What are the advantages of increase authorized capital?
Eg: If a pvt ltd company has a capital of 15 lakhs and wants to increase it to 1 crore, will it have any advantages?
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Advantage of increasing Authorized capital
Replies (3)
Firstly there are charges/fee to be paid. for exp. if you have auth capital of 15 lakh and you have to increase it you will have to pay additional charges. Similarly if in future you want to increase your capital you need not waste your time to increase your authorised capital
if u have authorised capital,u can increase the capital of promotors/issue shares.
Banks prefer to give loan dependiong on the authorised capital. The ideal debt equity ratio is 2:1. So if you increase the authorised capital, you will get the loans in the above proportion. But you need to incur certain costs at the ROC for increasing the share capital.
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