A Private Limited Company may require additional funds to run its business, which can be obtained through loans and advances in the short-term. However, for long-term financial needs, the company may need to increase its authorized capital. The authorized capital of a company is the maximum amount of share capital that is allowed by the memorandum of association (MOA) and is governed by the Companies Act.
During the registration of a Private Limited Company, the authorized and paid-up capital is specified in the MOA. The company can issue new shares within the limit of the authorized capital mentioned in the MOA. However, if the company needs to issue shares beyond the specified limit, it needs to amend the MOA.
Authorized capital is important as it determines the maximum level to which a company can expand its business. If a company needs to infuse more funds to expand its business beyond the initial authorized capital, it must follow the steps to increase the authorized share capital as per the Companies Act. This can be done by issuing new shares or transferring shares from existing shareholders to new shareholders, which will result in an increase in the authorized capital of the company.
No matter what type of business you want to run or the industry you belongs to, Bhakat Associates will take care of the registration process with our easy and affordable services.