Authorised Capital Increase

Overview

Authorised capital is the maximum share capital a company may issue, as stated in the capital clause of its Memorandum of Association (MOA). A company cannot issue shares beyond it, so when paid-up capital reaches the ceiling, the ceiling must be raised before new shares are allotted. Section 61 of the Companies Act, 2013 permits this by ordinary resolution if the Articles of Association (AOA) allow it.

Who needs it

• A company about to take in a new investor or founder money above the current ceiling.
• A company converting loans or advances into equity.
• A company introducing an employee stock option plan or bonus issue.
• A company preparing for expansion, acquisition or a restructuring.

What Zenith does

We start by understanding the funding plan and checking whether your AOA already allows an increase. Your relationship manager then shares a checklist, drafts the board notice, EGM notice, explanatory statement, resolutions and the altered MOA and AOA, and files the required forms through appropriately authorised professionals. We also explain what comes next, usually the allotment of shares. Timelines depend on completeness, complexity and authority processing.

Eligibility and key rules

• Check the AOA first. If it has no clause permitting alteration of capital, the AOA must be amended under Section 14 before capital can be increased.
• The increase is approved by an ordinary resolution of the members at a general meeting.
• Board meeting notice is at least 7 days. EGM notice is at least 21 days, which can be shortened where at least 95% of voting members agree.
• The capital clause (clause V) of the MOA must be altered.
• Paid-up capital can never exceed authorised capital.

Documents required

• Latest MOA and AOA, and altered versions.
• Certified true copy of the ordinary resolution.
• Notice of EGM with explanatory statement.
• Certificate of incorporation and PAN of the company.
• DSC of an authorised director.

Process and timeline

1. Review the AOA; amend it first if it is silent on capital increases.
2. Hold a board meeting after due notice and approve the proposal and the EGM.
3. Send the EGM notice to directors, members and auditors.
4. Hold the EGM and pass the ordinary resolution.
5. File Form SH-7 within 30 days of the resolution with the altered MOA and the resolution copy. MGT-14 is filed where a special resolution (for example an AOA change) was also passed.
6. Pay the stamp duty on the increased capital as per the state of the registered office.
7. After registration, update statutory records and proceed to allot shares.

If the change leads to a different industry code, the ROC may issue a fresh certificate of incorporation.

Government fees, penalties and due dates

• Form SH-7 is due within 30 days of the resolution; its fee depends on the amount of the increase.
• Stamp duty on the increase depends on the state of the registered office, so Zenith confirms it for your state.
• Late filing attracts additional fees; the public source read puts delay at ₹1,000 per day.
• General non-compliance under Section 450 can attract ₹10,000 plus ₹1,000 per day of continuing default.

Amounts and dates above reflect public sources read in October 2026 and change with notifications, so Zenith confirms the current figures in your quotation.

Common mistakes

• Issuing shares before the capital increase is registered.
• Skipping the AOA check and later finding the resolution was not valid.
• Passing the resolution with a short notice and no consent of 95% of members.
• Forgetting to pay stamp duty on the increased capital.
• Missing the 30-day window for SH-7.

FAQs