Increase in Authorized Capital

As per Section 2(8) of Companies Act 2013, Authorized capital is the maximum amount of share capital that a company is allowed to issue to its shareholders as per the constitutional documents.

It can be changed with the approval of shareholders.
The various reasons due to which a company may require to increase its authorized capital are-

• The need for enormous funds.
• If the debt is converted to equity capital

Before issuing additional equity shares, a company must enhance its authorized share capital.