Documents Required For Authorized Capital Increase in India

A company may need to increase its authorized capital when it plans to issue additional shares to existing or new investors. Before increasing the authorized share capital, the company must obtain the necessary approvals and file the prescribed forms with the Registrar of Companies (ROC). Submitting the correct documents ensures smooth processing and compliance with the Companies Act, 2013.

What is Authorized Capital?

Authorized capital, also known as authorized share capital or nominal capital, is the maximum amount of share capital that a company is permitted to issue as specified in its Memorandum of Association (MOA). If a company intends to issue shares beyond this limit, it must first increase its authorized capital.

Why is Increasing Authorized Capital Necessary?

A company may increase its authorized capital for several reasons, including:

• Raising additional funds
• Issuing new equity shares
• Bringing in new investors
• Expanding business operations
• Complying with investment requirements

Documents Required For Authorized Capital Increase

1. Board Resolution

A certified copy of the Board Resolution approving:

• Proposal to increase authorized capital
• Calling an Extraordinary General Meeting (EGM), if applicable
• Authorization for ROC filing

2. Shareholders' Resolution

An Ordinary Resolution passed by the shareholders approving the increase in authorized capital during the general meeting.

3. Altered Memorandum of Association (MOA)

A copy of the amended Memorandum of Association reflecting the revised authorized share capital.

4. Altered Articles of Association (AOA)

If required, the Articles of Association must be amended to authorize the increase in share capital.

5. Notice of Extraordinary General Meeting (EGM)

The notice issued to shareholders along with the explanatory statement describing the proposed increase in authorized capital.

6. Minutes of the General Meeting

Certified copy of the minutes recording the approval of shareholders for increasing the authorized capital.

7. Existing Certificate of Incorporation

A copy of the company's Certificate of Incorporation issued by the Registrar of Companies.

8. PAN of the Company

Permanent Account Number (PAN) of the company for identification and ROC filing purposes.

9. Digital Signature Certificate (DSC)

A valid Digital Signature Certificate of the authorized director or company secretary for electronic filing.

10. Form SH-7

Form SH-7 must be filed with the Registrar of Companies for registering the increase in authorized share capital along with the prescribed government fee.

Additional Information Required

While filing Form SH-7, the company should provide:

• Existing authorized capital
• Revised authorized capital
• Number and class of shares
• Face value of shares
• Date of passing the shareholders' resolution

Common Mistakes to Avoid

Companies should avoid the following errors:

• Failure to amend the MOA before filing
• Incorrect calculation of authorized capital
• Non-payment of applicable ROC fees
• Missing certified resolutions
• Delay in filing Form SH-7

Conclusion

Increasing the authorized capital of a company is an important corporate compliance procedure that enables businesses to issue additional shares and raise capital. Preparing all required documents in advance helps ensure timely approval by the Registrar of Companies and avoids unnecessary delays in the filing process. The filing is generally completed through Form SH-7 as prescribed under the Companies Act, 2013.