Why and How to increase paid-up or issued capital?

The paid-up or issued capital are capital used for working capital requirement purposes and there are time from time you may want to increase your company’s capital to higher level due to whatever reasons.

5 Main Reasons you want to increase your company’s paid-up capital

There are many reasons you may want to increase the paid-up capital of your company, but the following are the 5 common reasons found:

  1. Bank – Requested by the bank when applying bank facilities
  2. Project -Minimum requirement to qualify for a project tender
  3. License – Required by the relevant government departments when applying licenses
  4. Suppliers & Customers – Your suppliers or customers may not want to deal with you if your company is having low level of paid-up capital
  5. Corporate Image – You may want to re-branding your company’s image by having healthy capital level

4 Steps to increase paid-up capital of the Company:

1. Deposit the money into company’s bank account & produce the Bank-in slip to company secretaryHow to increase paid up capital in Malaysia - registercompany2u.com.my
2. Company secretary will prepare the relevant board’s & members’ resolutions & documents
3. All directors & shareholders must sign the resolutions & documents
4. Company secretary will lodge the Form 24 & 11 to SSM for registration of increase paid-up capital

Why bank-in slip is needed at the first place?

The following are extracted from the Section 48 of the Companies Act 1965:

“No allotment shall be made of any shares of a company unless the sum payable on application for the shares has been received by the Company. If a cheque for the sum has been received by the company, the sum shall be deemed not to have been received by the company until the cheque is paid by the bank.”

Every director who knowingly contravenes or permits or authorises the contravention shall be guilty on an offence against this Act.

Can a company increase paid-up capital without putting the money into the company’s bank account?

It is an legal offence in law and we are unable to increase paid-up capital of the company without receiving the evidence of cash deposited into the company’s bank account from the directors.