Compliances-Procedural

Increase in Authorised Share Capital

Drafting of resolution(s) and General Meeting Notice with Explanatory Statement - allied paperwork with filling and submission of Form(s) at an all-inclusive price, excluding Government Fees*

Complete By* : 03 Mar, 2024

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Documents Required

Certified true copy of the resolution for alteration of capital in case of increase in share capital independently by Company.

Copy of order of central government in case of increase in share capital with central Government order.

Copy of the order of the tribunal in case of increase in share capital with the Central Government.

Altered memorandum of association in case of increase in share capital independently or by order of the Central Government or increase in number of members.

Notice for General meeting

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Compliances-Procedural

Increase in Authorised Capital

Increase the Authorised Share Capital of your Company by altering the Memorandum of Association

Steps for Increase in Authorised Capital

Collect information and documents

Drafting of paperwork relating to Board Meeting

Drafting of paperwork relating to General Meeting

Filling and submission of requisite Forms

Different Types of

Share Capital

There are several different types of share capital that a company can issue to its shareholders. The specific types of share capital that a company can issue are governed by its Memorandum and Articles of Association and relevant company laws and regulations.The most common types of share capital are:

Ordinary Equity shares

Ordinary Equity shares are the most common type of share issued by a company. They represent the ownership of the company and typically carry voting rights, giving shareholders the ability to participate in key decisions affecting the company.

Preference shares

Preference shares are a type of share that typically carry certain preferential rights, such as the right to receive a fixed dividend before Equity shareholders, and the right to receive priority in the event of liquidation of the company. However, preference shareholders may not have voting rights or have limited voting rights.

Non-voting shares

Non-voting shares do not carry any voting rights and are typically issued to investors who want to invest in the company but do not want to participate in its management or decision-making.

Deferred shares

Deferred shares are a type of share that typically have limited or no voting rights and are issued to employees or management as part of their compensation package. These shares are usually subordinate to other types of shares and only receive dividends after other shareholders have been paid. A public Company or its subsidiary cannot issue such shares.

What is Authorised Share Capital

Authorised share capital is the maximum amount of share capital that a company is allowed to issue to shareholders. This figure is determined during the incorporation of a company and is specified in the company's Memorandum of Association.

 

The authorised share capital sets the limit for the total number of shares that can be issued by a company. It does not necessarily represent the actual amount of shares that the company has issued or the amount of shares that are currently outstanding. The authorised share capital can be increased or decreased by the company through a resolution passed by the shareholders.

 

Contd….

 

Contd…

The Authorised Share Capital is a key component of a company's Memorandum of Association. The Memorandum of Association is a legal document that sets out the constitution of a company, including its objectives, powers, and rules of operation.

 

The Authorised Share Capital clause in the Memorandum of Association specifies the maximum amount of share capital that the company is authorised to issue to shareholders. This figure represents the limit for the total number of shares that can be issued by the company, and it is typically a large amount to allow the company flexibility to issue additional shares in the future if needed.

 

The Authorised Share Capital clause also outlines the types of shares that the company is authorised to issue, such as Equity shares, different classes of Equity Shares,Preference shares or different classes of preference shares, and any restrictions or conditions related to their issuance. In some cases, the Memorandum of Association may also specify the minimum amount of share capital that must be subscribed by shareholders when the company is incorporated.

 

What is Capital?

Capital generally refers to financial resources or assets that a company or individual possesses, which can be used to generate income or wealth. Capital can take various forms, such as cash, property, equipment, inventory, investments, or other tangible or intangible assets.

 

In a business context, capital is often used to describe the funds or resources that a company uses to finance its operations and investments. This can include equity capital raised from investors, debt capital obtained from lenders or bondholders, or retained earnings generated by the business itself.

 

Capital is a critical component for businesses to operate and grow, as it provides the financial resources necessary to fund investments, research and development, marketing, and other activities.

 

General Meeting Notice for Increase in Authorised Share Capital

NOTICE

NOTICE is hereby given that the………….. Extra-Ordinary General Meeting of the Members of the Company will be held at the registered office of the Company at …………………… on …………….. at ………….,

 to transact the following business.  

Special Business:

 1.            Increase of Authorised Share Capital

To consider and if thought fit to pass, with or without modifications, the following resolution as an Ordinary Resolution:

 “Resolved that in accordance with Sections 4, 13 and 61 of the Companies Act, 2013 and rules made thereunder, and any other applicable law or laws, rules and regulations (including any amendments thereto or re-enactment thereof for the time being in force, shareholders approve that the authorised share capital of the Company be and is hereby increased from Rs……………../- (Rupees …………… only) to Rs…………../-(Rupees Ru……………….only) divided into 37,50,000 (.................) Equity Shares of Rs.10/- (Rupees Ten) each by creation of further ……………..(....................Only) Equity Shares of Rs…./- (Rupees ….) each.

Resolved further that in accordance with Sections 13 and 61 and any other applicable provisions of the Companies Act, 2013, Clause V of the Memorandum of Association of the Company, including the marginal notes thereto, be and is hereby deleted and be substituted with the following new Clause V:

 

“V.  The Authorised share capital of the company is Rs. …………./- (Rupees  …………..only) divided into …………….(..................) Equity Shares of Rs……/- (Rupees ….) each , with power to increase or reduce the Capital for the time being into several classes and to attach thereto respectively such preferential, deferred, qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may for the time being be provided by the Articles of Association of the Company.”

 

Resolved further that the Board of Directors be and are hereby authorised to take the necessary steps and do all such acts, deeds and things as may be necessary in this regard to give effect to this resolution.”

 

Place: Kolkata

Date:..................

For and on behalf of the Board.

 

 

…………………..

(Director/ Company Secretary)

DIN/ Mem No.: …………..

NOTES:

1. The explanatory Statement, pursuant to Section 102 of the Companies Act, 2013, with regard to the Special Business mentioned above is enclosed.

2.  A Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of himself/herself and the proxy need not be a Member. Proxies in order to be effective must be received at the Registered Office of the Company not less than forty-eight hours before the meeting.

3.   Members are requested to notify immediately and change in their addresses.

4.  Members are requested to intimate beforehand to the Company queries, if any, regarding this notice at least ten days before the meeting to enable the Management to keep the required information readily available at the meeting.

5.   Members are requested to bring their copies of the Notice of the Meeting.

6.   Route map of the venue for EGM is attached herewith.

7. ATTENDANCE WILL START AT………….. A.M

 

Route Map

 Explanatory Statement u/ s 102 of the Companies Act, 2013 Item Nos 1

The Company has an existing authorized share Capital of Rs …………/- (Rupees …………………only) consisting of the ……………shares of Rs. …../- each.

The Company had filed a petition with Hon’ble National Company Law Tribunal (NCLT) for merger of the ……………………………. with your Company. By an order dated………………., the Hon;’be NCLT has passed the merger Order w.e.f…………. This has also resulted in the Company to issue further shares to the shareholders of the Transferor Companies. Thus, to issue these shares, the Company has to increase the Authorised Share Capital of the Company from Rs ………………0/- to Rs. …………………/-

As per Section 61 of Companies Act, 2013, the alteration of the Memorandum of Association of the Company requires the approval of shareholders. The Board now seeks the approval of shareholders for the same.

None of the Directors are in any way concerned or interest in the said resolution except to the extent of their shareholdings in the Company.

Your Directors hence seek your consent for amending the provisions contained in the Memorandum of Association in the General Meeting by passing of the said resolution as an Ordinary Resolution.

 

Place: Kolkata

Date:..................

For and on behalf of the Board.

 

 

…………………..

(Director/ Company Secretary)

DIN/ Mem No.: …………..

 

Power of Limited Company to Alter its Share Capital

A Limited Company having a Share Capital may, if so authorised by its articles, alter its memorandum in its general meeting to-

 

(a) increase its authorised share capital by such amount as it thinks expedient;

 

(b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares:

 

(c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination;

 

(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, 

 

(e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

 

When a Company alters its share capital in any manner specified above, or on an order made by the Government under 62(6)(4) has the effect of increasing authorised capital of a Company; or a Company redeems any redeemable preference shares,the Company shall file a notice in E-Form SH-7 with the ROC within a period of 30 days of such alteration or increase or redemption, as the case may be, along with an altered MoA

Documents Required

  1. Certified true copy of the resolution for alteration of capital in case of increase in share capital independently by Company.
  2. Copy of order of central government in case of increase in share capital with central Government order.
  3. Copy of the order of the tribunal in case of increase in share capital with the Central Government.
  4. Altered memorandum of association in case of increase in share capital independently or by order of the Central Government or increase in number of members.
  5. Altered articles of association in case the same are altered.
  6. Working for calculations of ratios (in case of conversions) in case of increase in share capital with central government order.