Increase in Authorised Share Capital
Expand your company's capital limits with the right approvals, statutory filings, and regulatory compliance under the Companies Act, 2013.
What Is an Increase in Authorised Share Capital?
Authorised share capital is the maximum share capital a company is permitted to issue, as specified in its Memorandum of Association (MOA).
Legal Authorisation
A company may increase its authorised capital under Section 61(1)(a) of the Companies Act, 2013, subject to the applicable requirements and authorisation in its Articles of Association (AOA).
Required Approvals
The company must obtain the applicable Board and shareholder approvals and amend its capital clause in the MOA, wherever required.
MCA Compliance
The prescribed forms and supporting documents must be filed with the Registrar of Companies (ROC) within the applicable statutory timelines.
Prepare Your Company for Its Next Stage of Growth
Increasing authorised share capital provides a higher ceiling for issuing shares when required. It does not, by itself, raise the company's paid-up capital or bring in additional funds.
- Increase the permitted share capital limit
- Prepare for a proposed share issue
- Update the company's capital clause
- Complete the relevant statutory filings
Illustrative representation — actual capital requirements depend on your company's plans.
Procedure for Increasing Authorised Share Capital
Follow the applicable approval and filing process to update your company's authorised share capital.
Review the AOA and Existing Capital
Check the company's existing authorised capital, capital clause in the MOA, and whether the AOA authorises the proposed increase.
Obtain Board Approval
The Board of Directors considers the proposal, approves the proposed increase, and takes steps to convene a general meeting where required.
Obtain Shareholder Approval
Shareholders approve the alteration of the capital clause by an Ordinary Resolution under Section 61, where applicable. If the AOA does not authorise the increase, the necessary alteration of the AOA must be completed first.
File Form SH-7 with the ROC
File Form SH-7 within 30 days of the alteration of share capital, along with the prescribed fee, altered MOA and other applicable documents.
Complete Other Applicable Filings
File Form MGT-14 where required by law and maintain updated statutory records and company documents.
Authorised Capital vs. Paid-up Capital
These terms represent different aspects of a company's share capital and should not be treated as interchangeable.
| Particulars | Authorised Share Capital | Paid-up Share Capital |
|---|---|---|
| Meaning | Maximum share capital the company is authorised to issue. | Capital represented by shares issued and paid up, subject to the applicable legal framework. |
| Effect of Increase | Raises the maximum permitted capital limit. | Reflects additional capital from a valid share issue and allotment. |
| Key Compliance | Alteration of the capital clause and Form SH-7, with other filings where applicable. | The applicable share-issue procedure and prescribed return of allotment, where required. |
| Does It Bring in Funds? | No. Increasing the limit alone does not bring funds into the company. | A share issue may bring in funds, depending on the terms and nature of the issue. |
An increase in authorised share capital does not automatically increase paid-up capital. A separate share issue and allotment process may be required.
Need to Increase Paid-up Share Capital?
If the company intends to issue and allot additional shares, it must follow the applicable provisions of the Companies Act, 2013. Depending on the circumstances, this may involve a rights issue, private placement, preferential allotment or another legally permitted method.
The company must obtain the required approvals and complete the applicable filings. Form PAS-3 is generally used for the return of allotment, subject to the relevant statutory provisions and rules.
Discuss Your Capital RequirementsDocuments and Information Required
Keep the relevant company records ready for review. The final document list depends on the company's circumstances and applicable MCA requirements.
Company Documents
- Existing MOA and AOA
- Certificate of Incorporation
- Current authorised and paid-up capital details
- Company identification details
Approval Records
- Board resolution
- Notice and records of general meeting, where required
- Shareholder resolution
- Updated capital clause of the MOA
Filing Information
- Prescribed Form SH-7 details
- Form MGT-14 details, where applicable
- Supporting attachments and declarations, if required
- Prescribed filing fee
Increase in Capital FAQs
Answers to common questions about increasing authorised share capital.
What is authorised share capital?
It is the maximum share capital a company is authorised to issue, as specified in its MOA and subject to the applicable legal requirements.
Which form is used to increase authorised capital?
Form SH-7 is generally filed with the ROC to notify an alteration of share capital. Other filings may also be required depending on the circumstances.
What is the due date for filing Form SH-7?
Under Section 64(1) of the Companies Act, 2013, the company is generally required to file the prescribed notice within 30 days of the alteration of share capital.
Does increasing authorised capital increase paid-up capital?
No. An increase in authorised capital raises the maximum permitted limit only. Paid-up capital may increase following a separate valid share issue and allotment.
Is shareholder approval required?
The applicable shareholder approval must be obtained under the Companies Act, 2013 and the company's constitutional documents. The usual procedure for increasing authorised capital under Section 61 involves an Ordinary Resolution, subject to the relevant requirements.
Planning to Increase Your Company's Capital?
Get assistance with approval requirements, capital clause amendments, MCA forms and supporting documents.
- Capital review
- Shareholder approval
- SH-7 filing