Increase in Authorised Share Capital — Board Resolution, EGM, MOA Alteration and Form SH-7, Filed in 2–4 Working Days
A company cannot issue a single share beyond the authorised capital stated in its Memorandum. Before a funding round, a rights issue, ESOP allotment, conversion of loans or bonus shares, the authorised capital has to be raised first — under Section 61 of the Companies Act, 2013, with notice to the Registrar in Form SH-7 within 30 days. TAXAJ drafts every document, computes the MCA fee and state stamp duty to the rupee, files SH-7 on MCA V3 and hands you the updated Master Data — typically in 2–4 working days.
- Private, public and OPC — any ROC in India
- Board notice, resolution, EGM notice and minutes drafted
- Altered MOA capital clause (physical and e-MOA)
- Exact MCA fee and stamp duty before you pay
- SH-7 filed with CS/CA certification
- LLP contribution increase (Form 3) also handled
Authorised vs Paid-Up Capital — and Why the Increase Comes First
Authorised capital is the ceiling written into Clause V of the Memorandum of Association: the maximum value of shares the company may ever issue. Paid-up capital is what has actually been issued and paid for. Paid-up can never exceed authorised. A company with ₹10 lakh authorised and ₹10 lakh paid-up cannot allot one more share to an investor, an employee or a lender until the ceiling is raised — and the ROC will reject a PAS-3 return of allotment that breaches it.
The increase is therefore the first step in almost every capital event, and its timing decides whether the round closes on schedule. It is also one of the few company-law changes where the government fee is meaningful: the MCA charges on the difference between the old and new authorised capital, and the state charges stamp duty on the same increase.
Before a funding round
Seed, angel, VC or foreign investment: the term sheet fixes a post-money shareholding that usually needs headroom well above current paid-up. Increase authorised first, then allot (PAS-3), then report to RBI (FC-GPR) if the investor is foreign.
Before ESOPs, sweat equity or bonus
Every ESOP exercise, sweat-equity allotment and bonus issue consumes authorised capital. A bonus issue in particular can double paid-up overnight and needs the ceiling raised in advance.
Before converting loans or CCDs
Compulsorily convertible debentures, convertible notes and director loans converting into equity all require authorised headroom on the conversion date — miss it and the conversion is void.
The Law: Sections 61, 64 and 13 of the Companies Act, 2013
| Provision | What it says | What it means for you |
|---|---|---|
| Section 61(1)(a) | A limited company having a share capital may, if so authorised by its articles, alter its memorandum in general meeting to increase its authorised share capital by such amount as it thinks expedient. | Two checks before anything else: the Articles must permit the alteration, and it needs a general-meeting resolution — an ordinary resolution unless the Articles require a special one. |
| Section 13(1) and 13(6) | Alteration of the memorandum generally needs a special resolution; but the capital clause is altered under Section 61, and notice of the alteration is given under Section 64, not by filing MGT-14. | No MGT-14 for the capital increase itself. MGT-14 is needed only if the Articles have to be amended first (special resolution under Section 14). |
| Section 64(1) | Where a company alters its share capital under Section 61, it shall file a notice with the Registrar within 30 days of the alteration, with the altered memorandum. | That notice is Form SH-7, with the prescribed fee on the increase, the EGM notice, the certified resolution and the altered MOA attached. |
| Section 64(2) | Default attracts a penalty of ₹500 for every day during which the default continues, up to ₹5 lakh for the company and ₹1 lakh for each officer in default. | This is in addition to the additional filing fee on a late SH-7. The clock runs from day 31 after the resolution. |
| Rule 15, Companies (Share Capital and Debentures) Rules, 2014 | Prescribes SH-7 as the form for notice of increase, consolidation, sub-division, conversion or redemption of capital. | The same form covers every Section 61 alteration; this page is about the increase, by far the commonest. |
Check the Articles before calling the meeting.Most Table F-based Articles contain the enabling clause. Older bespoke Articles, and some Articles drafted for foreign subsidiaries, do not — in which case a special resolution to amend the Articles (with MGT-14 within 30 days) has to precede or accompany the capital resolution. We check this on day one, because finding out at the SH-7 stage costs a second EGM.
MCA Fee for Increase in Authorised Capital — the Slab Table
The Registrar's fee on SH-7 is the difference between the fee for the new authorised capital and the fee for the existing one, computed from the table in the Companies (Registration Offices and Fees) Rules, 2014. The table is progressive, so the marginal cost falls as capital rises.
| Authorised capital (companies other than OPC and small companies) | Fee |
|---|---|
| Up to ₹1,00,000 | ₹5,000 |
| ₹1,00,001 – ₹5,00,000 | ₹5,000 + ₹400 for every ₹10,000 or part above ₹1 lakh |
| ₹5,00,001 – ₹50,00,000 | ₹21,000 + ₹300 for every ₹10,000 or part above ₹5 lakh |
| ₹50,00,001 – ₹1,00,00,000 | ₹1,56,000 + ₹100 for every ₹10,000 or part above ₹50 lakh |
| Above ₹1,00,00,000 | ₹2,06,000 + ₹75 for every ₹10,000 or part above ₹1 crore (total fee capped at ₹2.5 crore) |
Worked example
- From ₹1 lakh to ₹10 lakh: fee at ₹10 lakh = ₹21,000 + ₹300 × 50 = ₹36,000; fee at ₹1 lakh = ₹5,000; SH-7 fee = ₹31,000 plus stamp duty.
- From ₹10 lakh to ₹1 crore: fee at ₹1 crore = ₹2,06,000; fee at ₹10 lakh = ₹36,000; SH-7 fee = ₹1,70,000 plus stamp duty.
- From ₹1 crore to ₹5 crore: ₹75 × 4,000 = ₹3,00,000 plus stamp duty.
OPCs and small companies pay a concessional scale — ₹2,000 up to ₹10 lakh and ₹200 per ₹10,000 from ₹10 lakh to ₹50 lakh — before the standard table applies. Run your own numbers on the MCA Fee Calculator.
Late filing: additional fee on top of the penalty
- SH-7 for an increase in authorised capital filed after 30 days attracts an additional fee of 2.5% of the normal fee per month of delay (3% per month where the delay runs beyond six months), under the Registration Offices and Fees Rules.
- That is separate from the Section 64(2) penalty of ₹500 a day, which the Registrar can adjudicate on the company and every officer in default.
- Because the normal fee on a large increase runs into lakhs, a two-month slip on a ₹1 crore-to-₹5 crore increase costs about ₹15,000 in additional fee before the penalty — which is why we file within days of the EGM, not weeks.
Stamp Duty on Increase in Authorised Capital — State-Wise
Stamp duty is levied by the state where the registered office sits, on the amount of increase, and is paid electronically through the MCA portal along with SH-7. The rate and ceiling differ sharply between states, which is why two identical companies in Delhi and Mumbai pay very different totals for the same increase.
| State of registered office | Stamp duty on the increase | Ceiling |
|---|---|---|
| Delhi | 0.15% of the increased authorised capital | ₹25 lakh in aggregate |
| Maharashtra | ₹1,000 for every ₹5 lakh or part (0.2%) | ₹50 lakh in aggregate |
| Other states | Rates range from a few hundred rupees flat to a percentage of the increase; a few states levy nothing on SH-7 | Computed by the MCA portal from the SH-7 instruction kit at filing |
Stamp duty rates are amended by state finance acts and the MCA portal's computation prevails. We give you the exact figure for your state before you approve the filing; the stamp duty reference covers incorporation and increase by state.
ProcedureProcedure to Increase Authorised Share Capital — Step by Step
Check the Articles and the Memorandum
Confirm the Articles authorise an alteration of capital under Section 61. Read the existing Clause V of the MOA for the current authorised capital and the share classes — the increase may need to specify equity vs preference and the face value.
Board meeting — notice and resolution
Seven days' notice to every director (or shorter with consent under Section 173(3)). The board approves the proposed increase, the draft altered MOA, and calls an extraordinary general meeting — fixing date, time, venue or video-conference mode and approving the EGM notice with the explanatory statement under Section 102.
EGM notice
Twenty-one clear days' notice to every member, director and the auditor — or a shorter-notice EGM with consent of members holding not less than 95% of paid-up capital, which is how most private companies do it in a day.
Extraordinary general meeting — ordinary resolution
Members pass the resolution to increase the authorised capital and substitute Clause V of the MOA. An ordinary resolution suffices unless the Articles require a special one; where the Articles themselves must be amended, a special resolution is passed for that and filed in MGT-14.
Form SH-7 on MCA V3 within 30 days
Attach the EGM notice with explanatory statement, the certified true copy of the resolution, and the altered MOA (the e-MOA where the company was incorporated with INC-33). Pay the MCA fee on the increase and the state stamp duty. The form is certified by a practising CS, CA or CMA.
Approval and Master Data
SH-7 is processed under straight-through processing in most cases; the new authorised capital appears in the company's Master Data on the MCA portal, usually within a day or two of filing. We send you the approved challan, the SRN and a screenshot of the updated record.
Then issue the shares
With headroom in place, the allotment follows — private placement (PAS-4, PAS-5, PAS-3), rights issue (Section 62(1)(a)), ESOP exercise, bonus or conversion — and, for a foreign investor, FC-GPR on the RBI FIRMS portal within 30 days of allotment. TAXAJ handles the issue of shares and FC-GPR as the next step of the same engagement.
Documents Required to Increase Authorised Capital
From the company
- Current Memorandum and Articles of Association (and the e-MOA / e-AOA if incorporated on SPICe+)
- Certificate of incorporation, CIN and the latest Master Data
- Present authorised and paid-up capital, share classes and face value; the proposed new authorised capital and its split
- List of shareholders with holdings (for the EGM notice, quorum and short-notice consent)
- Digital signature of a director and access to the company's MCA V3 business-user login
- Purpose of the increase (funding round, ESOP, bonus, conversion) — it shapes the explanatory statement
We prepare
- Board meeting notice, agenda, resolution and minutes
- EGM notice with explanatory statement, short-notice consent letters, attendance sheet and minutes
- Certified true copy of the ordinary resolution
- Altered MOA with the new Clause V (and altered Articles plus MGT-14, where required)
- SH-7 with fee and stamp-duty computation, professionally certified
- Updates to the register of members and the statutory registers after allotment
Other Alterations of Capital under Section 61 — and Increase in LLP Contribution
Consolidation of shares
Combining shares into a larger face value (ten ₹1 shares into one ₹10 share). Under Section 61(1)(b) a consolidation that changes the voting percentage of shareholders needs NCLT approval; otherwise an ordinary resolution and SH-7.
Sub-division (stock split)
Splitting shares into a smaller face value to improve liquidity or make ESOP pricing workable — Section 61(1)(d), ordinary resolution, SH-7 within 30 days, no change to total capital.
Cancellation of unissued shares
Diminishing authorised capital by cancelling shares never taken up — Section 61(1)(e). Not a reduction of capital under Section 66 and needs no NCLT order; SH-7 applies.
Increase in LLP contribution
An LLP has no authorised capital, but partners' contribution is stated in the LLP agreement. Increasing it needs a supplementary agreement on stamp paper (duty on the additional contribution, state-wise), and LLP Form 3 within 30 days of the agreement. TAXAJ drafts and files both.
Reclassification of capital
Converting unissued equity headroom into preference shares (or the reverse) is an alteration of the capital clause — often combined with an increase ahead of a CCPS round.
Foreign-owned subsidiaries
Where the parent is abroad, the board and EGM are usually held by video-conference, the parent's consent to short notice is documented, and the allotment that follows is reported in FC-GPR. We run the whole sequence under one engagement.
Why Companies Use TAXAJ to Increase Authorised Capital
Fee and stamp duty to the rupee, in advance
You see the MCA fee and the state stamp duty before you approve anything. No "the portal asked for more" surprises at the challan stage.
CS and CA in-house
The resolutions are drafted by a company secretary, and SH-7 is certified in-house — no outsourcing of the certification that the ROC relies on.
Round-ready sequencing
Increase → allotment → PAS-3 → FC-GPR → share certificates and registers, on one timeline, so an investor's closing date is met.
Articles checked first
We read the Articles before the board meeting, so an MGT-14 is never discovered at the filing stage.
Everything in your portal
Resolutions, minutes, altered MOA, SH-7 challan and the updated Master Data are stored in the myTAXAJ portal with the company's other filings.
Four offices, any ROC
Delhi, Bengaluru, Darbhanga and Goa — with online onboarding for a company registered with any Registrar of Companies.
Increase in Authorised Capital — Frequently Asked Questions
What is the difference between authorised capital and paid-up capital?
Authorised capital is the maximum value of shares a company may issue, as stated in the capital clause of its Memorandum. Paid-up capital is the value of shares actually issued and paid for. Paid-up can never exceed authorised, so an allotment that would breach the ceiling requires the authorised capital to be increased first under Section 61.
Is a special resolution required to increase authorised capital?
No — an ordinary resolution of members is sufficient under Section 61, provided the Articles authorise the alteration. A special resolution (and Form MGT-14) is needed only where the Articles themselves must first be amended to permit it, or where the Articles specifically require a special resolution.
Which form is filed and by when?
Form SH-7, under Section 64(1) read with Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014, within 30 days of the general-meeting resolution. Attachments: the EGM notice with explanatory statement, the certified true copy of the resolution and the altered Memorandum. It is filed on MCA V3 with the fee on the increase and the state stamp duty.
How much is the MCA fee for increasing authorised capital?
The fee is the difference between the fee for the new and the old authorised capital under the Registration Offices and Fees Rules: ₹5,000 up to ₹1 lakh; ₹400 per ₹10,000 from ₹1 lakh to ₹5 lakh; ₹300 per ₹10,000 from ₹5 lakh to ₹50 lakh; ₹100 per ₹10,000 from ₹50 lakh to ₹1 crore; ₹75 per ₹10,000 above ₹1 crore, capped at ₹2.5 crore. For example, ₹1 lakh to ₹10 lakh costs ₹31,000 in MCA fee plus stamp duty. OPCs and small companies pay a concessional scale up to ₹50 lakh.
How much is the stamp duty?
It depends on the state of the registered office and is charged on the amount of increase, paid through the MCA portal with SH-7. Delhi charges 0.15% with an aggregate cap of ₹25 lakh; Maharashtra ₹1,000 per ₹5 lakh (0.2%) capped at ₹50 lakh; other states range from small flat amounts to a percentage, and a few charge nothing. The portal computes the exact figure; we confirm it before you approve the filing.
What happens if SH-7 is filed late?
Two consequences. An additional filing fee of 2.5% of the normal fee per month of delay (3% per month beyond six months), and a penalty under Section 64(2) of ₹500 per day of default, up to ₹5 lakh for the company and ₹1 lakh for every officer in default. The increase itself remains valid once filed, but allotments made in the meantime can be questioned.
How long does the whole process take?
With a private company that can hold the board meeting and a short-notice EGM on the same day, the documents are ready in a day and SH-7 is approved within a day or two of filing — 2–4 working days end to end. A company that needs the full 21-day EGM notice, or must first amend its Articles, takes correspondingly longer.
Can the board meeting and EGM be held on the same day by video-conference?
Yes. Board meetings may be held through video-conferencing under Section 173(2), and general meetings of private companies are routinely held by VC. A short-notice EGM is valid with the consent of members holding at least 95% of the paid-up share capital, which a closely held company can obtain the same day.
Do I need to increase authorised capital before a bonus issue or ESOP allotment?
Only if the allotment would take paid-up capital above the existing ceiling — which a bonus issue almost always does, and an ESOP exercise often does over time. Check the headroom before the board approves the allotment; the increase must be effective (SH-7 approved) before the allotment date.
Is a valuation report needed to increase authorised capital?
No. Valuation is needed for the allotment that follows — a registered valuer's report for a private placement or preferential allotment under Section 62(1)(c), and an FEMA valuation for a foreign investor — not for raising the ceiling itself.
How is an increase in capital done for an LLP?
An LLP has contribution rather than authorised capital. Partners execute a supplementary LLP agreement recording the additional contribution, pay state stamp duty on it, and the LLP files Form 3 with the Registrar within 30 days of the agreement. Where a new partner is admitted with the contribution, Form 4 is filed as well.
Can authorised capital be reduced or cancelled?
Unissued authorised capital can be cancelled by ordinary resolution under Section 61(1)(e) and notified in SH-7 — this is not a reduction of capital. Reducing issued and paid-up capital is a different exercise under Section 66, requiring a special resolution and NCLT confirmation.
Raise Your Authorised Capital Before the Round Closes
Send us the current MOA and the target capital. We check the Articles, compute the MCA fee and stamp duty to the rupee, draft every document, and file SH-7 — typically approved within 2–4 working days.
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