Increase Capital

Authorized & Paid Up Capital of a Company

 Authorized capital is mentioned in the Memorandum of Association (MOA) of the company. This sets a limit on the capacity of the company to raise its equity capital. The government fee of company registration also depends on the authorized capital of the company.

The promoters then subscribe to the capital of the company by signing on the last page of the MOA, which is known as “Subscribed Capital”. It is a promise undertaken by the shareholders to pay the capital of the company. The subscribed capital can be lesser than the authorized capital. The subscribed capital became paid-up capital when the company received the amount of money from the shareholder. As per new provisions of the companies act 2013, a newly incorporated company cannot commence its business operations unless the subscribed amount is received from all the subscribers of the MOA. After the receipt of the subscription money, the company has to file Form INC-20A to the ROC.

The paid-up capital can never be more than the amount of authorized capital, as mentioned in the capital clause of the MOA. To increase the Authorised capital, you need to follow the AOA of the company and obtain approval of the ROC while making any changes in it’s capital.