Increase in Authorised Share Capital
Increase in Authorised Share Capital refers to the process of raising the maximum limit of share capital that a company is legally allowed to issue to its shareholders, as specified in its Memorandum of Association (MOA). A company cannot issue shares beyond its authorised share capital.
Whenever a company proposes to issue new shares for fund-raising, business expansion, induction of investors, or increase in paid-up capital, it is mandatory to first carry out an Increase in Authorised Share Capital.
We provide end-to-end professional assistance for Increase in Authorised Share Capital in full compliance with the Companies Act, 2013, ensuring a smooth and hassle-free process.
When is Increase in Authorised Share Capital Required?
An Increase in Authorised Share Capital is required in the following situations:
- Issue of additional shares to existing or new shareholders
- Increase in paid-up share capital
- Fund-raising through private placement, rights issue, or preferential allotment
- Entry of new investors or promoters
- Compliance with statutory, regulatory, or contractual requirements
Legal Provisions Governing Increase in Authorised Share Capital
The Increase in Authorised Share Capital is governed by the following legal provisions:
- Section 61(1)(a) of the Companies Act, 2013
- Articles of Association (AOA) of the Company
- Companies (Share Capital and Debentures) Rules, 2014
If the AOA does not authorise an increase, it must be altered before proceeding with the Increase in Authorised Share Capital.
Procedure for Increase in Authorised Share Capital
The Increase in Authorised Share Capital is a statutory process and must be carried out strictly as per the Companies Act, 2013.
Check Articles of Association (AOA)
The first step in Increase in Authorised Share Capital is to verify whether the AOA permits such an increase:
- If authorised, the company may proceed
- If not authorised, the AOA must be altered by passing the appropriate resolution
Without AOA authorisation, the Increase in Authorised Share Capital is not legally valid.
Convene Board Meeting
A Board Meeting is convened to initiate the Increase in Authorised Share Capital, wherein the following approvals are granted:
- Approval for Increase in Authorised Share Capital
- Approval for alteration of MOA and AOA, if required
- Approval to convene a General Meeting
- Authorisation to a Director or Company Secretary for ROC filings
The Board Resolution is a crucial statutory document.
Shareholder Approval
A General Meeting of shareholders is convened after Board approval:
- Shareholders pass an Ordinary Resolution for Increase in Authorised Share Capital
- Alteration of the Capital Clause of MOA is approved
Shareholder approval is mandatory for Increase in Authorised Share Capital.
Filing of Form SH-7 with ROC
After passing the Ordinary Resolution, Form SH-7 must be filed with the ROC for Increase in Authorised Share Capital, along with:
- Certified copy of Ordinary Resolution
- Altered Memorandum of Association (MOA)
- Altered Articles of Association (AOA), if applicable
Applicable government fees and stamp duty must be paid based on the amount of increase and the state of registration.
ROC Approval
Upon verification, the ROC approves Form SH-7:
- The Increase in Authorised Share Capital becomes legally effective
- Updated authorised capital reflects in the MCA Master Data
Only after ROC approval can the company issue further shares.
Documents Required for Increase in Authorised Share Capital
Board Resolution
Ordinary Resolution
Altered Memorandum of Association
Altered Articles of Association (if applicable)
Certificate of Incorporation and statutory records
Government Fees & Stamp Duty for Increase in Authorised Share Capital
Government fees for Increase in Authorised Share Capital are payable through Form SH-7 and depend on:
- Amount of increase in authorised capital
- State-wise stamp duty regulations
Increase in Paid-Up Capital
Increase in Paid-Up Capital takes place when a company allots new shares or securities to its shareholders or investors and receives consideration against such allotment. After every Increase in Paid-Up Capital, filing of Form PAS-3 (Return of Allotment) with the Registrar of Companies (ROC) is a mandatory statutory compliance.
Form PAS-3 is governed by Section 39(4) and Section 42 of the Companies Act, 2013, read with the Companies (Prospectus and Allotment of Securities) Rules, 2014. It is applicable to all companies, including Private Limited Companies, Public Limited Companies, and OPCs.
When is Form PAS-3 Required for Increase in Paid-Up Capital?
Form PAS-3 must be filed whenever there is an Increase in Paid-Up Capital due to:
- Allotment of equity shares
- Rights issue of shares
- Preferential allotment
- Private placement of shares
- Conversion of loans or debentures into equity
- ESOP allotment
Form PAS-3 must be filed within 30 days from the date of allotment, failing which penalties apply.
Important Note on Resolution Requirement for Increase in Paid-Up Capital
Form PAS-3 itself does not require passing of an Ordinary Resolution. It is only a statutory return filed after allotment.
However, for Increase in Paid-Up Capital, the nature of resolution depends on the mode of allotment:
- Rights Issue – Board Resolution is sufficient (subject to AOA)
- Private Placement / Preferential Allotment / ESOP – Special Resolution is mandatory
- Conversion of Loan or Debentures into Equity – Special Resolution as per agreement and law
The relevant resolution is passed before allotment, and its certified copy is attached with Form PAS-3.
Step-by-Step Process for Increase in Paid-Up Capital through PAS-3 Filing
Convening Board Meeting
A Board Meeting is convened to initiate the Increase in Paid-Up Capital, wherein:
- Allotment of shares is approved
- Board Resolution for allotment is passed
- Authorisation is given to file Form PAS-3
📌 The date of Board Meeting is treated as the date of allotment.
Preparation of Allotment Details
For Increase in Paid-Up Capital, the following details are prepared:
- Number and class of shares allotted
- Face value and issue price
- Name, address, and shareholding of allottees
- Amount received against share allotment
Collection & Verification of Documents
For filing PAS-3 related to Increase in Paid-Up Capital, the following documents are verified:
- Certified copy of Board Resolution
- Shareholders’ Resolution (if applicable)
- List of allottees
- Valuation Report (mandatory for private placement/preferential allotment)
- Bank statement showing receipt of share application money
Filing of Form PAS-3 on MCA Portal
The authorised person files Form PAS-3 on the MCA portal by:
- Entering CIN and company details
- Filling allotment and share capital particulars
- Uploading mandatory attachments
- Digitally signing the form using DSC
The form is submitted with payment of prescribed government fees.
Payment of Government Fees
ROC fees for Increase in Paid-Up Capital depend on:
- Authorised share capital of the company
- Additional fees in case of delayed filing
ROC Acknowledgement
Upon successful filing:
- SRN and acknowledgement are generated
- Once approved, the Increase in Paid-Up Capital becomes legally valid
Mandatory Attachments to Form PAS-3 for Increase in Paid-Up Capital
- Board Resolution for allotment
- List of allottees (as per prescribed format)
- Valuation Report (where applicable)
- Shareholders’ Resolution (if applicable)
- Contract / conversion agreement (if any)
Penalty for Late Filing of PAS-3
Failure to file Form PAS-3 within 30 days of Increase in Paid-Up Capital may result in:
- Additional ROC filing fees
- Monetary penalties on company and officers
- Compliance issues during audits, due diligence, or funding rounds
Why Choose My Legal Business LLP for Increase in Authorised Share Capital / Paid-Up Share Capital?
- Complete End-to-End Support – From drafting Board & Shareholder Resolutions to alteration of MOA & AOA, filing SH-7 and PAS-3, and ROC follow-ups.
- Quick & Reliable Execution – Timely processing to ensure smooth Increase in Authorised Share Capital and Increase in Paid-Up Share Capital without delays.
- 100% Legal Compliance – All filings done strictly as per the Companies Act, 2013 and MCA rules.
- Error-Free Documentation – Accurate drafting and proper attachments to avoid resubmissions or penalties.
- Expert Professional Guidance – Handled by experienced corporate compliance professionals.
- Transparent Pricing – Clear and upfront fees with no hidden costs.
- Dedicated Client Support – Personalised assistance at every stage for a hassle-free experience.
Frequently Asked Questions (FAQs) – Increase in Authorised Share Capital/Paid up Share capital
Can authorised capital be increased multiple times?
Yes. There is no restriction on the number of times authorised share capital can be increased, subject to compliance with the Companies Act, 2013.
Is it mandatory to increase authorised capital before issuing new shares?
Yes. A company cannot issue shares beyond its authorised capital limit. Therefore, authorised capital must be increased before issuing additional shares or increasing paid-up capital.
Which resolution is required to increase authorised share capital?
An Ordinary Resolution is required to be passed by shareholders in a General Meeting.
Is alteration of MOA required for increase in authorised capital?
Yes. The Capital Clause of the Memorandum of Association (MOA) must be altered to reflect the increased authorised share capital.
Is alteration of AOA always required?
Alteration of Articles of Association (AOA) is required only if the existing AOA does not authorise an increase in authorised share capital.
Which ROC form is filed for increase in authorised share capital?
Form SH-7 is required to be filed with the Registrar of Companies (ROC).
What is the due date for filing Form SH-7?
Form SH-7 must be filed within 30 days from the date of passing the Ordinary Resolution.
What documents are required for filing Form SH-7?
The following documents are generally required:
- Certified copy of Ordinary Resolution
- Altered MOA
- Altered AOA (if applicable)
Are government fees and stamp duty applicable?
Yes. Government fees and stamp duty are payable based on the amount of increase in authorised capital and vary according to state regulations.
Is increase in authorised capital compulsory for increase in paid-up capital?
Only when the existing authorised capital is insufficient. If sufficient authorised capital is already available, no increase is required.
Is filing of Form PAS-3 mandatory for every share allotment?
Yes. Filing of Form PAS-3 is mandatory for every allotment of shares or securities, including rights issue, private placement, preferential allotment, ESOPs, and conversion of securities into equity.
What is the due date for filing Form PAS-3?
Form PAS-3 must be filed within 15 days from the date of allotment. Delay in filing attracts additional fees and penalties.
Is Ordinary Resolution required for filing Form PAS-3?
No. Ordinary Resolution is not required for filing Form PAS-3. PAS-3 is only a return of allotment. However, shareholder approval depends on the mode of share issue.
When is Special Resolution required in relation to PAS-3?
Special Resolution is required in cases of private placement, preferential allotment, ESOPs, and conversion of loans or debentures into equity. The resolution is passed prior to allotment and attached while filing PAS-3.
Can PAS-3 be filed without receiving share application money?
No. Shares can be allotted only after receipt of share application money through proper banking channels. Proof of receipt must be maintained for PAS-3 filing.
What documents are attached with Form PAS-3?
Common attachments include Board Resolution for allotment, list of allottees, valuation report (if applicable), shareholders’ resolution (if applicable), and bank statement showing receipt of funds.
What happens if Form PAS-3 is filed late?
Late filing of PAS-3 attracts additional ROC fees and may result in monetary penalties on the company and its officers. Non-compliance may also create issues during audits and due diligence.
Who can sign and file Form PAS-3?
Form PAS-3 is digitally signed by a Director, Company Secretary, or authorised professional using a valid DSC.
Is PAS-3 required for increase in paid-up capital?
Yes. Any increase in paid-up capital through allotment of shares requires filing of Form PAS-3 with the ROC.
Is valuation report mandatory for filing Form PAS-3?
A valuation report is mandatory in cases of private placement and preferential allotment to justify the issue price of shares. However, for rights issue at face value, a valuation report is generally not required.
Does Form PAS-3 need to be filed separately for each allotment?
Yes. Form PAS-3 must be filed separately for every allotment of shares or securities, even if multiple allotments are made during the same financial year, as each allotment results in an increase in paid-up capital.