Increase Authorized Capital
Expert Assistance for Raising Authorized Share Capital in India
Looking to increase your authorized share capital in India? Tax Pal Solutions provides end-to-end support—from legal documentation to ROC filing—ensuring full compliance with the Companies Act, 2013.
Why Choose Our Service
- Drafting of Board & Shareholder Resolutions
- SH-7 and ROC Form Filing Assistance
- Full Compliance as per Companies Act, 2013
- MCA Verified Legal Experts
- Trusted by 20,000+ Indian Businesses
What is Authorized Capital?
Authorized capital (also called nominal or registered capital) is the maximum share capital a company can issue to shareholders as per its Memorandum of Association (MoA).
Key Points:
- Sets the upper limit of capital without amending the MoA
- Issuing shares beyond this requires MoA alteration and ROC filing
- Provides flexibility for future funding
Classification of Share Capital
| Capital Type | Description | Relation to Other Capital | Key Meaning |
|---|---|---|---|
| Authorized Capital | Maximum share capital legally allowed | Upper limit for Issued Capital | Total fundraising capacity approved in MoA |
| Issued Capital | Portion offered to investors | Cannot exceed Authorized Capital | Shares offered to public/promoters |
| Subscribed Capital | Part of issued capital subscribed by investors | Paid-Up Capital comes from this | Shares investors have committed to buy |
| Paid-Up Capital | Actual funds received from shareholders | ≤ Subscribed Capital | Real money received for issued shares |
| Called-Up Capital | Amount requested from shareholders | Subset of Paid-Up Capital | Portion requested for payment |
| Uncalled Capital | Subscribed but not yet called | Subset of Subscribed Capital | Future potential capital |
Why Increase Authorized Capital?
A company may need to raise its authorized capital for strategic reasons:
-
To Raise More Funds from Investors
- Issue new shares without increasing debt
- Approvals: Board resolution + Shareholders’ special resolution
- File SH-7 with ROC
-
For Business Expansion or New Projects
- Fund new offices, factories, or technology
- Support entry into new markets or launch products
- Align capital structure with growth plans
-
To Convert Debt into Equity
- Issue shares to creditors for loan conversion
- Reduce interest costs and improve balance sheet
-
To Improve Borrowing Capacity & Net Worth
- Increase equity capital to enhance net worth
- Secure better loan terms and investor confidence
Documents & Forms Required
Documents from Company:
- Board Resolution (certified true copy)
- Ordinary/Special Resolution from EGM
- Altered MoA reflecting new capital
- Altered AoA (if applicable)
- Notice & Explanatory Statement of EGM
Forms to File with ROC:
| Form | Purpose | Timeline |
|---|---|---|
| SH-7 | Notice of alteration of share capital | Within 30 days of EGM |
| MGT-14 | Filing special resolution (if AoA amended) | Within 30 days of passing resolution |
Step-by-Step Procedure
-
Check Articles of Association (AoA)
- Ensure AoA allows increase in authorized capital
- Amend AoA with special resolution if needed
-
Board Meeting
- Approve capital increase and EGM scheduling
- Approve EGM notice and explanatory statement
-
Extraordinary General Meeting (EGM)
- Dispatch notices to shareholders, directors, auditors
- Pass ordinary/special resolution approving increase
-
Filing with ROC
- Submit SH-7 and, if applicable, MGT-14
- Register the alteration legally
ROC Fees & Stamp Duty
ROC Fee Calculation Example:
| Capital Increment | Fee Slab | Calculated Fee |
|---|---|---|
| First ₹5,00,000 | ₹200 per 10,000 | ₹10,000 |
| Next ₹45,00,000 | ₹100 per 10,000 | ₹45,000 |
| Next ₹45,00,000 | ₹50 per 10,000 | ₹22,500 |
| Remaining ₹5,00,000 | ₹25 per 10,000 | ₹1,250 |
| Total ROC Fee | - | ₹78,750 |
Stamp Duty (Approx. % of Increase):
| State | Stamp Duty Rate | Max Cap |
|---|---|---|
| Maharashtra | 0.005% | ₹25 Lacs |
| Delhi | 0.15% | ₹25 Lacs |
| Karnataka | 0.1% | ₹25 Lacs |
| Tamil Nadu | 0.1% | ₹25 Lacs |
| West Bengal | 0.05% | ₹25 Lacs |
| Uttar Pradesh | 0.15% | ₹25 Lacs |
| Haryana | 0.15% | ₹25 Lacs |
| Gujarat | 0.1% | ₹25 Lacs |
Rates vary by state; verify before filing.
Timeline
- Typically 7–15 working days if documents are ready
- Longer if AoA amendment is required
- Dependent on ROC processing and shareholder approvals
Penalties for Non-Compliance
| Non-Compliance | Consequence |
|---|---|
| Delay in filing SH-7 | Fine up to ₹1,00,000 + ₹5,000/day for continued delay |
| Delay in MGT-14 (if AoA amended) | Same as above |
| Failure to comply under Sections 61/64 | Legal liability for company and officers |
Certification
