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The amount of capital to invest in the Company is one of the most critical decisions that have to be made by the supporters when a company is in its incorporation stages. As the business begins to pick up, the Company may look to expand its operations, expand in size, scale, or structure. To make that dream a reality, it may require the driving of more funds into the Company, basically increasing/Changing the share capital of the Company. Sometimes, the amount of necessary capital might surpass the limit of the authorized capital at the time.
The authorized capital is the greatest amount of Capital for which the Company can issue shares to the shareholders. As per the Section 2(8) of the Companies Act, 2013, the Authorised Capital limit is specified in the Memorandum of Association under the Capital Clause. A company may take the necessary steps required to Increase/Change the authorized capital limit to issue more shares. However, it cannot issue shares exceeding the authorized capital limit in any case.
The word capital signifies 'Share Capital' of the organization where the rupees divided into a predetermined number of shares of a fixed amount. Every Company requires cash in the form of share capital to maintain the business. The organization utilizes cash to meet its necessity by the method of gaining business premises and stock-in-trade and so on.
The Company which has chosen for expanding its Capital, first it has to check the current Authorized Share Capital. It is because the Company can't give the shares past the authorized Share capital in any way, for issuing the shares it is required to increase the authorized share capital by changing the Memorandum of Association of the Company.
The Company having Share Capital if so authorized by the Article of Association, can modify the Share Capital. In this case, the Company needs to follow the technique as recommended under the Companies Act, 2013. For the increase/Change in share capital, it is required to acquire the approval of the registrar of companies by filing required forms.
The provision of section 61 governs the Change in share capital in the organizations, read with section 13 and 64 of the Companies Act 2013. According to Section 2(8) of the Companies Act, 2013, 'authorized capital' or 'nominal capital' signifies such Capital as approved by the memorandum of a company to be the most considerable measure of the share capital of the organization.
In this way, it is clear that employing the previously mentioned definition, an organization can extend its business up-to the level of authorized Capital. If you need to expand your business by infusion of more funds, at that point first, you need to grow your approved Capital by following a couple of steps, as discussed ahead.
As provided in Section 61 of the Companies Act, 2013, different types of Change in Share Capital are associated.
Kinds Of Change In Share Capital Under Section 61 Of The Companies Act, 2013 Are As Follows:-
Those Are As Follows:-
The Procedure Followed For The Change In Share Capital In Brief Is Follows:
The above forms should get filed with the designated fees by the Ministry of Corporate Affairs. If the Forms discussed above are not registered with the (ROC) Registrar of Companies, in those case (Section 117 of the Companies Act, 2013) the company must be liable for a fine which shall not fall below five lakh rupees and may reach up to 25 lakhs of rupees. Every officer who is in default will be liable to pay 1 lakh rupee and which can be increased to 5 lakhs of Rupees.
Our professionals shall be at your disposal to assist you in the procedure of Change in Share Capital of your Company. We will plan ideally and will make sure of the successful completion of the process.
The amount of capital to invest in the Company is one of the most critical decisions that have to be made by the supporters when a company is in its incorporation stages. As the business begins to pick up, the Company may look to expand its operations, expand in size, scale, or structure. To make that dream a reality, it may require the driving of more funds into the Company, basically increasing/Changing the share capital of the Company. Sometimes, the amount of necessary capital might surpass the limit of the authorized capital at the time.
The word capital signifies 'Share Capital' of the organization where the rupees divided into a predetermined number of shares of a fixed amount. Every Company requires cash in the form of share capital to maintain the business.