Authorised Capital of a company can be increased by passing resolution in the meeting and filing form No. 5 along with necessary documents to the registrar of companies. Procedure to increase authorized capital of a company is:
Proposal and Resolution to be passed in Board Meeting
Proposal for increase of Authorised Capital should be included in the agenda of Board meeting. After discussion of justification about increase in capital the resolution can be passed by the Board. Capital clause of the Memorandum of Association should be revised to accommodate the increased capital amount. Sample resolution to amend the capital clause of Memorandum of Association is:
"RESOLVED THAT pursuant to Section 94 of the Companies Act, 1956 and other applicable provisions, if any, the Authorised Capital of the Company be increased from Rs. ______ to Rs. _____________ divided into _____________ Equity Shares of Rs. ____ each and Clause V of the Memorandum of Association of the Company relating to Share Capital be altered by deleting the same and substituting in its place the following as the new Clause :
V "The Share Capital of the Company is Rs.___________ (Rupees __________________only) divided into _______________ Equity Shares of Rs __________ (Rupees _____only) each.
Approval of increase in Share Capital in the Meeting of Shareholders.
The Resolution to amend Capital Clause of Memorandum should be passed either in the Annual General Meeting (AGM) or Extra Ordinary General Meeting (EGM). If the proposal is to be passed in AGM, the resolution should be included in the notice of AGM. If the Resolution is to be passed in Extra Ordinary General Meeting (EGM), draft copy of Resolution is to be included in the Notice. Since EGM is conducting for any specific business, the agenda is to be clearly mentioned in the notice.
Notice Period for Extra Ordinary General Meeting (EGM)
Notice period for EGM is normal notice period. If the meeting is to be conducted in short period, it can be called with the consent of shareholders in short period.
Modification to Articles of Association
If Articles of Association does not give authority to increase authorized capital it should be modified in by passing "Special Resolution" in the meeting of Shareholders. The Resolution should be passed with sufficient quorum.
Sample Resolution to modify Articles of Association of Company
"Resolved as Special Resolution that pursuant to section 31 and other applicable provisions of the Companies Act, 1956 the Articles of Association of the Company be altered by substituting the present Article No. ____ with the following new Article viz.,
No. __ The Authorised Share Capital of the Company is Rs.____________ (Rupees ___________________ only) divided into ________________equity shares of Rs___/- (Rupees ____ only) each and ________Preference shares of Rs. ____/- (Rupees ____ only) each with power to increase or decrease the same to divide the shares and sub-divide the same as may be determined by or in accordance with the regulations of the Company and to vary, modify or abrogate any such rights privileges and conditions in such manner as may be from time to time be provided by the regulations of the company.
Filing of Form No. 23 in case of Special Resolution to Increase authorized Capital.
Special Resolution passed in the Extra Ordinary General Meeting or Annual General Meeting is to be filed with the Registrar of Companies within prescribed time by filling form No. 23.
Documents to be filed with Registrar of Companies to Increase Authorised Capital
The following Documents are to be filed with ROC to increase authorized capital of a company.
Form No. 5
This form can be used to file information related to Notice of consolidation, division, increase in share capital or increase in number of members of the company. The form should be duly filled and signed by the director and company secretary or such other authorized person. The following documents are to be attached with form No.5.
Copy of Memorandum of Association
The capital clause of the Memorandum of Association needs to be modified to incorporate the new capital structure of the company. Copy of modified Memorandum of Association should be attached with form No. 5.
Copy of Articles of Association in case of Modification
If Capital Clause of Articles of Association is modified, copy of the modified Articles of Association should be attached with form No. 5. Information related to form No. 23 related to "Special Resolution" filed with ROC and SRN number also should be mentioned in such cases.
Copy of Resolution passed in the Extra Ordinary General Meeting (EGM) or Annual General Meeting (AGM).
Copy of Resolution/Special Resolution passed in the AGM or EGM should be attached with form No. 5.
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