How to Increase Authorized Share Capital of a Company

Is your company preparing to raise additional funds, issue new shares, or bring in investors? Before taking these steps, it is essential to ensure that your authorised share capital is sufficient.

Under Section 2(8) of the Companies Act, 2013, authorised capital (also called nominal capital) is defined as such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company.

In simple words, it’s the legal ceiling on the number of shares your company can issue. If you want to issue shares beyond this limit, you must first increase authorised share capital by following the prescribed procedure with the Registrar of Companies (ROC).

In this article, we shall walk you through the step-by-step process, required forms (like SH-7), fees, and compliance checks to increase authorised share capital in India.

Whether you are a startup gearing up for growth or an established business expanding operations, understanding this process is crucial to avoid delays and penalties.

Table of Contents

Why Do Companies Need to increase Authorised Share Capital?

To raise fresh funds for business expansion and new projects.
To issue additional shares to new or existing investors.
To meet the capital requirements for scaling operations.
To strengthen the company’s financial structure for growth.
To comply with investor agreements or funding commitments.
To enable mergers, acquisitions, or strategic partnerships.
To prepare for future business opportunities without legal delays.
To convert debt into equity.

Legal Provisions to Increase Authorised Share Capital

The increase of authorised share capital is governed by specific provisions of the Companies Act, 2013, which are outlined below for easy reference.

Governing Section / Form	Provision	Requirement
Section 2(8), Companies Act, 2013	Definition of Authorised Capital	Authorised capital is the maximum capital a company can issue, as stated in its Memorandum of Association (MOA).
Section 61(1)(a), Companies Act, 2013	Power to Alter Authorised Capital	Company may increase authorised capital if permitted by Articles of Association (AOA).
Section 14, Companies Act, 2013	Amendment of AOA	If AOA does not authorise increase, it must be amended by passing a special resolution.
Section 61(1)(a), Companies Act, 2013	Shareholder Approval	Increase of authorised share capital requires an ordinary resolution passed in a general meeting.
Form SH-7, Companies (Registration Offices and Fees) Rules	Filing with ROC	Form SH-7 must be filed with ROC along with prescribed fees and attachments within 30 days.
MCA/ROC Procedure	ROC Approval	ROC verifies documents, updates records, and confirms revised authorised share capital.

Step-by-Step Process to Increase Authorised Share Capital

Step 1: – Check the Articles of Association (AOA)

Verify whether the AOA permits the company to increase its authorised share capital.
If it does not, amend the AOA first through a special resolution.

Step 2: – Convene a Board Meeting

Pass a resolution to propose the increase of authorised share capital.
Approve the notice of the Extraordinary General Meeting (EGM).

Step 3: – Call and Hold an Extraordinary General Meeting (EGM)

Issue notice to shareholders along with the explanatory statement.
Conduct the EGM and present the proposal for increasing authorised share capital.

Step 4: – Pass Ordinary Resolution for Alteration of MOA

Obtain shareholder approval by passing an ordinary resolution under Section 61(1)(a) of the Companies Act, 2013.
Amend Clause V (Capital Clause) of the MOA to reflect the revised capital.

Step 5: – File Form SH-7 with the ROC

File Form SH-7 within 30 days of passing the resolution
Attach the altered MOA, resolution copies.
Pay ROC filing fees for SH-7 based on the post-increase authorised capital slab.
Pay applicable stamp duty on alteration of capital as per the relevant State Stamp Act through the MCA portal along with SH-7.
Keep challans and acknowledgements for future references.

Step 6: – Approval of form SH-7

After verification, the Registrar of Companies updates the records.
The revised authorised share capital reflects in MCA master data.

Documents Required to increase authorised share Capital

To successfully increase authorised share capital, a company must prepare and submit specific documents to ensure compliance with the Companies Act, 2013.

Document	Purpose/Description
Certified True Copy of Board Resolution	To approve the proposal for increasing authorised capital and calling the general meeting.
Notice of Extraordinary General Meeting (EGM)	Sent to members along with the agenda and explanatory statement under Section 102 of the Companies Act, 2013.
Certified True Copy of Ordinary Resolution	Passed by shareholders in the EGM approving the increase in authorised capital.
Altered Memorandum of Association (MOA)	Updated Clause V (Capital Clause) reflecting the revised authorised share capital.
Altered Articles of Association (AOA) (if applicable)	Required only if amendment to AOA is necessary to authorise increase of capital.

Post approval Compliance after increase of authorised capital

Update the Register of Members and statutory registers.
Record the revised capital in books of accounts and financial statements.
Maintain the updated MOA and AOA with alterations.
Notify investors, lenders, and stakeholders of the change.
Align future share issue plans with the revised authorised capital.
Preserve ROC challans, resolutions, and filings for records.

Compliance Tips to Avoid Delays

Ensure the AOA enables alteration before the General Meeting.
Use precise wording in the resolutions and MOA capital clause.
Match figures across the notice, resolutions, MOA, SH-7, and fee calculations.
Track the 30-day timelines for SH-7 and, where applicable, for MGT-14.

Conclusion

It is not just a legal formality to increase authorised capital but a strategic step that empowers your company to raise funds, issue new shares, and support long-term growth. By carefully following the provisions of the Companies Act, 2013, checking the Articles of Association, passing the required resolutions, and filing the correct forms with the Registrar of Companies (ROC), businesses can expand smoothly without compliance hurdles.

For companies planning capital expansion, it is essential to align your legal framework with your growth vision.

Need assistance to increase authorised share capital of your company? Our expert team of My Legal Business LLP have professionals who can manage the entire process, from drafting resolutions and altering MOA/AOA to filing with the ROC, ensuring complete compliance under the Companies Act, 2013.

Partner with us to make your capital expansion smooth, accurate, and hassle free.