What is Authorized Share Capital?
Authorized share capital is basically an amount of initial capital with which company is registered with Registrar of Companies (ROC) and is also the maximum capital amount which company can raise through the issue of shares to its shareholders and not beyond this amount.
Need to Increase authorized share capital
During the course of business operations, company requires more funds to expand its business or to meet to business expenditures, which is not possible without increase in authorized share capital of that company.Provision regarding increase in authorized share capital should be mentioned in Articles of Association (AOA) and if it is not there, then AOA required to be altered.
Procedure for Increase in authorized share capital
Every company intending to increase its authorized share capital requires to follow the procedure, as
- Firstly, AOA should contain increase in share capital, if not then alter it.
- Director's approval needs to be taken in Board meeting followed by convening General Meeting for members to take their approval also.
- Form prescribed for increase in authorized share capital needs to be filed to Registrar of Companies (ROC) along with all necessary attachments.