A company may need to increase its authorized share capital before issuing new equity shares capital and increasing paid-up capital. Authorized Share Capital is the total value of shares of the company that can issue while the paid-up capital is the total value of shares the company has issued.An increase in authorized (SH-7) or paid-up (PAS-3) capital must be done with proper board resolution and filing of forms with Registrar of Companies.
In most cases,the authorized capital increase is made after issuing new shares also transferring shares from existing shareholders to the new shareholders is another way of doing it.
An ordinary bill consented by all the shareholders must be passed at an Extra-ordinary General Meeting Form SH-7 must be filed by the company within 30 days of passing of the ordinary resolution. Along with Form SH-7, the prescribed government fee for authorized capital must be paid and the following documents must be attached:
- Notice related to EGM.
- Authorized True copy of Ordinary Resolution.
- Changed Memorandum of Association will have a changed amount of authorized capital.