Alteration of Authorised Capital
A comprehensive guide to understanding and navigating the process of changing a company's financial structure.
Why Alter Authorised Capital?
A company's authorised capital isn't static. Strategic and financial reasons often require it to be altered. Here are the primary motivations:
Expansion & Growth
To issue more shares and raise funds for new projects, acquisitions, or general business expansion.
Fundraising
To accommodate new equity investors or comply with financing agreements that mandate a higher capital base.
Restructuring
To align the capital structure with new business objectives or, in some cases, to reduce dormant capital.
Compliance
To meet specific regulatory requirements or to maintain a healthy and robust balance sheet.
Methods of Alteration
The Companies Act provides several ways to alter authorised capital. Click on each method to see how it works.
The Process Flow
Altering authorised capital is a formal process with several key steps. Click on each step in the timeline to view the details.
Key Considerations
Before proceeding, it's crucial to be aware of these important aspects to ensure a smooth and compliant process.
Regulatory Compliance
Strict adherence to the Companies Act, 2013 is mandatory. Any deviation can lead to non-compliance issues.
ROC Fees & Stamp Duty
Filing forms with the ROC incurs specific fees. Additionally, increasing capital often requires payment of stamp duty.
Impact on Stakeholders
Any alteration can affect shareholder rights and the company's valuation. Clear communication is essential.
Professional Guidance
It's highly advisable to consult with legal and company secretarial professionals to ensure proper procedure.