Does authorised capital increase require ROC approval?

No pre-approval needed. File SH-7 and MGT-14 within 30 days of the special resolution and the increase is effective upon MCA processing.

Authorized Capital Increase

Q: What is the difference between authorised capital and paid-up capital?

Authorised capital is the ceiling — the maximum shares permissible under the MOA. Paid-up capital is what shareholders have actually paid. Paid-up can never exceed authorised.

Q: When is it necessary to increase authorised capital?

When a company wants to issue new shares beyond the current authorised limit — for fundraising, bonus shares, ESOPs, or as a forward-looking measure for growth.

Q: How much does it cost to increase authorised capital?

Costs include MCA filing fees for SH-7 (capital slab-based), state stamp duty on incremental capital (varies by state), and professional fees for the EGM and filing process.

Q: Can authorised capital be reduced?

Yes, under Section 66 via NCLT approval and special resolution, but only above the paid-up capital level. It is rare and complex.

Expand Your Company's Share Capital Ceiling to Support Fundraising and Business Growth

Authorised capital (also called nominal capital) is the maximum amount of share capital that a company is authorised to issue to its shareholders, as stated in its Memorandum of Association. A company cannot issue shares exceeding its authorised capital — making an increase in authorised capital a prerequisite for any new share allotment, fundraising, or investor equity issuance.

Increasing authorised capital requires an amendment to the MOA's Capital Clause, a special resolution of shareholders, and filing of both Form MGT-14 and Form SH-7 with MCA. The process also attracts additional stamp duty on the incremental authorised capital in the state where the company is registered. This is a common step before new share allotments and is a key part of the company compliance process for growing businesses.

Our Authorised Capital Increase Services

Eligibility & Structuring

Assessing the current authorised capital versus paid-up capital and determining the optimal increase amount for planned share allotments and fundraising.

Board & EGM Management

Drafting board resolutions recommending the increase, issuing EGM notice, and managing the special resolution process at the general meeting.

MOA Amendment

Drafting the amended Capital Clause of the MOA to reflect the new authorised capital amount and class of shares.

Form SH-7 Filing

Filing Form SH-7 (notice of alteration of share capital) with the Registrar of Companies within 30 days of passing the special resolution.

Form MGT-14 Filing

Filing the special resolution and amended MOA via Form MGT-14 within 30 days of the resolution to complete the MCA compliance.

Stamp Duty Computation

Computing and advising on the state-specific stamp duty payable on the incremental authorised capital before finalising the increase amount.

Key Facts About Authorised Capital Increase

A company cannot issue or allot shares beyond its current authorised capital limit
Authorised capital can only be increased — it cannot be reduced below the paid-up capital
Special resolution (75% shareholder majority) is required to increase authorised capital
Both Form SH-7 and Form MGT-14 must be filed with MCA within 30 days of the resolution
Stamp duty on the incremental authorised capital must be paid before or at the time of filing
Stamp duty rates vary by state — Maharashtra, Delhi, and Karnataka each have different schedules
MCA filing fees for SH-7 are based on the total new authorised capital after the increase

Frequently Asked Questions

What is the difference between authorised capital and paid-up capital?

Authorised capital is the maximum share capital a company is permitted to issue as per its MOA — it is the ceiling. Paid-up capital is the actual capital received by the company from shareholders for shares issued and fully paid. Paid-up capital can never exceed authorised capital. Most companies maintain authorised capital higher than paid-up capital to allow flexibility for future share issuances without the need for a capital increase each time.

When is it necessary to increase authorised capital?

An increase is necessary whenever a company wants to issue new shares beyond its current authorised capital limit — such as when raising funding from investors, issuing bonus shares, allotting shares under an ESOP scheme, or when the paid-up capital approaches the authorised capital limit. It is also commonly done as a forward-looking measure to avoid repeated increase processes as the company grows.

How much does it cost to increase authorised capital?

The cost includes MCA filing fees for SH-7 (based on authorised capital slab under the Companies (Registration Offices and Fees) Rules), stamp duty on the incremental capital (which varies significantly by state — Maharashtra charges 0.2%, while some states are lower), and professional fees for drafting, EGM, and filing. Companies should plan for state-specific stamp duty as it can be significant for large capital increases.

Can authorised capital be reduced?

Yes, but only through a formal reduction of capital under Section 66 of the Companies Act, which requires a special resolution, NCLT approval, and is significantly more complex. The authorised capital cannot be reduced below the paid-up capital. Reduction of authorised capital is rare and typically done to reduce annual MCA compliance fees based on authorised capital slab.

Does an authorised capital increase require ROC approval?

No pre-approval from the Registrar of Companies is needed. The process is self-contained — pass the special resolution, file SH-7 and MGT-14 within 30 days, pay the applicable fees and stamp duty, and the increase takes effect upon MCA processing. There is no separate approval order required for an authorised capital increase.