How to Increase Authorised Share Capital of a Company — SH-7 & ROC Compliance

Every company is incorporated with a certain authorised share capital — the maximum amount of share capital the company is legally permitted to issue. When you need to issue new shares beyond this limit (for fundraising, ESOPs, or conversion of loans), you must first increase the authorised capital. This is a common ROC compliance requirement for growing companies, and getting it done right — with proper board and shareholder resolutions and timely ROC filings — is essential. Here's the complete guide.

1. Authorised vs Paid-up Capital — What's the Difference?

Concept	Meaning	Example
Authorised Capital	Maximum capital the company is permitted to issue — stated in MOA (Memorandum of Association)	₹10,00,000 (10 lakh)
Subscribed / Issued Capital	Capital actually offered and subscribed by shareholders	₹5,00,000
Paid-up Capital	Capital actually received/paid by shareholders	₹5,00,000

You can only allot shares up to the authorised capital limit. To allot shares beyond it, you must first increase the authorised capital by amending the MOA and filing with ROC.

2. Why Do Companies Need to Increase Authorised Capital?

• Fundraising from investors: When you want to allot new shares to an angel investor, VC, or strategic partner
• ESOP issuance: When the ESOP pool size requires more shares than currently authorised
• Conversion of loan to equity: Convertible notes or CCDs converting to equity shares
• Rights issue or bonus issue: Issuing additional shares to existing shareholders
• Merger / acquisition: Share-for-share exchanges in M&A transactions
• Bank requirement: Some banks require minimum paid-up capital — increasing authorised capital is the first step

3. Procedure to Increase Authorised Capital

• Step 1 — Check AOA: Review the Articles of Association to confirm it permits the Board to call an EGM and increase capital. Most standard AOAs permit this, but some older AOAs may require an AOA amendment first.
• Step 2 — Board Meeting: Pass a Board Resolution recommending the increase in authorised capital and authorising the calling of an Extraordinary General Meeting (EGM)
• Step 3 — EGM Notice: Send EGM notice to all shareholders with at least 21 days' clear notice (or shorter notice with consent of 95%+ shareholders)
• Step 4 — EGM: Pass an Ordinary Resolution at EGM approving the increase — amend the Capital Clause of MOA (Clause V)
• Step 5 — File MGT-14: File the EGM resolution with ROC via Form MGT-14 within 30 days
• Step 6 — File SH-7: File Form SH-7 (Notice of Increase in Authorised Capital) with ROC within 30 days of passing the resolution — pay stamp duty and ROC fees
• Step 7 — Updated MOA: The company's MOA is now amended to reflect the new authorised capital

4. ROC Forms — SH-7 and MGT-14

Form	Purpose	Timeline	Attachments
MGT-14	Filing of Ordinary Resolution passed at EGM	Within 30 days of EGM	Certified copy of resolution, EGM notice, attendance sheet
SH-7	Notice of alteration of share capital (increase in authorised capital)	Within 30 days of resolution	Altered MOA, board and EGM resolutions, stamp duty payment proof

Both forms are filed on the MCA portal (mca.gov.in) under the company's CIN. Both require DSC of an authorised director and certification by a practising CA or CS in some cases.

5. Stamp Duty and ROC Fees for Capital Increase

• ROC Filing Fees (SH-7): Based on the incremental authorised capital — typically ₹500 to ₹5,000 depending on the amount
• Stamp Duty: Stamp duty on the MOA amendment — varies by state. For UP: 0.15% of the incremental authorised capital
• Professional fees: CA/CS fees for preparation of resolutions, EGM notice, and ROC filing

Total cost is relatively low compared to the flexibility it gives — for example, increasing from ₹10 lakh to ₹1 crore authorised capital in UP typically costs ₹10,000–15,000 all-in including stamp duty, ROC fees, and professional charges.