WHAT IS AUTHORIZED SHARE CAPITAL?

Benefits of Increasing Authorized Share Capital 

1. Raise Additional Funds: Issue new shares to attract investors and raise capital for expansion, acquisitions, or debt repayment. 
2. Enhance Credibility: A higher authorized capital signifies a company's potential for growth and attracts potential investors. 
3. Improved Flexibility: Provides the option to issue different classes of shares (e.g., preference shares) for future funding needs. 
4. Simplified Future Fundraising: Avoids the need for frequent amendments to the Memorandum of Association (MOA) for future capital increases. 

Process for Increasing Authorized Share Capital 

1. Board Meeting: Convene a board meeting and obtain approval from directors for the increase. 
2. Extraordinary General Meeting (EGM): Conduct an EGM to obtain shareholder approval through an ordinary resolution. There might be a need to amend the Articles of Association (AoA) if they don't have a clause allowing capital increase. 
3. Form SH-7 Filing: File Form SH-7 with the Registrar of Companies (ROC) within 30 days of passing the resolution, along with the prescribed fees. 
4. MOA Update: Update the company's MOA to reflect the increased authorized capital. 

Drawbacks to Consider 

1. Dilution of Existing Shareholder Ownership: Issuing new shares can dilute the ownership percentage of existing shareholders. 
2. Increased Compliance: Companies with higher authorized capital might face increased compliance requirements. 
3. Cost of Process: There are associated costs for legal drafting, filing fees, and professional help. 

Documents Required 

1. Copy of the company's MOA (current and amended) 
2. Copy of the AoA (current and amended, if applicable) 
3. Copy of the board resolution approving the increase 
4. Copy of the EGM resolution approving the increase 

Eligibility 

• Any company with share capital can increase its authorized capital. 
• The AoA should allow for an increase in authorized capital, or a provision needs to be added through amendment. 

Checklist for Increasing Authorized Share Capital 

1. Schedule a board meeting to discuss and approve the increase. 
2. Draft a notice for the EGM clearly outlining the proposed increase. 
3. Conduct the EGM and obtain shareholder approval. 
4. Prepare the necessary documents for filing with the ROC. 
5. File Form SH-7 with the ROC and pay the prescribed fees. 
6. Update the company's MOA to reflect the increased authorized capital. 

How can 24eFiling help me increase my authorized share capital? 

24eFiling provides a seamless and efficient way to increase your authorized share capital. We offer: 

• Expert guidance and support throughout the process. 
• Assistance with drafting resolutions and legal documents. 
• Online filing of Form SH-7 with the ROC. 
• Cost-effective and transparent pricing.