INCREASE OF AUTHORISED CAPITAL

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Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2010 WHAT IS THE PROCEDURE TO INCREASE THE AUTHORISED CAPITAL OF A COMPANY?

CA Sanat Pyne

CA Sanat Pyne (Expert)
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08 September 2010 Procedure For Alteration Of Share Capital Including
Increase Of Authorised Share Capital
Act: The Companies Act, 1956
Relevant Section: 31, 40 and 94(1)
1. Preliminary
I) The procedure for alteration of share capital
including increase of authorised share capital
should not contravene the provisions of Section 31
, Section 40 , Section 94(1) of The Companies Act,
1956.
II) The memorandum of every company having a
share capital must state the authorised share capital
with which the company is incorporated.
III) A limited company having a share capital, may,
only if so authorised by its articles, alter its share
capital in any of the following ways:-
a. increase its share capital by issuing new
shares;
b. consolidate and divide all or any of its share
capital into shares of larger amount than its
existing shares;
c. convert all or any of its fully paid up shares
into stock, and reconvert that stock into fully
paid up shares of any denomination;
d. sub-divide its shares, or any of them, into
shares of smaller amount than is fixed by the
memorandum, so that the proportion between
the amount paid and the amount, if any, unpaid
on each reduced share shall be the same as it
was in the case of the share from which the
reduced share is derived;
e. cancel shares which, at the date of the passing
of the resolution in that behalf, have not been
taken or agreed to be taken by any person, and
diminish the amount of its share capital by the
amount of the shares so cancelled.
IV) If articles do not contain an express provision for
alteration, first take necessary steps to amend the
articles so as to insert a suitable provision therein.
V) Convene a Board Meeting for the purpose of
passing resolution for the alteration of share
capital.
2. Application
I) At the Board meeting, the given decisions must be
taken:-
a. approving the proposal for alteration of share
capital and consequential alteration of the
memorandum;
b. convening a general meeting for passing an
ordinary resolution in terms of section 94 and a
special resolution if the alteration of share capital calls
for alteration of articles;
c. fixing a date, place and time of the meeting and to
approve the draft notice of the general meeting and
explanatory statement; and
d. authorising a Company Secretary (or a director or
other officer) of the company to issue the notice to
the members.
II) In the case of listed company, send 3 copies of the notice
of the general meeting to all the Stock Exchanges on
which the company's securities are listed, at the same time
when notice is sent to the members.
III) Convene a General Meeting to pass a resolution
ordinary/special resolution for the alteration of share
capital and the memorandum and articles of the company.
IV) Get the FORM NO. 5 duly stamped or franked from the
concerned Stamp authority for the stamp duty paid for
increase in the authorised share capital, in accordance with
the Stamp Act of the State in which the registered office
of the company is situated.
3. Filing And Fees
I) File FORM NO. 23 with Registrar of Companies
alongwith the requisite filing fees, alongwith the certified
copy of the a special resolution and the explanatory
statement passed at the general meeting, within 30 day of
the conclusion of the meeting.
II) File FORM NO. 5, duly stamped, with Registrar of
Companies alongwith the requisite filing fees, in respect
of increase of the authorised share capital alongwith given
documents
a. certified copy of the special resolution passed at the
general meeting; and
b. demand draft or challan for the fees paid on the
increase of the authorised share capital and the normal
filing fee.

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CA Sanat Pyne

CA Sanat Pyne (Expert)
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08 September 2010 YOU CAN VISIT ALSO
https://www.caclubindia.com/experts/increase-of-authorised-capital-443255.asp

Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2010 thank you sir.
can you provide me the specimen resolution?

CA Sanat Pyne

CA Sanat Pyne (Expert)
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08 September 2010 For increase in authorised share capital
RESOLVED THAT pursuant to provisions of sections 94, 97 and other applicable provisions, if any, of the Companies Act, 1956, the Authorised Share Capital of the company be and is hereby increased from Rs. 5,00,000 (Rupees Five Lacs only) divided into 50,000 (Fifty Thousand) Equity Shares of Rs. 10 (Rupees Ten Only) each to Rs. 12,00,000 (Rupees Twelve Lakhs only) by creation of 70,000 (Seventy Thousand) Equity Shares of Rs. 10 (Rupees Ten only) each, with a power of company to increase, reduce or modify the capital and to divide all or any of the shares in the capital of the company, for the time being, and to classify and reclassify such shares from shares of one class into shares of other class or classes and to attach thereto respectively such preferential, deferred, qualified or other special rights, privileges, conditions or restrictions as may be determined by the company in accordance with the Articles of Association of the company and to vary, modify or abrogate any such rights, privileges, conditions or restrictions, in such manner and by such persons as may, for the time being, be permitted under the provisions of the Articles of Association of the company or legislative provisions for the time being in force in that behalf.
II. Alteration in the Clause No. V of the Memorandum
RESOLVED THAT the existing Clause V of the Memorandum of Association of the Company be altered and substituted by the following new Clause:
V: The Authorised Share Capital of the company is Rs. 12,00,000 (Rupees Twelve Lakhs only) divided into 1,20,000 (One Lakh Twenty Thousand) Equity Shares of Rs. 10 (Rupees Ten only) each.
III. Alteration in the Clause No. 5 of Articles
RESOLVED THAT pursuant to section 31 of the Companies Act, 1956, Article No. 5 of the Articles of Association of the Company be altered by substituting it with the following new clause:
5. The Authorised Share Capital of the company is Rs. 12,00,000 (Rupees Twelve Lacs only) divided into 1,20,000 (One Lakh Twenty Thousand) Equity Shares of Rs. 10 (Rupees Ten only) each, with a power of company to increase, reduce or modify the capital and to divide all or any of the shares in the capital of the company, for the time being, and to classify and reclassify such shares from shares of one class into shares of other class or classes and to attach thereto respectively such preferential, deferred, qualified or other special rights, privileges, conditions or restrictions as may be determined by the company in accordance with the Articles of Association of the company and to vary, modify or abrogate any such rights, privileges, conditions or restrictions, in such manner and by such persons as may, for the time being, be permitted under the provisions of the Articles of Association of the company or legislative provisions for the time being in force in that behalf.

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Ajay Mishra

Ajay Mishra (Expert)
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08 September 2010 Procedure for increase in authorised capital of the company

1. Convene a Board Meeting after issuing notices to the directors of the company to decide about the increase and to fix the date, time, place and agenda for convening a General Meeting.
2. To pass an Ordinary Resolution (Special Resolution if so required by articles) for the same.
3. Download Form -5 from www.mca.gov.in
4. Fill the details required such form except signature of the concerned person.
5. Opt the option to pay stamp duty electronically along with ROC fee on Form-5 with concerned ROC.
6. Please attached altered MOA and AOA with the Form-5 filed with concerned ROC .
7. File physically MOA along with stamped form-5 with concerned ROC (if required).
8. After approval of Form-5 from ROC make necessary changes in MOA and AOA and in all other papers and documents.

If you are increasing Authorised Capital by Special Resolution or also change in Article of Association it is required to file Form 23 with concerned ROC within 30 days from the date of passing such resolution.

Ankur Garg

Ankur Garg (Expert)
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08 September 2010 Increase in Authorised Share Capital of the Company

“RESOLVED THAT pursuant to the provisions of Section 94 and other applicable provisions if any of the Companies Act, 1956 (including any Statutory modification or reenactment for the time being in force) the Authorised Capital of the Company be increased from Rs. 50,00,000 (Rupees Fifty Lacs) to Rs. 20,00,00,000 (Rupees Twenty Crores) by creation of 1,95,00,000 (One Crore Ninety Five Lacs) new Equity shares of Rs.10/- (Rupees Ten) each ranking pari passu in all respects with the existing Equity Shares.

RESOLVED FURTHER THAT pursuant to the provisions of Section 16 and other applicable provisions if any of the Companies Act, 1956 (including any statutory modification or re-enactment for the time being in force) the existing Clause-V of the Memorandum of Association of the Company be and is hereby substituted by the following new Clause-V:

The Authorised Share Capital of the Company is Rs. 20,00,00,000 (Rupees Twenty Crores) divided into 2,00,00,000 (Two Croroe) Equity Shares of Rs. 10/- (Rupees Ten) each.

Best Regards

Ankur Garg

Ankur Garg (Expert)
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08 September 2010 SAMPLE BOARD RESOLUTIONS:

For some more sample board resolutions kindly visit the link below:

1. https://www.caclubindia.com/forum/download-corporate-law-professional-files-70021.asp

2. https://www.caclubindia.com/articles/ca-articleship-some-useful-corporate-board-resolutions-ii-5874.asp

3. https://www.caclubindia.com/articles/ca-articleship-some-useful-corporate-board-resolutions-i-3911.asp