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As defined in section 2(8) of the Companies Act, 2013, authorized capital refers to the maximum amount of share capital authorized by the memorandum of the company.
According to the provisions of the Ministry of Corporate Affairs (MCA) & Registrars of Companies (ROC), the necessary documents and activities are as follows:
The company’s AoA must include a clause for future capital increase. If not, the Articles need modification as per Section 14 of the Companies Act, 2013.
A Board Meeting is required to approve the Increase in Authorized Capital by the Board of Directors.
Following the Board Meeting, shareholders' approval is necessary for the Increase in Authorized Capital.
After obtaining approval from the Board and shareholders, the Company’s MoA should be amended to reflect the increase in Authorized Capital.
The changes in the company’s MoA, AoA, and the increase in Authorized Capital should be notified 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.
A company can increase its Authorized Capital by initiating an amendment in its AoA (if needed). Consequently, the company needs to organize a Board Meeting to get approval from the Directors and the Shareholders.
The procedure of Increase in Authorized Capital for a company is regulated by the Company Act, 2013 of the Indian Govt. along with the regulations of the Registrars of Companies (ROC).