How to Increase Authorised Share Capital of a Company in India

As your business grows, you may need to increase your company's authorised share capital to issue new shares — whether to onboard investors, reward employees with ESOPs, or restructure the shareholding. This guide explains the complete process for increasing authorised share capital in India.

What is Authorised Share Capital?

Authorised share capital is the maximum amount of share capital that a company is legally authorised to issue to shareholders. It is stated in the Capital Clause of the Memorandum of Association. A company cannot issue shares beyond this limit without first increasing the authorised capital.

For example, if a company has an authorised capital of ₹10 lakh divided into 1,00,000 equity shares of ₹10 each, it cannot issue more than 1,00,000 shares without amending the MOA.

Difference Between Authorised and Paid-Up Capital

Authorised capital is the maximum permissible limit. Paid-up capital is the actual amount received from shareholders for shares issued and fully paid. Paid-up capital can never exceed authorised capital.

Step-by-Step Process to Increase Authorised Capital

Step 1 — Check Articles of Association: Confirm that the AOA contains a provision allowing the company to increase its authorised capital by ordinary resolution. Most standard AOAs include this, but some older ones may not.

Step 2 — Board Meeting: Convene a Board Meeting to recommend the increase in authorised capital and fix the date for an Extraordinary General Meeting (EGM) or Annual General Meeting (AGM).

Step 3 — EGM/AGM: Send proper notice to all shareholders (at least 21 days for an AGM or special business; shorter if 95% consent is obtained). Pass an Ordinary Resolution to increase the authorised share capital and amend the Capital Clause of the MOA accordingly.

Step 4 — File Form SH-7: Within 30 days of passing the resolution, file Form SH-7 on the MCA V3 portal with the altered MOA and the ordinary resolution.

Step 5 — File Form MGT-14: The ordinary resolution must also be filed in Form MGT-14 within 30 days.

Step 6 — Pay Additional Registration Fee: The ROC charges a fee based on the increased amount of authorised capital. This must be paid at the time of filing SH-7.

Government Fee for Increasing Authorised Capital

The ROC fee for increasing authorised capital is based on the incremental capital added. For example, for an increase up to ₹5 lakh, the fee is ₹5,000. For increases beyond ₹5 lakh, a sliding scale applies. Your CA or CS can calculate the exact fee based on your specific increase.

Timeline

From the board meeting to the MCA approving the Form SH-7, the entire process typically takes 15 to 25 working days including the notice period for the EGM. Plan ahead if you are expecting investors who need shares to be issued within a specific timeframe.

Conclusion

Increasing authorised share capital requires careful documentation and timely MCA filings. SPOTON's CS team manages the entire process including board resolutions, EGM notices, MOA amendments and all MCA filings. Contact us for expert support.