Increase Your Company’s Authorised Capital with Proper ROC Compliance
As a business grows, it may need to issue additional shares to raise funds, induct investors, meet future capital requirements, or restructure its shareholding. However, a company cannot issue shares beyond the limit of its authorised share capital as stated in its Memorandum of Association (MOA).
Whenever a company wishes to increase or alter its authorised share capital, it must first complete the required corporate approvals and file the necessary forms with the Registrar of Companies (ROC).
At CLEANFILINGS, we assist companies with end-to-end support for authorised capital change, including drafting of resolutions, alteration of capital clause of MOA, SH-7 filing, and complete ROC compliance.
What is Authorised Capital?
Authorised Share Capital refers to the maximum amount of share capital that a company is permitted to issue to its shareholders as per its Memorandum of Association (MOA).
It represents the upper limit up to which a company can issue shares without altering its capital clause.
For example, if a company has an authorised capital of ₹10,00,000 divided into 1,00,000 equity shares of ₹10 each, it cannot issue shares beyond this limit unless the authorised capital is increased through proper legal procedure.
What is Authorised Capital Change?
Authorised Capital Change refers to the process of increasing, reclassifying, or otherwise altering the authorised share capital of a company in accordance with the Companies Act, 2013 and its constitutional documents.
In most practical cases, businesses approach this service when they need to increase authorised share capital to enable fresh share allotment, investor entry, funding rounds, or restructuring.
Who Can Apply for Authorised Capital Change?
This service is generally applicable to:
✔ Private Limited Companies
✔ Public Limited Companies
✔ One Person Companies (OPCs)
✔ Section 8 Companies having share capital, where applicable
✔ Other companies having share capital under the Companies Act
When is Authorised Capital Change Required?
A company may require authorised capital change in situations such as:
1. New Share Allotment
When the company wants to issue new shares but the existing authorised capital is insufficient.
2. Investor Induction / Funding
When shares need to be issued to new investors, promoters, or strategic stakeholders.
3. Business Expansion
When the company plans to raise additional capital for growth, operations, or future funding needs.
4. ESOP / Internal Restructuring
Where additional capital headroom is required for employee stock options or internal shareholding changes.
5. Conversion / Corporate Restructuring
When restructuring requires revision of the capital structure of the company.
Legal Basis for Authorised Capital Change
Authorised share capital change is generally governed by:
- Section 61 of the Companies Act, 2013
- Section 13 of the Companies Act, 2013, where alteration of MOA is involved
- Relevant provisions of the company’s Articles of Association (AOA)
- Applicable ROC filing requirements under the Companies (Share Capital and Debentures) Rules, 2014
The company must ensure that its Articles of Association permit the increase of authorised capital. If not, alteration of AOA may also be required before or along with the capital increase process.
Important Pre-Condition: Check AOA Before Capital Increase
Before increasing authorised capital, the company should verify whether its Articles of Association (AOA) authorise such increase.
If AOA already permits increase of authorised capital
The company can proceed with Board approval, shareholder approval, and SH-7 filing.
If AOA does not permit the increase
The company may first need to alter its AOA and then proceed with the authorised capital increase process.
This is an important legal checkpoint in the transaction.
Documents Required for Authorised Capital Change
The following documents / details are generally required:
- Certificate of Incorporation
- PAN of Company
- MOA & AOA of Company
- Existing Capital Structure Details
- Proposed Revised Authorised Capital Details
- Board Resolution for Capital Increase
- Notice of General Meeting / EGM
- Shareholders’ Resolution / Special Resolution, as applicable
- Altered MOA
- Altered AOA, if required
- DSC of Director / Authorised Signatory
- Professional Certification, where applicable
ROC Form for Authorised Capital Change
Form SH-7
Form SH-7 is the principal ROC form used for alteration of share capital, including increase in authorised share capital.
The form generally captures:
✔ Existing Authorised Capital
✔ Revised Authorised Capital
✔ Date of Resolution
✔ Details of Increase / Alteration
✔ Updated Capital Clause
✔ Applicable Stamp Duty / ROC Fees
Where required, MGT-14 may also be filed for the relevant shareholder resolution, depending on the nature of company and the applicable legal position.
Procedure for Authorised Capital Change
Step 1 – Review of Existing Capital Structure & AOA
We review the company’s existing authorised capital, paid-up capital, and AOA provisions to determine whether capital increase is permissible under the current constitutional documents.
Step 2 – Drafting of Board Resolution
A Board Meeting is convened to approve the proposal for increase of authorised capital and to call a general meeting of shareholders, if required.
Step 3 – Shareholder Approval
The shareholders approve the increase in authorised capital and alteration of the capital clause of MOA through the required resolution in a general meeting / EGM.
Step 4 – Alteration of MOA / AOA, if applicable
The capital clause of the Memorandum of Association is altered to reflect the revised authorised capital. If required, AOA is also amended.
Step 5 – Filing of ROC Forms
Form SH-7 is filed with ROC along with the necessary attachments and prescribed filing fees / stamp duty. MGT-14 may also be filed wherever applicable.
Step 6 – Updated Capital Structure Record
Upon successful filing / approval, the company’s authorised capital stands updated in MCA records and the company becomes eligible to proceed with fresh share allotment within the revised limit.
Time Limit for Filing Authorised Capital Change
The ROC filing for authorised capital alteration is generally required to be made within the prescribed timeline from the date of passing of the relevant resolution.
As a practical compliance standard:
- SH-7 is generally filed within 30 days of the resolution approving the alteration.
- MGT-14, wherever applicable, is also generally filed within 30 days of passing the relevant resolution.
Timely filing is important to avoid additional filing fees and compliance complications.
Why is Authorised Capital Change Important?
Enables Further Share Allotment
A company cannot issue shares beyond its authorised capital. Increasing it creates legal room for new share issuance.
Supports Fundraising & Investor Entry
It is often the first step before issuing shares to founders, investors, or strategic partners.
Facilitates Business Expansion
Additional capital flexibility helps in scaling operations, meeting future capital needs, and planning growth.
Keeps MCA Records Updated
The company’s capital structure in official records remains aligned with its business plans.
Avoids Future Compliance Bottlenecks
Completing the capital increase before allotment helps avoid legal defects in future share issuance transactions.
Common Scenarios Where We Help
We commonly assist in authorised capital increase for:
✔ Fresh Share Allotment to Promoters
✔ Angel / Investor Funding Rounds
✔ Rights Issue / Preferential Allotment Preparation
✔ Paid-Up Capital Expansion
✔ Corporate Restructuring
✔ ESOP / Internal Capital Planning
Difference Between Authorised Capital and Paid-Up Capital
This is one of the most common areas of confusion:
Authorised Capital
The maximum capital a company is allowed to issue.
Issued / Subscribed / Paid-Up Capital
The actual capital issued to shareholders and subscribed / paid for by them.
A company may have high authorised capital but low paid-up capital. However, it cannot increase paid-up capital beyond the authorised capital limit unless the authorised capital is first increased.
Consequences of Not Increasing Authorised Capital Before Allotment
If a company proceeds with share allotment without sufficient authorised capital, it may face:
✔ Defective or non-compliant allotment structure
✔ ROC filing complications in PAS-3 / related filings
✔ Need for corrective corporate actions
✔ Delay in funding / investor transactions
✔ Legal and documentation risks
Accordingly, authorised capital planning should be done before any major allotment exercise.
What Do We Provide?
Our Authorised Capital Change Services may include:
✔ Review of Existing Capital Structure
✔ Review of MOA / AOA Provisions
✔ Drafting of Board Resolution & EGM Documents
✔ Drafting of Altered Capital Clause
✔ SH-7 Filing with ROC
✔ MGT-14 Filing Support, where applicable
✔ Guidance on ROC Fees / Stamp Duty
✔ End-to-End ROC Compliance Support
Benefits of Professional Authorised Capital Change Support
✔ Accurate Capital Structuring Support
✔ Proper Resolution & Documentation Drafting
✔ Reduced Risk of ROC Resubmission
✔ Timely Filing of SH-7 / MGT-14
✔ Better Preparedness for Future Share Allotment
✔ Compliance with Companies Act Requirements
Why Choose CLEANFILINGS?
✔ Experienced ROC Compliance Professionals
✔ Accurate Documentation & Filing
✔ Transparent Pricing
✔ Dedicated Support Team
✔ Pan India Service Delivery
✔ End-to-End MCA Compliance Support
Increase your authorised capital smoothly and prepare your company for future growth, funding, and share allotment while our experts handle the complete ROC compliance process.
CLEANFILINGS PRIVATE LIMITED
Smart Filings. Clean Future.