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Increasing Capital PAS-3

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:

  1. Notice related to EGM.
  2. Authorized True copy of Ordinary Resolution.
  3. Changed Memorandum of Association will have a changed amount of authorized capital.

FAQs

What is the Capital of the Company?
Capital means investment made by shareholders into the company. The authorized capital is an amount up to which the company can issue shares. This capital is mentioned during the incorporation of the company based on which ROC registration fees and stamp duty is paid. Paid-up capital is an actual investment that goes from shareholders into a company bank account, against which share certificateis issued by the company.
What is the difference in Paid-up capital and Authorised Capital?
The Authorized Capital of the Company is the maximum limit upto which a company can issue shares and Paid-up Capital is that part of the Authorized Capital for which Shareholders have invested in the Company.
What documents are required to show an increase in the capital?
MOA, AOA, documents for Board Meeting of the Company and documents for Extra-Ordinary General Meeting (EGM) of the Company are required.
What time the change has to be informed after?
The time limit is 30 days from the passing of the Board Resolution for Increasing of Authorized Share Capital
Is there any limit to introduce share capital?
There is no limit for maximum capital.

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