Alter Share Capital
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Alteration of Share Capital
Several occasions arise when companies need to raise funds in equity. There may be a case when the planned amount is higher than the authorized share capital registered with the Registrar of Companies. Authorized capital is, also known as “Nominal capital” of the company, is the capital which is authorised by Memorandum of Association of the Company.
Step 1: The Board meeting of the company is convened to:
- Decide about increase in the Authorised share capital
- Approve notice for the general meeting where an ordinary resolution is to be passed
Step 2: Notice of the general meeting is sent to all members, directors and auditors of the company
Step 3: General Meeting is held and an ordinary resolution is passed. File with ROC form SH-7 within 30 days.
Step 4: Stamp duty on SH-7 is paid electronically to ROC.
Step 5: All the copies of Memorandum of Association are altered with the new capital clause.
- Drafting Minutes of Board Resolution
- Drafting Notice for EGM
- Drafting Ordinary Resolution
- Alteration of MoA
- Issue of Share Certificate
- Filing of Form SH-7 with ROC
- DSC of the Authorized Director
- Any other document depending on the capital amount
The authorised capital should be increased so as to easily adjust the nominal value of shares being issued. If your shares have fact value of Rs 10, as a startup it may be possible you are issuing shares at a premium value so you need not increase authorised capital for the full value of Rs 1 crore.