Increasing the authorized share capital of a company typically involves following certain legal and procedural steps as outlined in the company’s governing documents and applicable laws. Here’s a general guide on how to increase the authorized share capital:
- Review Governing Documents: Start by reviewing the company’s articles of incorporation or memorandum and articles of association to understand the existing provisions related to the authorized share capital. These documents may contain specific procedures and requirements for increasing the authorized share capital.
- Shareholder Approval: In most cases, increasing the authorized share capital requires obtaining approval from the shareholders of the company. This is typically done through a resolution passed at a duly convened shareholders’ meeting. Check the company’s bylaws or applicable laws to understand the specific requirements for shareholder approval, such as majority voting thresholds or special resolution requirements.
- Board of Directors Approval: Before seeking shareholder approval, it may be necessary to obtain approval from the board of directors. The board should review and approve the proposed increase in authorized share capital before presenting it to the shareholders. Check the company’s bylaws or applicable laws to determine the board approval requirements.
- Drafting a Resolution: Prepare a resolution that outlines the proposed increase in authorized share capital. The resolution should include the details of the proposed increase, such as the new authorized share capital amount and any other relevant provisions, such as the types or classes of shares to be authorized.
- Shareholder Meeting: Convene a shareholder meeting and present the proposed resolution for their approval. Provide sufficient notice to shareholders as required by the company’s bylaws and applicable laws. During the meeting, present the rationale for the increase in authorized share capital and allow shareholders to ask questions or discuss the matter before voting.
- Shareholder Approval and Filing: Once the resolution is approved by the shareholders, it should be duly recorded in the minutes of the meeting. File the necessary documents with the appropriate government authorities or registrar of companies, as required by the jurisdiction’s regulations. This may include submitting a copy of the resolution and other prescribed forms or documents.
- Update Governing Documents: After the increase in authorized share capital is approved and registered, amend the company’s articles of incorporation or memorandum and articles of association to reflect the new authorized share capital amount. This ensures that the governing documents accurately reflect the updated share capital structure of the company.
It is important to note that the specific procedures and requirements for increasing authorized share capital can vary depending on the jurisdiction and the company’s specific circumstances. It is recommended to consult with legal professionals or corporate advisors familiar with the applicable laws and regulations to ensure compliance and proper execution of the process.