Understanding Increase in Authorized Share Capital — the process of raising the maximum share capital a company is permitted to issue, as stated in its Memorandum of Association — starts with knowing exactly what the process involves. Here's a step-by-step breakdown for companies planning to issue more shares than their current authorized capital allows.
Step 1
Pass a board resolution proposing the increase.
Step 2
Obtain shareholder approval at a general meeting.
Step 3
File the relevant form with the MCA along with fees.
Step 4
Update the Memorandum of Association and statutory registers.
Documents to Keep Ready
Before starting, it helps to have these ready so the process moves without unnecessary back-and-forth:
- Current authorized capital as per the Memorandum of Association
- Board resolution proposing the increase
- Shareholder approval through a general meeting
- Altered Memorandum of Association reflecting the new capital
- Applicable government fee for the increased capital
- Updated statutory registers
What to Watch Out For
Trying to issue shares before increasing authorized capital, when required — this is one of the most frequent slip-ups at this stage, so it's worth double-checking before you proceed.
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