Increasing Authorised Share Capital

Every Indian private or public company has a ceiling on how much capital it can issue — the authorised share capital stated in Clause V of its Memorandum of Association. Once the company has allotted shares up to that ceiling, no further allotment is legally possible until the ceiling is raised. Founders running a fresh round, companies converting CCDs / SAFEs, family businesses introducing new investors, and ESOP-heavy startups all hit this wall at the worst possible moment — usually weeks before a closing — and discover that increasing the authorised capital is not a one-form exercise but a full Section 13 plus Section 61 of the Companies Act 2013 sequence with shareholder resolution, MOA / AOA amendment, ROC filing, and State-specific stamp duty on the increased capital.

The legal path is precise. The Board first calls an EGM (or includes the item in the AGM); the shareholders pass an ordinary resolution under Section 61 authorising the increase; the AOA is checked to confirm whether it permits an increase by ordinary resolution (most modern AOAs do — older ones may need a special resolution and AOA amendment under Section 14 first); MOA Clause V is amended; Form SH-7 is filed with ROC within 30 days of the resolution, accompanied by the altered MOA, the resolution, and the prescribed fee plus stamp duty under the Indian Stamp Act as applicable in the State of the registered office. Stamp duty rates vary materially — Maharashtra, Delhi, Karnataka, Tamil Nadu, Telangana and West Bengal each have their own slab — and a wrongly computed challan delays the SH-7 by weeks.

We handle authorised-capital increases end-to-end — board / EGM, resolutions, MOA amendment, SH-7, MGT-14 (where applicable), stamp duty, and ROC follow-through — synchronised with your fundraising or allotment timeline so the closing is not held up.

When You Need to Increase Authorised Capital

• Pre-Allotment for Fresh Round:: Series Seed / A / B subscription that breaches the existing ceiling — must be done before PAS-3 allotment.

• Convertible Conversion:: CCDs, CCPS, SAFEs converting into equity — the post-conversion paid-up exceeds authorised; increase first, then convert.

• ESOP Pool Creation / Expansion:: Pre-money pool expansion that pushes paid-up beyond authorised once exercised.

• Bonus Issue:: Bonus shares from reserves require sufficient authorised headroom before allotment.

• Rights Issue / Preferential Allotment:: Section 62 issuances need authorised capacity in advance.

The Filing Sequence

Step A: AOA Check. Confirm whether AOA permits increase by ordinary resolution. If not, AOA amendment under Section 14 with special resolution and MGT-14 filing precedes SH-7.

Step B: Board Meeting. Approve increase, fix EGM date / include in AGM, approve notice and explanatory statement under Section 102.

Step C: EGM / AGM. Ordinary resolution under Section 61(1)(a) passed by shareholders.

Step D: SH-7 Filing. Filed with ROC within 30 days with altered MOA, resolution, fee, and State stamp duty challan.

Step E: MGT-14 (If Applicable). Where AOA amendment is required, MGT-14 within 30 days of special resolution.

Step F: Master Data Update. ROC updates company master data; new authorised capital reflects on MCA portal; cap table and minute book updated.

Stamp Duty — The Detail That Trips Most Filings

Stamp duty on increase of authorised capital is levied under the Indian Stamp Act as adopted by each State, and the rate is on the incremental capital. Maharashtra (0.2% with cap), Delhi (slab-based), Karnataka (0.15%), Tamil Nadu, Telangana and West Bengal each prescribe their own scale — payable by e-challan or e-stamp before SH-7 is uploaded. A miscalculation forces a re-filing; a State-mismatch (paying Maharashtra duty for a Delhi company) is rejected outright. We compute and pay the correct State-specific duty before SH-7 is uploaded.