What is authorized capital?

According to Section 2 (8) of the Companies Act, 2013 “Authorized Capital” is the capital that is authorized by the memorandum of the company to be the maximum amount of the share capital of the company.

The company can expand its business to the level of the authorized capital. In case the company has to expand the business infusing more funds than at first, the company has to increase the authorized capital by following the steps that are mentioned in this article.

Authorized Share Capital increase

A company may need to increase the authorized share capital before it is issuing new equity shares and increasing the paid-up capital. As authorized share capital is the total value of the shares a company can issue. The paid-up capital is the total value of the shares of the company that have been issued.

The Paid-up capital does not exceed the authorized capital. Hence, if the company has authorized capital of Rs.10 lakh and paid-up capital of Rs.10 lakhs would like to induct new shareholders then it can be done by:

Increasing the Authorized share capital and issuing new shares (or)

Transferring shares from the existing shareholders to the new shareholders.

In most cases after the new shares are issues the authorized capital increases. Connect with our advisors at info@legalecare.com for assistance with increasing the authorized share capital.

How to increase the authorized share capital of the company?

Verify AOA of the Company

Before starting with the procedures for increasing the authorized share capital it is necessary to verify the AOA to ensure that there is a provision in the Articles of Association referring to the increase of the authorized share capital. If there is no such provision then the company must first make changes to the AOA of the company.

Note: Most of the AOA’s have the provision for increasing the authorized share capital of the company.

Convene a Board Meeting

It is necessary to convene a Board meeting by providing notice to Director to increase the authorized share capital of the company. At the Board meeting, it is necessary to obtain approval from the Board of Directors for increasing the authorized share capital.

After this whole procedure, a date should be fixed to conduct an Extra-ordinary General meeting to obtain the approval of the shareholders for increasing the authorized share capital and make changes to the MOA of the Company.

At last get the approval of the Board of Directors, the company secretary who is present at the meeting to present the notice of Extraordinary general meeting to the shareholders. Basing the approval, the notice of extraordinary general meeting should be presented to all the shareholders, directors, and auditors of the company.

Extra-Ordinary General Meeting

Any DIN holder who has already submitted eForm DIR-3 KYC in any of the previous financial years and who does not require an update in any of his KYC details as submitted may perform his annual KYC by accessing the DIR-3 KYC web service.

Form DIR-3 KYC WEB is simply to verify the data filled by the DIN holder in his previous year’s eForm DIR-3 KYC.

Applicable Fee for form DIR-3 KYC

If Form DIR-3 KYC, is filed within the due date of the respective financial year, no fee is payable. However, if filed after the due date, for DIN status ‘Deactivated due to non-filing of DIR-3 KYC a Fee of Rs.5000 becomes payable.

Due Date for Filing DIR 3 KYC Form

Documents Required to File DIR 3 KYC form

The documents required to file reform DIR 3 KYC is as follows:

Details of Nationality

Details of citizenship like gender, date of birth, etc.

Permanent Account Number (PAN)

Passport (compulsory when DIN holder is of foreign nationality)

Driving License

Aadhaar card

Personal Mobile and Email ID

Proof of Residential address.

Voters Identity card

Aside from the aforementioned documents, directors must additionally have the following items on hand:

To file the form, he used his digital signature.

CA, CS, or Cost Accountants who are currently practicing the professional attestation of the above-mentioned documents. In the event of foreign nationals, an attestation by a defined authorized person is required.

A declaration signed by them (applicant/director) and attested by CA, CS, or Cost Accountants in good standing.

The process to file DIR 3 KYC Form

Step 1- Download the form

The first and most important step is to obtain a copy of the DIR-3 KYC form from the MCA’s website.

The DIR 3 KYC form is attached for your reference.

Step 2- Fill in the DIN details

The DIN must be filled in on the KYC form if the status is ‘Approved.’

Directors who have had their DIN deactivated due to non-submission of the KYC Form can reactivate their DIN by filling out the form after the statutory due date and paying late filing fees.

Step 3- Fill out the DIR- 3 KYC Form with the required information

Name and relevant credentials

The applicant must enter his own first and last name, as well as his father’s first and last name. There are a few things to keep in mind:

The director must give his name as it appears on his PAN card.

The address provided in the form will be verified against the PAN database.

Acronyms, single alphabets, and short forms are not permitted.

Nationality

A director needs to declare his nationality

Directors with foreign nationality must declare the nationality mentioned in their passport

Age Declaration

A director’s date of birth (DOB) must be entered in the DD/MM/YYYY Because anyone under the age of 18 is ineligible to file this application, an age declaration is required.

Address

A director’s permanent residential address must be entered and proof of permanent address must be attached. When the current residential address differs from the permanent residential address, the current residential address must be provided.

Note: A foreign pin code can be furnished only when the state selected is “NA”.

Step 4- PAN verification

Verification of the Permanent Account Number (PAN) is required. A director must first input his PAN, after which he must click the ‘Verify income-tax PAN’ button. The system next checks the director’s information using the PAN card number.

Note: For successful authentication, the PAN provided in the form must match the PAN indicated in the DSC. When foreign nationals do not have a PAN, the name on the form must match the name on the DSC in order for authentication to be successful.

Step 5- Update contact details and verify OTP

A director must update his contact information by providing his phone number and e-mail address, both of which must be validated using an OTP.

When a director inputs these contact details, he must verify them using an OTP by selecting the ‘Generate OTP’ button once they have been submitted. OTPs are issued to both the mobile number and the email address separately.

Only directors who are not Indian citizens are permitted to use country codes other than +91/91/0.

It should be remembered that an OTP can be issued to the telephone number and email address up to 10 times per day and twice every 30 minutes against one form.

Attested Attachments to be made

An applicant must attest and upload the documents listed above. Any additional attachments must be signed digitally by the applicant.

Step 6- Authentication of e-Form

The e-Form must be validated, which means it must be digitally signed by a Chartered Accountant/Cost Accountant or a Company Secretary who is licensed to practice their profession. The provision of the practicing professional’s information, as well as their digital signature, is a critical responsibility that cannot be overlooked.

After thorough proofreading, click the ‘Submit’ button.

Step 7- SRN Generation

When the e-Form DIR-3 KYC is successfully submitted, an SRN is produced and assigned to the user for future MCA correspondence.

Step 8- Email communication

On his personal email ID, the applicant will receive an email acknowledging receipt of the form. Once the email of approval is received, filing eForm DIR-3 KYC is complete.

Things to keep in mind while filing e-Form DIR-3 KYC

When filling out this e-form, the director must provide their phone number and email address. A One-Time-Password will be used to verify this information (OTP)

This e-Form will require directors to utilize their digital signatures.

Directors must ensure that the e-Form is certified by a practicing Chartered Accountant, Cost Accountant, or Company Secretary.

Procedure to File Form DIR-3 KYC WEB

The procedure to File Form DIR-3 KYC Web is explained in detail below:

The applicant needs to log in to the MCA portal with valid credentials. After login, click on the MCA service option and then select DIN services. From the list of services, select the DIR-3 KYC Web option.

On the new page, Provide the DIN details, mobile number, and email ID that are preloaded will display on the page.

By clicking on the Send OTP option, an OTP will be redirected to the applicant’s mobile number and Mail ID. Furnish the OTP to verify.

Pre-loaded details of the DIN Holder will display, check all the details, and click on submit button.

A zero rupee challan and SRN will be generated if the form is filed on or before 30th September.