Requirement of increase in authorised share capital

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Bhaumik Shah (Querist)
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18 August 2013 Respected Sir,

A company is going to take the finance round about 8.5 CR Cash Credit and 2.5 CR Term Loan From Bank of Baroda.

As per discussion with Branch Manager of BOB, they decided to increase Authorised Share capital round abount 1.5 Cr. instead of Unsecured loan as quasi capital. At present Authorised capital of company is 0.82 Cr.which would be incresed 1.5 Cr. So, Total = 2.32 Cr.

My question is what should be Stamp duty for increase in authorised capital of company and it depends on incremental or Total Authorised share capital ?

Another question is instead of increasing authorised capital, whether we can go directly to increase unsecured loan keeping as quasi capital ?

Plz give me perfect answer as early as possible

Ajay Mishra

Ajay Mishra (Expert)
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18 August 2013 Hi

The stamp duty will always payable on increased capital at a rate applicable on your state.

When you fill form-5 it will show the amount of stamp duty.

As per my views, I will prefer to increased capital, it will be help full in near future.

Ajay Mishra

Ajay Mishra (Expert)
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18 August 2013 Procedure for increase in authorised capital of the company

Section 95 of the Companies Act, 1956 provides that a company having share capital shall give notice to the Registrar of Companies for alteration in share capital in e-Form 5 electronically within a period of 30 days from the date of the resolution passed by the company for alteration in share capital.

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 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.

Any increase in the authorized share capital would come into effect immediately on passing of any valid resolution in this behalf, and filing of the requisite Forms 5, 23, being a ministerial act and procedural in nature, would not influence the date of increase of the authorized share capital. [Kobian (P) Ltd. v Kobian India (P) Ltd. and Others (2005) 64 CLA 281 (CLB)].

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