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Increase in share capital

sumit (accountant) (84 Points)

13 June 2013

I work in pvt. ltd..Our authorised and paid up equity shares are 10,000 * 10 = 100000 /-

Now can a pvt. ltd. increase authorised and paid up from 10000 equity shares to 1 crore equity of 10 each...of course after amending AOA...Is there any celing limit for issue of equity in pvt. company...

or any compliance such as (e.g. Turnover for certain period should be of certain amount or net worth should not be less than certain figure)

kindly enlighten me ....

thank you for your time...

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4 Replies

Sarvesh (Company Secretary) (179 Points)
Replied 13 June 2013

No, there is no such limit has been prescribed.

Sneha (Company Secretary) (1594 Points)
Replied 13 June 2013

Firstly call a Board Meeting for holding EGM and pass the below mentioned resolution in the Board Meeting to get consent of the shareholders for the increase in capital and change of memorandum and articles (if required). Check whether the increase of authorized capital is in accordance with the Memorandum and Articles of Association of the Company or not. If not then first increase the capital clause in the memorandum and file Form 23 (if reqd). If it is in accordance with MOA then no need to file Form 23. After this file Form 5. Give the reference of SRN of Form 23 in this Form 5 (In case you file Form 23).

Please note that the forms can be filed only after getting the consent of shareholders in the EGM.

HOLDING OF EXTRA ORDINARY GENERAL MEETING FOR INCREASE IN AUTHORISED CAPITAL OF THE COMPANY

The company requires funds for its expansion plans. It is therefore desirable that the Authorized Share Capital be increased to issue further shares. The proposed increase in Authorized Share Capital would also enable the Company to raise additional capital. The Board expressed its satisfaction to the matter discussed and passed the following Resolution.

“RESOLVED that an Extra Ordinary General Meeting of the shareholders be called on (Date – atleast 23days from the date of this Board meeting) for the increase in authorized capital of the Company. The draft notice along with explanatory statement thereto as placed before the Board be and is hereby approved and the same be sent to the shareholders whose name appear in the register of members as on (date of this Board Meeting).”

“RESOLVED further that in the said Extra Ordinary General Meeting of the Company the following resolution be moved:

“RESOLVED that pursuant to Section 94 and other applicable provisions if any, of the Companies Act, 1956 the Authorized Share Capital of the Company be increased from Rs._______/- (Rupees __________ only) divided into ________ equity shares of Rs.__/- each to Rs._______/- (Rupees ________ Only) divided into _______ equity shares of Rs.__/- each by the creation of ________ new equity shares of Rs.____/- each to rank paripassu in all respect with existing equity shares of the Company.” (If MOA has to be changed, then include as mentioned below) V. The Authorized Share Capital of the Company is Rs.________/- (Rupees _________ only) divided into ________ ( ______) equity shares of Rs.____/- (Rupees Ten) each and subject to the provisions of the Companies Act, 1956 including any statutory modification or re-enctment thereof, with right, privileges and conditions attached thereto as are provided by the regulations of the Company for the time being with the power to sub-divide, consolidate, increase or reduce the capital of the company and to attach thereto such preferential, qualified or special rights, privileges or conditions as may be determined by or in accordance with the regulations of the company and to vary, modify or abrogate any such rights, privileges, or conditions in such manner as may for the time being be provided by the regulation of the Company subject to the provisions of the Companies Act, 1956 including any statutory modification or re-enactment thereof and the regulation of the company

“FURTHER RESOLVED THAT Mr. _________, Director of the Company, be and is hereby authorised to sign and file necessary required forms with the concerned Registrar of Companies, within the prescribed time limit.”

Sneha (Company Secretary) (1594 Points)
Replied 13 June 2013

Increase in paid up capital means allotment of shares. Call a Board Meeting and pass the following resolution.

ALLOTMENT OF SHARES

The Chairman informed the Board that the Company has received few application request for the allotment of Company’s shares to them. It is proposed to allot ___________ equity shares (at a premium of Rs. ___/- per share) to those applicants who have applied to subscribe in the equity shares of the Company. After some discussions, it was :-

“RESOLVED THAT consent of the Board be and is hereby accorded for the allotment of ________ equity shares of Rs.10/- each (at a premium of Rs.__/- per share) to the applicants who have applied to subscribe in the equity shares of the Company as per the details given below :-

Sr. No. Name of the Applicants No. of shares applied No. of shares to be allotted 1 2

FURTHER RESOLVED that ________, Director of the Company be and is hereby authorized to file the return of Allotment with the concerned Registrar of Companies, and comply with the necessary formalities in this regard.”

File Form 2 and issue share certificates to the shareholders to whom shares have been alloted