Increase Authorised Capital

To increase authorised share capital, a company alters the capital clause of its memorandum at a general meeting, as section 61 of the Companies Act 2013 allows when its articles permit, and files Form SH-7 with the Registrar of Companies within 30 days. The cost is an MCA fee worked out on the fee table plus state stamp duty, both paid online with SH-7. A late filing risks a penalty of ₹500 a day.

When do you need to increase authorised capital?

You need an increase before any allotment that would take the company's issued share capital past the figure in its memorandum. Authorised capital is the ceiling on share capital that the memorandum allows (section 2(8)), so a company at ₹10 lakh with ₹10 lakh already issued cannot allot even one more share until the ceiling moves.

Common triggers are an angel or seed round, a rights issue to fund expansion, an ESOP pool, or converting a founder's loan into equity. The increase itself creates no shares and brings in no money: paid-up capital stays where it is until the board allots shares under one of those routes.

Ordinary or special resolution: which does an increase need?

An ordinary resolution of members is enough under section 61, unless the articles ask for a special one. The model articles in Table F of Schedule I say the company may increase its share capital by ordinary resolution. Section 13, which needs a special resolution for other changes to the memorandum, expressly leaves section 61 alone.

Two consequences follow:

• No MGT-14 for an ordinary resolution. Section 117 requires MGT-14 for special resolutions, so it comes into play only if the articles demand a special resolution for the increase.
• Articles that do not allow it. Section 61 works only "if so authorised by its articles". If yours are silent, the members first alter the articles by special resolution under section 14, and that special resolution goes to the ROC on MGT-14 within 30 days.

What documents are needed for Form SH-7?

SH-7 is filed with the altered memorandum, which section 64(1) makes compulsory. The MCA instruction kit for SH-7 adds the rest: an e-MoA showing the new capital clause, e-AoA only if the articles change, and the MGT-14 reference where a special resolution was passed.

Step-by-step procedure to increase authorised share capital

The process is short and fully online. The deadline that matters runs from the members' meeting, not the board meeting.

1. Check the articles for the power to increase capital, and alter them first if needed.
2. Choose the new figure. Cover the next two or three funding steps; the authorised capital increase calculator shows the fee and stamp duty for any figure.
3. Board meeting to approve the proposal and call the general meeting.
4. General meeting passes the resolution altering the capital clause.
5. MGT-14 within 30 days, only if a special resolution was passed.
6. SH-7 within 30 days of the alteration, with the altered memorandum. The portal works out the stamp duty for your state and collects it with the fee.
7. Processing. Since 16 February 2024, SH-7 has gone to the MCA's Central Processing Centre, and the SH-7 kit says it is processed in non-STP mode, so it is examined before it is approved rather than taken on record automatically.

What does it cost to increase authorised capital?

Three items: the SH-7 fee, state stamp duty on the increase, and Ofin's professional fee. The SH-7 fee is the table fee for the new capital less the table fee for the old, with a lower table for OPCs and small companies, capped at ₹2.5 crore.

• When the difference is nil. An OPC or small company that stays within ₹10 lakh pays the same table fee on both figures. The SH-7 kit says the normal filing fee, set by nominal capital, then applies: ₹200 to ₹400 at that size.
• Late filing. The fee grows by 2.5% for each month of delay up to six months and 3% a month after that. Separately, section 64(2) allows a penalty of ₹500 a day, up to ₹5 lakh for the company and ₹1 lakh for each officer in default.
• Stamp duty depends on the state of the registered office. In Maharashtra it is 0.3% of the increase, capped at ₹1 crore, so the ₹10 lakh to ₹50 lakh increase pays ₹12,000. See increase authorised capital in Mumbai for the Maharashtra detail.

Ofin's fee starts at ₹9,999, inclusive of GST, with the government fee and stamp duty paid at actuals.

After the increase: allotting the new shares

The new ceiling only creates room. Shares come into existence when the board allots them under a route such as a rights issue, an ESOP scheme or a private placement, each with its own rules.

• Rights issue. Existing equity shareholders are offered the shares in proportion to their paid-up holdings (section 62(1)(a)).
• ESOPs need a members' resolution under section 62(1)(b): special for a public company, ordinary for a private company that is up to date with its financial statement and annual return filings (G.S.R. 464(E) of 5 June 2015, as amended in 2017).
• Demat first. A private company that is not a small company must issue securities only in demat form under rule 9B, and before any issue, rights or bonus offer its promoters', directors' and key managerial personnel's holdings must be in demat. Subscribers must hold all their securities in demat before they subscribe.
• Stamp duty on the issue is 0.005% of the issue value, so issuing shares worth ₹20,00,000 costs ₹100.
• Return of allotment. File PAS-3 within 30 days of allotment, or within 15 days for a private placement.

If an investor is outside India, check the entry route with the FDI route checker before you allot. If an existing shareholder is selling instead, no new shares are created and it is a share transfer. The next annual return then reports the company's shares and shareholding pattern (section 92(1)(b)), which Ofin's company annual compliance service files.

Mistakes that hold up an SH-7

Each of these paperwork slips can hold up the form or add to the cost:

• Filing SH-7 without the altered memorandum, which section 64(1) requires with the notice.
• Passing a special resolution, because the articles require one, and then forgetting MGT-14.
• Leaving out the professional certificate, which the kit requires on SH-7 with no exemption.
• Signing with an expired or revoked DSC; the kit requires a valid one.
• Trusting the state stamp rates printed in MCA's own SH-7 kit. Its annexure still shows Maharashtra at ₹1,000 for every ₹5 lakh, with a ₹50 lakh cap, a rate that no longer applies.

What changed in 2025 and 2026?

From 1 December 2025, a private company is small if its paid-up capital is up to ₹10 crore and turnover up to ₹100 crore, unless it is a holding or subsidiary company. A company newly inside those limits pays the lower SH-7 table: ₹30,000 instead of ₹60,000 to go from ₹5 lakh to ₹25 lakh.

For rule 9B, private companies other than producer companies that were not small on 31 March 2023 had until 30 June 2025 to comply, so their new allotments must now be in demat. The Corporate Laws (Amendment) Bill 2026 proposes raising the most the Government can set for small companies to ₹20 crore of paid-up capital and ₹200 crore of turnover. It is a proposal, not law, as of October 2026.

How Ofin handles an increase in authorised capital

Ofin's CAs, CSs and legal professionals draft the board resolution, notice and members' resolution, prepare the altered memorandum and file SH-7, plus MGT-14 where needed, with the government fee and stamp duty at actuals. Packages can include the share issue that follows. It is 100% online, with a reply within 24 hours, from ₹9,999. Tell us the current and target capital to get a fixed-price proposal.