Increase in Authorized Share Capital in India (Companies Act, 2013)

If a company needs more funds, it may increase its Authorized Share Capital before issuing new shares. This process is governed by Section 61 & 64 of the Companies Act, 2013 and requires shareholder approval.

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1. What is Authorized Share Capital?

🔹 Authorized Capital is the maximum capital a company can issue as shares.
🔹 Paid-up Capital is the actual capital raised from shareholders.
🔹 A company cannot issue shares beyond its Authorized Capital, so increasing it is necessary before issuing more shares.

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2. Step-by-Step Process to Increase Authorized Share Capital

Step 1: Check the Articles of Association (AOA)

• The company’s AOA must allow for an increase in Authorized Capital.
• If the AOA does not permit it, first amend the AOA by passing a Special Resolution.

Step 2: Board Meeting & Resolution

• Convene a Board Meeting to approve the increase and fix a date for the Extraordinary General Meeting (EGM).
• Pass a Board Resolution for increasing the capital and amending the Memorandum of Association (MOA).

Step 3: Hold the Extraordinary General Meeting (EGM)

• Issue a Notice to shareholders at least 21 days before the meeting.
• Pass an Ordinary Resolution for increasing the Authorized Share Capital.

Step 4: File ROC Forms (Within 30 Days of EGM)

• File Form SH-7 with the Registrar of Companies (ROC) along with:
  ✅ Certified copy of the Board Resolution & Shareholders’ Resolution
  ✅ Altered MOA (Capital Clause Updated)
  ✅ Altered AOA (if required)
  ✅ Proof of payment of stamp duty (varies by state)

Step 5: Approval & MCA Updates

• The ROC will verify and approve the increase.
• Upon approval, the new Authorized Share Capital is updated on the MCA portal.

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3. ROC Forms & Fees for Authorized Capital Increase

Form	Purpose	Due Date
SH-7	To inform ROC about the increase in Authorized Share Capital	Within 30 days of EGM
MGT-14 (only if AOA is amended)	Filing of Special Resolution (if required)	Within 30 days of EGM

ROC Filing Fees for SH-7 (Based on Increase in Capital)

The government fee depends on the amount of increase:

Increased Capital	ROC Fees
Up to ₹1 lakh	₹5,000
₹1 lakh – ₹5 lakh	₹400 per ₹10,000
₹5 lakh – ₹10 lakh	₹300 per ₹10,000
₹10 lakh – ₹50 lakh	₹200 per ₹10,000
₹50 lakh – ₹1 crore	₹100 per ₹10,000
Above ₹1 crore	₹75 per ₹10,000

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4. Sample Board Resolution for Increasing Authorized Share Capital

BOARD RESOLUTION FORMAT

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF
[Company Name] HELD ON [Date] AT [Registered Office Address]

RESOLVED THAT pursuant to the provisions of Section 61(1)(a) and other applicable provisions of the Companies Act, 2013, and subject to the approval of the shareholders in the General Meeting, the Authorized Share Capital of the Company be and is hereby increased from ₹[Existing Capital] to ₹[New Capital] by creating additional [Number] equity shares of ₹[Face Value] each.

FURTHER RESOLVED THAT the Memorandum of Association of the Company be altered accordingly in Clause V.

FURTHER RESOLVED THAT Mr./Ms. [Company Secretary or Director] be and is hereby authorized to sign and file the necessary forms with the Registrar of Companies and take all necessary steps to give effect to this resolution.

For & on behalf of
[Company Name]
[Signature]
[Director/Authorized Signatory]

5. Sample Shareholders’ Resolution (EGM) for Increasing Authorized Capital

ORDINARY RESOLUTION FORMAT

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE EXTRAORDINARY GENERAL MEETING (EGM)
OF [Company Name] HELD ON [Date] AT [Registered Office Address]

RESOLVED THAT pursuant to the provisions of Section 61(1)(a) and other applicable provisions of the Companies Act, 2013, the Authorized Share Capital of the Company be increased from ₹[Existing Capital] to ₹[New Capital] by creating additional [Number] equity shares of ₹[Face Value] each.

FURTHER RESOLVED THAT the existing Clause V of the Memorandum of Association of the Company be substituted with the following:
“The Authorized Share Capital of the Company is ₹[New Capital] divided into [Number] equity shares of ₹[Face Value] each.”

FURTHER RESOLVED THAT the Board of Directors be and is hereby authorized to file the necessary forms with the Registrar of Companies (ROC) and do all such acts as may be necessary in this regard.

For & on behalf of
[Company Name]
[Signature]
[Chairman/Authorized Signatory]

FAQs on Increasing Authorized Share Capital