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Every business needs extra funds at different stages to keep things running smoothly. These funds may be needed for short-term expenses or long-term growth. Loans and advances can help with short-term financial needs, but in the long run, the company will need more funds to sustain and grow. One way for a Private Limited Company to access more funds is by increasing its authorised capital. Since a Private Limited Company is regulated by the Companies Act, any changes to its structure must comply with the stated rules.
Startup Club India makes it easy to increase your company's authorised capital. Our experts guide you through every step, making sure you get a smooth and hassle-free experience. We are one of the leading Increase Authorized Capital For PVT LTD Companies in Delhi.
As per Section 2(8) of the Companies Act 2013, "Authorized Capital" refers to the maximum share capital a company is allowed to have, as stated in its memorandum.
A company can only grow as much as its authorized capital allows. If the company needs more money to grow, it must increase its authorized capital.
When a company raises its authorized share capital, it extends the limit on the number of shares it can distribute. This process generally involves updating the company’s Memorandum of Association (MOA) to reflect the changes.
A company can raise more money from existing or new shareholders by increasing its authorised share capital and issuing extra shares. Businesses increase their authorised capital to support expansion, fund fresh initiatives, or adapt to shifting financial demands.
The Memorandum of Association (MOA) of a Private Limited Company outlines the authorized and paid-up capital that the company starts with during its formation. It defines the maximum limit of share capital that the company is permitted to issue to its shareholders. If the company wants to issue more shares beyond the set limit, it must first amend the MOA to increase the authorized capital, allowing for the expansion of share allocation.
A company may choose to raise its authorised capital for various reasons, including those mentioned above:
The necessary documents must be filed within 30 days after shareholders give their approval to officially increase the authorised share capital. Private companies must submit the resolution using e-form SH-7, but e-form MGT-14 is not needed. Make sure to have the required documents ready for filing:
There are important steps involved to make sure the increase meets legal standards and is approved by shareholders.
The AoA outlines the company's governance, including capital management. Initially, verify if the AoA permits changes to the authorised capital.
Increasing authorized capital is a crucial step for businesses looking to expand, secure funding, or meet financial requirements. By following the proper legal process and updating the MOA, companies can issue additional shares and raise funds effectively. Startup Club India provides expert assistance to Increase Authorized Capital For PVT LTD Company easily. If you are looking to Increase Authorized Capital For PVT LTD Company in India, our team ensures a hassle-free and legally compliant process
