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Increasing Share Capital with LPC Consultancy

Expanding your business often requires additional financial resources, and increasing the share capital of your company is a vital tool to raise funds for growth. Whether it's for scaling operations, launching new products, or meeting long-term financial needs, an increase in share capital allows your company to attract additional investments. LPC Consultancy provides seamless support for increasing share capital, ensuring that your company complies with all legal requirements under the Companies Act, 2013, and handles the process efficiently.

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6000+ Startups and MSMEs Served

6000+ Startups and MSMEs Served

6000+ Startups and MSMEs Served

OVERVIEW

What is Share Capital?

Share capital refers to the amount of money that a company raises through the sale of shares to shareholders. This capital forms the foundation of the company’s financial strength and is crucial for business operations, expansion, and sustainability.

The company’s authorized share capital is the maximum amount of capital the company is authorized to issue, as stated in its Memorandum of Association. The paid-up share capital is the actual amount received by the company in exchange for shares. Increasing the authorized share capital allows the company to issue more shares, thereby raising additional funds from existing or new shareholders.

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HERE'S HOW IT WORKS

HERE'S HOW IT WORKS

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1. Fill Form

Simply fill the above form
to get started.

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2. Call to discuss

Our expert will
connect with you & complete
legalities.

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3. Get Incorporation

Get your Company
Incorporation

Why Increase Share Capital?

  1. Business Expansion: As your business grows, you may need additional capital to fund new projects, increase production capacity, or expand into new markets. Increasing your company’s share capital allows you to raise funds to support these initiatives.

  2. Attract New Investors: Increasing share capital enables the company to issue new shares, attracting external investors, venture capital, or angel investments that can help fuel your company's growth.

  3. Meet Financial Requirements: Sometimes, increasing share capital is necessary to meet regulatory requirements, such as maintaining a minimum capital threshold for certain licenses or registrations.

  4. Strengthen Financial Position: A higher share capital enhances your company’s credibility and financial strength, which can improve your ability to secure loans or favorable terms from creditors.

  5. Improve Debt-to-Equity Ratio: Raising additional equity through increased share capital helps improve your company's financial ratios, particularly the debt-to-equity ratio, making it a more attractive proposition for investors and lenders.

Process of Increasing Share Capital

At LPC Consultancy, we simplify the entire process of increasing your company’s share capital. Here’s a step-by-step guide to how we help you through the process:

  1. Review of Articles of Association (AOA)

    • Before increasing share capital, it is essential to review the company’s Articles of Association (AOA) to ensure that the company is authorized to increase capital. If the AOA restricts an increase in share capital, it will need to be amended by passing a special resolution.

  2. Board Meeting for Approval

    • The process begins with a board meeting, where the proposal to increase share capital is discussed and approved by the board of directors. A resolution is passed to increase the share capital and to hold a general meeting of shareholders to approve the change.

  3. Extraordinary General Meeting (EGM)

    • An Extraordinary General Meeting (EGM) of the shareholders is called to pass a special resolution to increase the authorized share capital. The shareholders must agree to the proposed increase before proceeding.

  4. Filing with the Registrar of Companies (ROC)

    • After the EGM, the company must file Form SH-7 with the Registrar of Companies (ROC) within 30 days of passing the resolution. This form notifies the ROC of the increase in authorized share capital and must be accompanied by a copy of the special resolution and amended Memorandum of Association (MOA).

  5. Payment of Stamp Duty

    • Appropriate stamp duty must be paid on the increase in share capital as per the Indian Stamp Act. The amount of duty depends on the value of the increased capital.

  6. Issuance of New Shares

    • Once the share capital increase is approved by the ROC, the company can issue new shares to existing shareholders or new investors. The company’s register of members and share certificates must be updated to reflect the changes.

  7. Update Statutory Registers

    • The company must update its statutory registers, including the register of members and register of share capital, to reflect the increase in share capital and the issuance of new shares.

Documents Checklist

Documents Required for Increasing Share Capital

Board Resolution
A resolution passed by the board of directors approving the increase in share capital.
Form SH-7
The form filed with the ROC to notify them of the increase in authorized share capital.
Stamp Duty Payment Proof
Proof of payment of stamp duty on the increased share capital.
Shareholders’ Special Resolution
A resolution passed by the shareholders at an Extraordinary General Meeting (EGM) authorizing the increase.
Updated Memorandum of Association (MOA)

 The MOA must be updated to reflect the new authorized share capital of the company.

Register of Members and Share Certificates
Updated records of the company’s shareholders and the issuance of new shares.

Consequences of Non-Compliance in Increasing Share Capital

  1. Penalties for Late Filing: Failure to file Form SH-7 within the stipulated 30-day deadline can result in late fees and penalties.

  2. Invalid Issuance of Shares: If the increase in share capital is not approved by the ROC, any shares issued beyond the authorized limit may be considered invalid.

  3. Legal and Regulatory Challenges: Non-compliance with the legal requirements for increasing share capital can lead to legal challenges or penalties from regulatory authorities.

  4. Impact on Fundraising: Without proper approvals, your company may face difficulties in raising funds from investors or issuing new shares.

Why Choose LPC Consultancy for Increasing Share Capital?

  1. Comprehensive Legal Support: We handle every step of the process, from reviewing your company’s AOA to filing forms with the ROC and ensuring compliance with legal requirements.

  2. Tailored Solutions for Your Business: We understand that each company’s needs are different, and we offer customized solutions to fit your specific requirements when increasing share capital.

  3. Expert Guidance on Compliance: Our team of legal experts ensures that your company remains compliant with all legal and regulatory requirements, helping you avoid any potential penalties or legal issues.

  4. Timely and Efficient Processing: We ensure that all filings and approvals are completed on time, enabling your company to issue new shares and raise capital quickly.

  5. Transparent Pricing: We offer competitive and transparent pricing with no hidden fees, providing you with clear and upfront costs for increasing your company’s capital.

  6. Post-Approval Support: We provide ongoing support even after the share capital increase is approved, ensuring that all statutory registers and records are updated in accordance with the law.

OUR CLIENTS SAY

There was a little bit of anxiety and doubt when I contacted them as I was from one side of the country and they were from other side and I was new to online filing and legal process. But the service I got from them was marvelous. These guys are so professional, that I never felt to be new to them. The execution of legal and processing was first class. They finished the assignment before committed time and pricing is absolutely affordable and value for money." 

Mr. Bikash Garabadau,
Founder, Cosmo Trade, Bhubaneswar, Odisha

FAQs About Increasing Share Capital

  • What is the process for appointing a director in a company?
    The process involves obtaining a DSC, applying for a DIN, passing a board resolution, and filing Form DIR-12 with the ROC.
  • What documents are required for appointing a director?
    Key documents include the DSC, DIN, identity proof, address proof, consent to act as a director (Form DIR-2), and a declaration of non-disqualification.
  • What is Form DIR-12?
    Form DIR-12 is the form filed with the ROC to notify the appointment of a new director, containing details about the director and their role.
  • What is a DIN, and why is it required?
    A DIN (Director Identification Number) is a unique identification number issued by the MCA to individuals who wish to serve as a director in any company.
  • Can an individual be a director in more than one company?
    Yes, an individual can serve as a director in multiple companies, but there are limits on the number of directorships as per the Companies Act.
  • What happens if Form DIR-12 is not filed on time?
    Failure to file Form DIR-12 within 30 days of the director’s appointment can result in penalties and the appointment being considered invalid.
  • Who can appoint a director?
    Directors can be appointed by the company’s board of directors, shareholders, or a nomination committee, depending on the company’s articles of association.
  • What is the role of a non-executive director?
    A non-executive director contributes to the company’s governance and strategic decision-making but does not participate in day-to-day operations.
  • How can LPC Consultancy help in appointing a director?
    LPC Consultancy handles the entire process, from document collection to filing with the ROC, ensuring a smooth and compliant appointment.
  • Can a director be appointed without a board meeting?
    No, a board meeting must be held, and a resolution must be passed to formally appoint the director.
  • Can a foreign national be appointed as a director in an Indian company?
    Yes, foreign nationals can be appointed as directors in Indian companies, provided they meet the eligibility criteria and have the necessary documentation.
  • What is the difference between an executive and a non-executive director?
    An executive director is involved in the company’s day-to-day management, while a non-executive director focuses on governance and strategy.
  • Is a Digital Signature Certificate (DSC) mandatory for directors?
    Yes, a DSC is required for signing digital forms and documents submitted to the ROC.
  • What is Form DIR-2?
    Form DIR-2 is the written consent from the director, stating their willingness to act as a director in the company.
  • Can a company appoint more than one director at a time?
    Yes, a company can appoint multiple directors in a single board meeting, provided all necessary filings are completed.
  • What is a nominee director?
    A nominee director is appointed to represent the interests of a shareholder, creditor, or financial institution on the company’s board.
  • Can a director be removed after being appointed?
    Yes, a director can be removed through a shareholder resolution or by the board, depending on the company’s articles of association.
  • What is the tenure of an additional director?
    An additional director holds office until the next AGM, after which the shareholders must confirm their appointment.
  • Is there a minimum age requirement for becoming a director?
    Yes, an individual must be at least 18 years old to be eligible for appointment as a director in an Indian company.
  • What is the maximum number of directorships a person can hold?
    An individual can hold a maximum of 20 directorships, with not more than 10 in public companies.
  • What is the process for resigning as a director?
    A director can submit their resignation, and the company must file Form DIR-12 to inform the ROC of the resignation.
  • Can an LLP appoint a director?
    No, LLPs have designated partners instead of directors, but partners can have similar roles in decision-making.
  • Is it necessary to update statutory registers after appointing a director?
    Yes, the statutory registers of directors and key management personnel must be updated after appointing a director.
  • What is the role of an alternate director?
    An alternate director is appointed to temporarily act on behalf of a director who is unable to attend board meetings for an extended period.
  • What sets a Private Limited Company apart from other business structures in India?
    A Private Limited Company offers a balance between flexibility and limited liability, making it ideal for small to medium-sized businesses that wish to grow while minimizing personal financial risk.
  • Why should I consider registering my business as a Private Limited Company?
    Registering as a Private Limited Company provides your business with legal recognition, enhances credibility, and opens up opportunities for investment and growth, while protecting your personal assets.
  • Can I start a Private Limited Company if I already have another business?
    Yes, you can start a Private Limited Company even if you already own another business. However, the new company must operate as a separate legal entity with its own distinct identity.
  • What is the process for choosing the right business structure before registration?
    Choosing the right business structure involves evaluating your business goals, investment plans, risk appetite, and long-term vision. Our experts at LPC Consultancy can help you make an informed decision.
  • What happens if my chosen company name is already taken?
    If your preferred company name is already in use or does not meet the naming guidelines, you will need to submit alternative names. Our team will assist in checking availability and suggesting appropriate names.
  • How does a Private Limited Company protect my personal assets?
    In a Private Limited Company, shareholders' liability is limited to the amount they have invested in shares. This means your personal assets are protected in case the company faces financial difficulties.
  • Can I run my Private Limited Company from home?
    Yes, you can run your Private Limited Company from your home as long as the address is registered with the Ministry of Corporate Affairs as the official registered office of the company.
  • Is it necessary to have a physical office space to register a Private Limited Company?
    While you need a registered office address, it does not have to be a commercial space. It can be a residential address, as long as it is in India and all legal notices can be served there.
  • How many shareholders are required to form a Private Limited Company?
    A Private Limited Company requires a minimum of two shareholders and can have a maximum of 200 shareholders.
  • What is the role of a Director in a Private Limited Company?
    Directors are responsible for managing the day-to-day operations of the company, making strategic decisions, and ensuring compliance with legal and regulatory requirements.
  • Can I appoint a foreign national as a director in my Private Limited Company?
    Yes, foreign nationals can be appointed as directors in a Private Limited Company, provided they obtain a valid Director Identification Number and comply with other legal requirements.
  • What are the responsibilities of a shareholder in a Private Limited Company?
    Shareholders own a portion of the company through their shares and have the right to vote on major decisions, such as the election of directors and changes to the company's structure.
  • Can I transfer shares in a Private Limited Company?
    Yes, shares in a Private Limited Company can be transferred, but the process is more restricted compared to public companies. The transfer usually requires approval from the board of directors.
  • How does a Private Limited Company handle profits and losses?
    Profits earned by the company can be distributed to shareholders as dividends, reinvested in the business, or held in reserves. Losses are borne by the company, and shareholders are not personally liable.
  • What is the significance of the Memorandum of Association (MOA) and Articles of Association (AOA)?
    The MOA outlines the company’s objectives and scope of activities, while the AOA defines the internal rules for managing the company. Together, they form the company's constitution.
  • How does a Private Limited Company ensure compliance with regulatory authorities?
    A Private Limited Company must comply with various regulations, including filing annual returns, maintaining statutory records, and adhering to tax obligations. LPC Consultancy offers ongoing compliance services to help manage these responsibilities.
  • What are the options for raising capital in a Private Limited Company?
    A Private Limited Company can raise capital by issuing shares, obtaining loans, or seeking investments from venture capitalists, angel investors, or private equity firms.
  • How does a Private Limited Company maintain its perpetual succession?
    Perpetual succession means that the company continues to exist even if shareholders or directors change, ensuring continuity of business operations.
  • What role does the Registrar of Companies (ROC) play in company registration?
    The Registrar of Companies is the government authority responsible for registering companies, maintaining records, and ensuring that companies comply with legal requirements.
  • How do I ensure my Private Limited Company name is unique and compliant with regulations?
    Our team at LPC Consultancy will help you conduct a thorough search to ensure your chosen name is unique and compliant with the naming guidelines set by the Ministry of Corporate Affairs.
  • What are the common challenges faced during the registration of a Private Limited Company?
    Common challenges include name availability issues, document verification delays, and compliance with legal formalities. Our experts at LPC Consultancy help you navigate these challenges smoothly.
  • Can I convert my Private Limited Company into another business structure later?
    Yes, a Private Limited Company can be converted into another business structure, such as a public limited company or LLP, by following the legal process. LPC Consultancy can assist with the conversion process.
  • What are the tax implications for shareholders in a Private Limited Company?
    Shareholders in a Private Limited Company may be subject to tax on dividends received. Additionally, the company itself is subject to corporate taxes on its profits.
  • How does a Private Limited Company ensure confidentiality of its business operations?
    While a Private Limited Company must comply with public disclosure requirements, it can maintain confidentiality in certain areas, such as internal management practices and shareholder agreements.
  • Why should I choose LPC Consultancy to help register my Private Limited Company?
    LPC Consultancy offers personalized guidance, transparent pricing, and a commitment to timely and accurate service, ensuring your company registration process is efficient and stress-free.
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