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As per section 2(8) of the Companies Act, 2013 the capital which is authorized by the memorandum of the company to be the maximum amount of share capital of the company is called the authorized capital of the company.
Following the incorporation procedure and continuing business operation, a company may need to increase the authorized capital for numerous reasons:
The company’s AoA must have a clause for an increase in capital in the future. If not, the organization is required to modify the Articles as per Section 14 of the Companies Act, 2013.
To approve the Increase in Authorized Capital, a board meeting is required to be organized with the board of directors.
As soon as the board of directors decides to Increase Authorized Capital, the company’s shareholders must be addressed.
After getting approval from the Board and the Shareholders, the Company’s MoA should be modified for increasing the Authorized Capital.
The alteration in the company’s MoA, AoA, increase in the Authorized Capital, should be informed to the Registrar of Companies (ROC) and the Ministry of Corporate Affairs (MCA).
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The capital which is authorized by the memorandum of the company to be the maximum amount of share capital of the company is called the Authorized Capital of the Company. It is required to be mentioned in the company’s MoA.
