Board Resolution for Increase in Authorised Share Capital

Authorised share capital is the amount of shares a company can issue to its shareholders. Most companies in India are incorporated with an authorised share capital of Rs.1 lakh or Rs.10 lakh. To increase the paid-up capital of a company, viz., issue more shares, the authorised capital of the company may have to be increased. The following board resolution format can be used for such increase in authorised share capital.

Difference between authorised share capital and paid-up share capital.

Board Resolution Format for Increase in Authorised Share Capital

RESOLVED that pursuant to the provisions of section 61(1)(a) of the Companies Act, 2013, and other applicable provisions, if any, the authorised share capital of the company be and is hereby increased from Rs.<Current Authorised Share Capital> divided into <Present Number of Shares Issuable> of Rs.<Face Value> each to Rs.<Proposed Authorised Share Capital> divided into <Proposed Number of Shares Issuable> of Rs.<Face Value> each. RESOLVED FURTHER that the existing Clause V of the Memorandum of Association of the Company as to share capital be and is hereby deleted and in its place the following Clause V be substituted: The authorised share capital of the company is Rs.<Proposed Authorised Share Capital> divided into <Proposed Number of Shares Issuable> of Rs.<Face Value> each. RESOLVED that pursuant to the provisions of section 14 of the Companies Act, 2013, the existing Article <Article Number> of the Artiles of Association of the Company be and is hereby deleted and in its place the following Article <Article Number> be substituted therefor: The authorised share capital of the company is Rs.<Proposed Authorised Share Capital> divided into <Proposed Number of Shares Issuable> of Rs.<Face Value> each.

Note: Before increasing the authorised capital, ensure that the Articles of Association of the Company permits an increase in the share capital of the company. If there is no provision, first alter the Articles of Association of the company by passing a Special Resolution. To increase authorised share capital, e-Form No. MGT-14 along with Explanatory Statement must be filed with ROC along with Government fee for the authorised capital increase.

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Frequently Asked Questions

Common questions about Increase Authorised Share Capital.

Increasing the authorised share capital allows a company to issue more shares to its shareholders. This is necessary if the company wants to raise additional capital by issuing new shares but has already reached the limit of its current authorised share capital.

As per the Companies Act, 2013, a company needs to pass a board resolution and amend its Memorandum of Association and Articles of Association to reflect the increased authorised share capital. The company must file e-Form MGT-14 with the Registrar of Companies (ROC) along with the necessary fees.

No, a company cannot increase its authorised share capital without amending the Memorandum of Association. The Memorandum of Association contains the details of the company's authorised share capital, and any change to it requires an amendment.

No, increasing the authorised share capital does not automatically increase the paid-up share capital. The authorised share capital is the maximum amount of capital a company can raise, while the paid-up share capital is the actual amount of capital that has been issued and paid by the shareholders.

The authorised share capital is the maximum amount of capital a company can raise by issuing shares, as stated in its Memorandum of Association. The paid-up share capital is the actual amount of capital that has been issued and paid by the shareholders.

It depends on the existing provisions in the company's Articles of Association. If the Articles already permit an increase in the authorised share capital, then no alteration is required. However, if there is no such provision, the Articles must be altered by passing a special resolution before increasing the authorised share capital.

After passing the board resolution, the company must file e-Form MGT-14 with the ROC, along with an explanatory statement and the prescribed government fees for increasing the authorised share capital.

No, there is no specific limit mentioned in the Companies Act, 2013, regarding the maximum amount by which a company can increase its authorised share capital. However, the increase should be reasonable and justified based on the company's business requirements.

No, a company cannot issue shares beyond its authorised share capital. Doing so would be a violation of the Companies Act, 2013, and the company's Memorandum of Association.

Not necessarily. Increasing the authorised share capital can be done by passing a board resolution and amending the Memorandum of Association and Articles of Association, without requiring approval from the shareholders. However, if the Articles of Association require shareholder approval for such an increase, then the company must obtain the necessary approval.