Increase in Auth Capital

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 April 2010
Share Apllication money may be received without increasing the autorised capital and subsequently the same will be raised?

CA Shiv

CA Shiv (Expert)
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23 April 2010 yes you can do that... in case of over subscription there are chances of increase in share application. But you cannot increases authorised capital looking to the application money received. once that subsciption is closed and after relavant period as per companies act you can increase the share capital...

Ankur Garg

Ankur Garg (Expert)
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23 April 2010 Hello,

Receipt of share application money over and above of Authorised capital is not a default at all, hence you may accept share application money over authorised capital. Reason being share application money is not in the nature of paid up capital unless and until allotment of share against the share application money.

In other words only after allotment of share you can consider such share application money as paid up share capital. But before passing allotment resolution you have to increase your Authorised capital.

Best Regards

CA Shiv

CA Shiv (Expert)
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23 April 2010 Hello,

I am not sure about the increase in authorised capital after receiving application money or else all the company will do that. Now a days all the companies are oversubscribed by more than 10 times. So they can increase capital instantly. But noone do it.

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