Upon incorporation, a limited corporation should give every one of its shares a "nominal" value, such as £1.00. This nominal value, commonly referred to as the par value, stands for the company's limited liability shareholders. In the event of a company wind-up, it represents the price that shareholders would be required to pay for every share they own.

In certain circumstances, it could be necessary to provide proof of a particular amount of share capital. For instance, some lenders and creditors may evaluate a company's trustworthiness based on the amount of its share capital. Additionally, some trade associations have a minimum equity capital requirement for membership.

What is the Procedure to Increase Authorized Share Capital?

·         Verify the authority of the Articles of Association.

Verify whether the articles of association permit the company's ability to expand share capital. If not, actions must be taken to change them.

·         Set a board meeting date.

Summon a board meeting to give the board the authority to call an extraordinary general meeting (EGM) if the AGM's resolution to increase authorized share capital is not approved.

·         Send a notification calling a special general meeting.

Send a notice calling a special meeting of the shareholders with a specific agenda, justifications, and motions to be adopted to amend the articles of association and memorandum of association to raise authorized share capital.

·         Vote in favour of the resolution to raise the authorized share capital.

Pass the resolution to increase the company's authorized share capital and, by special resolution, make the necessary changes to the MOA and AOA.

·         Allow the board to submit the required paperwork.

Give the board permission to submit the required paperwork and resolutions to the ROC.

·         Submit e-form SH-7.

Additionally, submit e-form SH-7 to ROC within 30 days of the Ordinary Resolution's passage while paying the required price. Furthermore, the business must call a board meeting following consultation with the AOA.

Every firm member must get notification of the general meeting at least 21 days before it begins, along with the location, date, day, and hour of the meeting and the agenda.

The required paperwork and requirements for receiving the authorized share capital -

Submitting Form SH-7 to the ROC Within 30 days of the change, submit the following documents to the Registrar together with an E-Form SH-7 including a notice of the change in share capital and the specified fee:

·         Ordinary Resolution for Raising in Authorized Share Capital, Verified True Copy Shorter notice approval, if any, and a copy of the modified MOA and AOA any additional paperwork that could be necessary.

·         Making e-Stamp Duty Payments

·         Modifications made to each copy of MOA and AOA:

Why use a professional to increase authorized share capital?

By approving an ordinary resolution that requires the support of at least 50% of the owners, the shareholders will offer their approval of the proposal to raise the authorized capital. Hence, a professional can help to understand the procedure to increase authorized share capital.

Conclusion

The amount of cash to invest in a business is one of the most crucial choices the promoters must make during the incorporation phase.

The corporation may seek to expand operations in size, scale, and organizational structure when business starts to take up. The corporation may need to receive additional funding, raising its share capital, to realize that dream.

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