A company Needs funds for short or long term requirements. It can issue new shares and infuse more capital to increase its authorized capital. Authorized capital is the maximum no of share capital that a company can issue to its shareholders.
A company can only raise its share capital beyond what it is prescribed in its MOA (Memorandum of Association) if authorised capital. Hence, increasing authorized capital has an incremental effect on the overall company share capital.
With the increase in share capital, the company’s overall net worth also increases. This further enhances the borrowing capacity of the company.
To Existing Promoters
To increase the authorised capital and to issue new shares to existing promoters the following steps are required. A board meeting is called for all shareholders, and Form PAS-3 is filed with the Registrar of Companies (RoC) to intimate the allotment of new shares.
To New Shareholders
To issue new shares to new shareholders a valuation report is required, from a certified chartered accountant.
1. Digital Signature Certificate: A copy of a DSC from any authorized director of the company
2. Memorandum of Association: A copy of the modified or the latest version of MoA
3. Articles of Association: A copy of the modified or the latest version of AoA
4. Certificate of Incorporation: A copy of the company’s incorporation certificate.
5. PAN card: A copy of the company PAN card.
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