Authorised capital small amount or big amount

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Querist : Anonymous

Querist : Anonymous (Querist)

14 January 2012 Hi, we are a proprietorship firm and now forming a new company (Pvt. Ltd.) with an authorized capital of 1 lac. I had a query about the authorized capital.

What are the key concerns in deciding about AUTHORISED CAPITAL? How does it matter if it is a small amount or big amount?

Jiten Gupta

Jiten Gupta (Expert)
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14 January 2012 It is not a very huge matter to be worried about.
Further if u want to increase the ASC in future, u can do so by passing OR and E-Form 5 to ROC.

But Rather If your company has plan to increase paid up capital in near future then u can keep ASC above then Minimum prescribed limit of 1 lac to avoid cost of E-Form 5 and delay cost.

sivadas chettoor

sivadas chettoor (Expert)
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14 January 2012 The amount of capital is to be decided on the basis of the particular requirement of each company. If you intent to raise loan they may insist on your share which must be brought in as a capital. Then it is advisable to take a broad view and provide for the requirements of the immediate future also. So fix it accordingly.

siva208@yahoo.com

Charu Srivastava

Charu Srivastava (Expert)
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16 January 2012 Authorised Capital is the maximum Capital which the Company is authorised to raise by issuing Shares.It is on this amount the Company has to pay prescribed fees at the time of registration.

Therefore the Authorised Capital should be fixed keeping in mind

1). Companies ability to pay the Fees at the time of Registeration which is quite high.

2). fund requirement of the Company so that it can raise through Shares.

3). other Factors mentioned below

Key words in the Name of a Company
Minimum Authorised Capital Required
Corporation
5 Crores
International, Globe, Global , Universal, Universe, Continental, Inter- Continental, Asiatic, Asia, Asian, World
Being the first part of the name

1 Crore

Hindustan, Hindustani, Hindustanee, India, Indian, Bharat, Bharatati, Bharatiya, Bharateeya
Being the first word of the name

50 Lacs
If any of the key words as above is used within the name(with or without brackets)
5 Lacs

Industries, Udyog, Industrial, Industry
1 Crore
Enterprises, Enterprise, Products, Product Business, Manufacturing, Manufacture
10 Lacs

Thanks and Regards
Charu

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Jiten Gupta

Jiten Gupta (Expert)
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16 January 2012 Dear Charu,

Please refer the following circular published on 8th July 2011.

http://www.mca.gov.in/Ministry/pdf/Circular_45-2011_08july2011.pdf

As per my view u are referring the circular published on 15th March 2011.

http://www.mca.gov.in/Ministry/pdf/Companies_rules_15Mar2011.pdf

Charu Srivastava

Charu Srivastava (Expert)
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16 January 2012 Actually i have received this table from my friend.I havent gone through the circular.

Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2012 Thank you for the reply..

@Jitendra, one of the consultants told me that if I am using the word India as part of my company name, the minimum authorized capital will be Rs.5 lakhs... Is that still valid after the latest circular?

And one more query, If I start a company with a capital of Rs.1 lakh and I need funds to buy various assets like furniture, computers, vehicle etc.. Can teh company take loan from it's directors..? And if Yes, it will be interest free or max. interest that is allowed on such loans?

Jiten Gupta

Jiten Gupta (Expert)
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16 January 2012 This limit is not in Force now. You can keep the ASC as per your willingness..

Company can take the unsecured loan from Directors at a Prevailing rate and book the Interest expenses to get deductions in Income Tax Act.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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24 January 2012 Agree With Jitendra Ji...

Please check out General Circular No. 45/2011 dated: 08/07/2011 & 48/2011 dated: 22/07/2011.

The Name Availability Guidelines, 2011 and revised e-form 1A has been implemented with effect from 24th July, 2011.

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