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Increase in Authorised Share Capital

Increasing the authorised share capital of a company is a strategic decision to accommodate future funding or ownership changes. Under the Companies Act, 2013, this process is legally regulated and must be carried out in compliance with the following:

  • Section 61 - Power to increase share capital
  • Section 64 - Filing of notice to the Registrar of Companies (ROC)
  • Companies (Share Capital and Debentures) Rules, 2014

What is Authorised Capital?

Authorised Capital (also called Authorised Share Capital) is the maximum amount of share capital a company is legally permitted to issue to shareholders, as defined in its Memorandum of Association (MOA).

Example: If a company's authorised capital is ₹10 lakhs, it can issue shares only up to this value unless the authorised capital is formally increased through statutory procedures.

To raise funds by issuing new shares beyond the existing limit, the company must first increase its authorised capital.

Step-by-Step Procedure to Increase Authorised Capital

1

Check Articles of Association (AOA)

  • Verify if the Articles of Association allow for increasing the authorised capital.
  • If not permitted, the company must first amend the AOA by passing a special resolution under Section 14 of the Companies Act.
2

Convene a Board Meeting

Call and hold a Board Meeting to:

  • Approve the proposal for increasing the authorised capital
  • Approve the notice and agenda for the Extraordinary General Meeting (EGM)
3

Hold General Meeting (EGM)

  • Conduct the EGM and pass an ordinary resolution to increase the authorised capital.
  • Also, pass a resolution to alter Clause V (Capital Clause) of the MOA.
4

File with ROC

  • File Form SH-7 with the Registrar of Companies (ROC) within 30 days from the date of resolution.
Attach the following documents:
  • Certified copy of the ordinary resolution
  • AAltered MOA reflecting the new capital
  • Notice of the EGM with explanatory statement

Key MCA Forms

Form Purpose
MGT-14 Filed only if the AOA is amended
SH-7 Filed to increase the authorised share capital

Related Corporate Actions Post Capital Increase

Once the authorised share capital is increased and approved, the company can proceed with issuing shares via:

  • Rights Issue (as per Section 62)
  • Preferential Allotment
  • Private Placement
  • Bonus Issue, and more.
Important Points to Remember
  • Stamp duty is payable on Form SH-7, and the rate differs from state to state.
  • No approval from the Central Government is required—only shareholder resolution and ROC filing.
  • The increase becomes effective only after ROC approval.
  • A company cannot issue shares beyond its authorised capital until the increase is legally registered.

How VETRI AUDIT SERVICES PRIVATE LIMITED Can Help?

At Vetri Audit Services Private Limited, we provide end-to-end assistance in increasing your company's authorised share capital. Our expert team will:

  • Review and amend your AOA, if needed
  • Draft board and shareholder resolutions
  • Conduct legal filings with ROC
  • Ensure compliance with MCA norms and stamp duty requirements

Get in touch today for a seamless and compliant capital enhancement process.

Contact us today for a consultation!

9176455554

OR vetriauditor@gmail.com
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