Changing the authorized share capital of a company typically involves specific procedures and approvals as per the company’s governing documents and relevant laws. Here’s a general outline of the process:
- Board Resolution: The board of directors should convene a meeting and pass a resolution approving the proposed change in authorized share capital. The resolution should specify the new authorized share capital amount and authorize the convening of a general meeting of shareholders to approve the change.
- Shareholder Approval: A general meeting of shareholders must be convened to approve the change in authorized share capital. Shareholders should be provided with notice of the meeting and all relevant information regarding the proposed change.
- Special Resolution: At the general meeting, shareholders must pass a special resolution approving the amendment to the company’s Memorandum of Association (MOA) to reflect the new authorized share capital. A special resolution typically requires the approval of at least 75% of the shareholders present and voting at the meeting.
- Filing with Regulatory Authorities: Once the special resolution has been passed, the company must file the necessary documents with the appropriate regulatory authorities. This typically includes filing an application or notice of change in authorized share capital with the Companies Registry or other relevant regulatory body in the jurisdiction where the company is incorporated.
- Payment of Fees: In some jurisdictions, there may be fees associated with changing the authorized share capital. Ensure that any required fees are paid to the regulatory authorities along with the filing of documents.
- Update Company Records: Amend the company’s MOA to reflect the new authorized share capital. This may require filing updated documents with the Companies Registry or other regulatory bodies.
- Issue New Shares (Optional): Depending on the purpose of increasing the authorized share capital, the company may decide to issue new shares to existing shareholders or offer them for sale to new investors. This would typically require compliance with relevant securities laws and additional documentation.
- Notification to Stock Exchange (if applicable): If the company’s shares are listed on a stock exchange, it may be necessary to notify the exchange of the change in authorized share capital and comply with any listing rules or regulations.
- Maintain Records: Keep records of all communications, resolutions, and filings related to the change in authorized share capital for future reference and compliance purposes
It’s important to follow all necessary procedures and comply with legal requirements to ensure that the change in authorized share capital is valid and legally effective. Depending on the jurisdiction and specific circumstances, additional steps or requirements may apply. Therefore, it’s advisable to seek professional advice or consult with legal experts familiar with company law in your jurisdiction.