Once the company is incorporated, the promoters are constantly thinking about the amount of capital invested in the company. Though the initial investment is taken care of, as the company starts growing, there is a need for more capital to expand its operations as well as to expand the scale and the structure of the business. To make these necessary demands a reality, one will have to increase the company’s authorized capital. Authorized capital is the maximum quantity of share value that a company is allowed to allot its shareholders.
To increase the authorized capital for growth, expansion and other necessary expenditure requirements, the company has to pass the ordinary or special resolution in the General Meeting and also by adhering to the proceedings as given in the Companies Act, 2013, contingent on the confirmation by the Registrar of Companies (ROC).
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Note:The required documents for increasing the authorized capital have to be filed with the Ministry of Corporate Affairs (MCA) within 30 days post getting the shareholders’ official consent to raise the authorized capital.
A company has a limitation of raising the capital, i.e., it cannot raise capital more than what is prescribed in the Memorandum of Association (MoA). Therefore, if there is a need to increase the paid-up capital of the company, the ideal thing to do is to raise the company’s authorized capital. The advantage is that regardless of how much authorized capital is settled upon, the revised amount of the capital can be included in the Memorandum of Association with amendments.
As the capital is raised, the net worth of the company also increases. As a result, the increase in the net worth of the company strengthens the borrowing capacity as well. With the help of the new borrowing capacity, the company can take advantage of expanding its operations and can also make improvements in the existing company, if need be.
We at Taxrepair take pride in giving excellent service and having immense knowledge about the process and procedures for increasing the authorized capital of a Private Limited Company. Our team will help our clients with the necessary documentation and coordination with the
concerned officials. However, the time taken to complete the procedures depends on the approvals and reverts the concerned officials.
Have more questions about this? Our expert team at Taxrepair are here to help you out. So, contact us or email us for consultation from our experts.
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