Why Increase Authorised Share Capital?
To issue new shares for funding and expansion
When companies need additional capital for growth initiatives, they may need to increase their authorised capital to issue new shares to investors.
To attract new investors or venture capital
Having sufficient authorised capital allows companies to accommodate potential investment from venture capitalists or strategic investors.
To comply with regulatory or contractual obligations
Some regulatory requirements or financing agreements may necessitate maintaining a specific level of authorised capital.
To facilitate mergers, acquisitions, or restructuring
Corporate restructuring often requires issuing new shares to the shareholders of the acquired entity, necessitating an increase in authorised capital.
Legal Provisions
The process of increasing authorised share capital is governed by:
Companies Act, 2013 – Sections 61 and 64 – These sections provide the legal framework for alterations to share capital and the filing requirements with the Registrar of Companies.
Companies (Share Capital and Debentures) Rules, 2014 – These rules outline the procedural requirements for changes to share capital structure.
Articles of Association (AOA) of the company – The company's own AOA may have specific provisions regarding the alteration of share capital.
Process for Increasing Authorised Share Capital
Check Articles of Association (AOA)
Ensure that the company's AOA permits an increase in authorised share capital. If not, amend the AOA before proceeding.
Board Meeting Resolution
- • Convene a Board Meeting to pass a resolution approving the increase in authorised share capital.
- • Authorize the calling of an Extra-Ordinary General Meeting (EGM) for shareholders' approval.
Shareholders' Approval via EGM
- • Issue a notice for the EGM, including the agenda and draft resolution.
- • Conduct the EGM and pass a Special Resolution approving the increase in authorised share capital.
Filing with the Registrar of Companies (ROC)
- • File Form SH-7 with the ROC within 30 days of passing the resolution.
- • Attach necessary documents, including certified true copy of the Special Resolution, altered MOA, altered AOA (if amended), and notice of EGM with explanatory statement.
ROC Processing & Approval
- • The ROC will verify the documents and approve the increase in authorised share capital.
- • Once approved, the company's authorised share capital stands increased officially.
Compliance & Post-Filing Requirements
Update the MOA & AOA with the revised share capital details to reflect the current capital structure.
Ensure compliance with contractual obligations related to the change, such as informing lenders or other stakeholders.
Issue new share certificates if applicable, especially when the increase is followed by a further allotment.
Update statutory registers including the register of members and register of share transfer.
Pay additional stamp duty as applicable in the state where the company is registered.
Process Timeline
Our Authorised Share Capital Services
- End-to-End Assistance – Complete management of the authorised share capital increase process.
- Expert Document Preparation – Drafting of all required resolutions and filings.
- Timely Compliance – Ensuring all forms are filed within statutory deadlines.
- Post-Process Support – Help with updating all statutory records and documents.