Paid up capital is the amount that shareholders agree to pay the money in exchange of shares to the company. If company wants to do the changes in the paid-up capital structure of company, they need to follow the steps given below.
Submit to get Change In Paid Up Capital
It enhanced the financial stability of the company
Increasing the amount of paid-up capital will attract the investors to invest.
It provides the flexibility to the company.
It increases the borrowing capacity of the company.
There are some ways to increase the paid-up share capital of the company i.e.,
Issuing new shares
By way of issuing Bonus Shares
By way of issuing Right Shares
By way of Private Placement
Note: Paid-up capital cannot be increased beyond the authorized capital. If the authorized capital is below the required limit for increasing the paid-up capital, it must be increased first. Only then the paid-up capital can be raised.
Process for Increasing Paid-up Share capital: -
It includes several steps i.e.,
Firstly, we have to pass various resolution along with the explanatory notes.
Then we have to file PAS- 3 for increasing paid up capital.
Then at last MGT- 14 need to be file for increasing capital and filing of the resolutions.
At last ROC will approve the forms and provide the approval letter for same.
Now Let’s discuss in detail what is included in every step and how we proceed with that
Firstly, company has to conduct board meeting for increasing the paid-up capital and also dispatch out the notice of Extraordinary General Meeting (EGM) to the shareholders.
Then EGM will conduct, and shareholder will grant approval for the same.
Then all the resolution passed at both the meeting is required along with the explanatory notes.
Then after all these things the first step is to file the PAS -3 for increasing paid up capital of company and we will attach resolution in that and file the same by attesting DSC of authorized director for signing of the form.
Now we have to file another form i.e., MGT 14 on MCA portal and pay the fees along with that.
Then ROC will take some days to approval after we receive the approval letter.
Documents Deliverable: -
Form PAS- 3 along with challan.
Form MGT-14 along with challan.
Time taken under this work will be 2 days and ROC will approve the same in 3-4 working days.
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Eligibility
Increased paid up capital must be within the authorized capital of the company.
Approval of the board and the shareholders is required for increasing the paid up capital.
Documents Required for Change In Paid Up Capital
Now let’s Discuss about the documents need for increasing Paid-up Capital of a company: -
All the resolution passed at both the meting i.e., EGM and BM along with the explanatory notes.
Digital signature certificate of the director authorized for signing.
Memorandum association of the company.
Subscriber sheet stating clearly the proportion of each shareholder that they will hold after increasing the capital.
Benefits Of Getting Change In Paid Up Capital
Enhanced Financial Stability: - It enhanced the financial stability of the company
Attracting Investors: - Increasing the amount of paid-up capital will attract the investors to invest.
Operational Flexibility: - It provides the flexibility to the company.
Increased Borrowing Capacity: - It increases the borrowing capacity of the company.
