by the company from shareholders in exchange for shares. A company can increase its paid up capital by issuing fresh shares to existing shareholders or new investors. For this purpose, the company needs to comply with provisions related to allotment of shares and file Form PAS 3 with the Registrar of Companies.

Proper compliance is very important while increasing authorised or paid up capital. Non filing or incorrect filing may lead to penalties and legal complications. BizGlobal assists companies in drafting resolutions, preparing required documents, filing SH 7 and PAS 3 forms, updating Memorandum and Articles of Association, and ensuring smooth approval from the Registrar of Companies so that your capital increase process is completed without delay or errors.

Required Documents

REQUIRED DOCUMENTS

• Memorandum of Association and Articles of Association
• Board Resolution approving increase in capital
• Shareholders Resolution in General Meeting
• Notice of General Meeting with Explanatory Statement
• Updated shareholding pattern
• Identity and address proof of new shareholders if applicable
• Valuation report if shares are issued at premium
• Digital Signature Certificate of directors
• PAN of company

Advantage

Improved Business Expansion

Increasing capital allows the company to invest in infrastructure, manpower, marketing and expansion activities. It strengthens the financial capacity of the company to take up bigger projects and inc... View More

Attract New Investors

Higher authorised capital enables the company to issue additional shares to new investors. This helps in bringing strategic partners, venture capital or private equity funding into the business.

Stronger Financial Position

An increase in paid up capital improves the net worth of the company. This enhances the credibility of the company in front of banks, financial institutions and vendors.

Better Loan Eligibility

Banks and NBFCs consider paid up capital while evaluating loan applications. A higher capital base increases trust and improves eligibility for business loans and credit facilities.

Compliance with Investment Requirements

In certain sectors, minimum paid up capital is mandatory. Increasing capital ensures compliance with sector specific regulations and licensing requirements.

Ownership Structuring

Capital increase allows restructuring of shareholding pattern. Companies can allocate shares to promoters, investors or employees as per strategic requirements.

Business Valuation Growth

A higher capital structure can positively impact company valuation and investor perception, especially during funding rounds or mergers.

Increase Authorised/Paid Up Capital

Board Meeting

A Board Meeting is conducted to approve the proposal for increase in authorised or paid up capital and to call an Extraordinary General Meeting. Notice of meeting is issued as per the Companies Act, 2013.

Shareholders Approval

An Ordinary Resolution is passed in the General Meeting for increasing authorised capital. For alteration of MOA, approval is mandatory. The capital clause of MOA is amended accordingly.

ROC Filing

Form SH 7 is filed for increase in authorised capital. For allotment of shares and increase in paid up capital, Form PAS 3 is filed with the Registrar of Companies along with required attachments.

Share Allotment and Update Records

Shares are allotted to subscribers. Share certificates are issued and statutory registers are updated. The company’s capital structure is updated in MCA records.