The capital of a company is divided into units of a fixed denomination. Share refers to only such a unit. section 2 (84) of The Companies Act 2013 defines “share” means a share in the share capital of a company and includes stock.
Section 2(8) of The Companies Act 2013 defines that “Authorised capital” or “nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company. The authorised share capital is the maximum amount of share capital that a company can issue to its members/ shareholders. Generally, the companies registered with a small authorised capital and increased as per the requirements or conditions imposed by the lender/investors, customers (particularly the government companies and large corporates where the capital and net worth of the suppliers are prescribed and when the company wants to issue the bonus shares). The Companies Act 2013 allows the companies to alter its authorised share capital with certain procedures which are governed by Section 61-64 of the Act along with Section 13 and 14 of the act which governs the alterations to the Chartered Documents being the Memorandum Of Association and Articles Of Association of the company.
Share capital is a major source of funding for the companies. There can be various reasons for increase in authorised share capital of the company such as company may requires more funds for diversifying itself and its paid up capital is already at par with its authorised capital. In such situations companies are required to increase its authorised capital before increasing its paid up capital.
The authorized capital of a Company determines the number of shares a Company can issue to its shareholders. An increase in authorized capital might be required for issuing new shares and/or inducting more capital into the Company. Our professional can help you with respect to the filing and issuing of share with respect to the increase in authorized share capital of the Company.
Our team of highly qualified professionals at Ask4compliance.com can help your business to Increase in Authorised Capital of the Company as per provisions of the Companies Act, 2013.