Key Takeaways
- Increasing authorized share capital under Section 61(1)(a) needs only an ordinary resolution (simple majority), provided your Articles of Association already permit the increase.
- If the AOA caps your capital or has no enabling clause, you must first alter it by special resolution under Section 14, which then triggers a MGT-14 filing under Section 117(3).
- File Form SH-7 with the Registrar within 30 days of passing the resolution (Section 64, read with Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014).
- MCA fees follow a slab based on the new authorized capital, plus state-specific stamp duty on the altered MOA.
- The most common failure is filing SH-7 before the resolution is validly passed, or forgetting to alter the AOA when it caps capital.
Do I need an ordinary or special resolution to increase authorized share capital? Increasing authorized capital under Section 61(1)(a) of the Companies Act 2013 requires only an ordinary resolution, passed by simple majority at a general meeting, if the Articles already authorize it. A special resolution is needed only when the Articles must first be altered under Section 14 to permit the increase. (Source: Sections 14, 61 and 117, Companies Act 2013; mca.gov.in)
Your company has run out of authorized capital. You want to bring in a new investor, create an ESOP pool, or issue convertible instruments, but the total value of shares you can legally issue is capped by your Memorandum of Association. Before you can allot a single new share above that ceiling, you have to raise the authorized limit itself.
This is a routine but procedure-heavy exercise under the Companies Act 2013. Get the sequence wrong, file the wrong form, or skip the Articles check, and the Registrar can reject your filing or the resolution can be challenged later. This guide walks through the exact steps, the correct forms, the statutory timelines, and the fee structure, so the increase holds up.
Looking for expert help with how to increase authorized share capital India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
Authorized vs Issued vs Paid-Up Capital: Know Which One You Are Changing
Before touching any form, be clear about which layer of capital you are altering. Increasing authorized capital does not put a rupee into the company. It only raises the ceiling up to which shares can later be issued.
Comparison
Authorized vs Issued vs Paid-Up Capital
Increasing authorized capital only lifts the ceiling. Issuing shares is a separate step.
| Parameter | Type | What it means |
|---|---|---|
| Authorized (Nominal) Capital | Section 2(8) | The maximum share capital the company is permitted to issue, as stated in Clause V of the MOA. Section 61/SH-7 changes this. |
| Issued Capital | Section 2(50) | The portion of authorized capital actually offered to and taken up by shareholders. Always equal to or below authorized capital. |
| Paid-Up Capital | Section 2(64) | The amount shareholders have actually paid against the issued shares. Equal to or below issued capital. |
| Money into the company? | On increase | No. Raising authorized capital brings in no funds. Funds arrive only when shares are issued and paid up. |
| Governing action | To change it | Authorized: Section 61 + SH-7. Issued/paid-up: allotment via PAS-3 after the increase. |
Source: Companies Act 2013, Sections 2(8), 2(50), 2(64), 61; mca.gov.in
The order matters: you increase authorized capital first, then issue new shares (paid-up capital) against the enlarged ceiling and report the allotment through Form PAS-3. This article covers the first step.
Why Increase Authorized Capital in the First Place
A company reaches its authorized ceiling whenever the shares it wants to issue would push issued capital above the nominal figure in Clause V. Typical triggers:
- Bringing in equity investment: a new investor subscribes to fresh shares, and the total issued capital would breach the current limit.
- Preference shares or convertible instruments: issuing preference shares, CCPS, or convertible debentures that, on conversion, exceed the authorized amount.
- ESOP pools: creating or expanding an employee stock option pool where the reserved shares plus existing issued capital cross the ceiling.
- Capitalization of reserves: issuing bonus shares, which converts reserves into share capital and consumes authorized headroom.
In each case the increase in authorized capital is a precondition, not the transaction itself. The allotment follows separately.
The Two Paths: Does Your AOA Already Permit the Increase?
This is the single most important check, and the step most often skipped. Section 61(1) allows a limited company to alter its capital clause only if authorized by its Articles. So the procedure forks depending on what your Articles say.
Comparison
Ordinary Resolution vs Special Resolution: Which Path Applies
The answer depends entirely on whether your Articles already permit the increase.
| Parameter | Path A: AOA already permits | Path B: AOA silent or caps capital |
|---|---|---|
| Resolution to increase capital | Ordinary resolution (Section 61(1)(a), simple majority) | Ordinary resolution (Section 61) for the capital increase |
| Do you alter the AOA? | No alteration needed | Yes. Alter Articles first by special resolution (Section 14) |
| MGT-14 required? | No. Ordinary resolution for capital increase does not attract MGT-14 | Yes. The special resolution altering the AOA triggers MGT-14 under Section 117(3) |
| SH-7 required? | Yes, within 30 days (Section 64) | Yes, within 30 days (Section 64) |
| Typical scenario | Standard company with a capital-alteration clause in its Articles | Older company or one whose Articles fix a maximum capital |
Source: Companies Act 2013, Sections 14, 61, 64, 117(3); mca.gov.in
The reason for the fork is structural. Section 61 governs the capital clause in the Memorandum, and altering it needs only an ordinary resolution because the Act treats a capital increase as a routine business decision. But your Articles are a separate document. If they contain a ceiling or lack an enabling power, that ceiling binds the company until the Articles themselves are changed, and altering Articles always requires a special resolution under Section 14. A special resolution, in turn, must be filed with the Registrar in Form MGT-14 under Section 117(3).
Check the Articles before you draft the notice. If Table F was adopted or a capital-alteration clause exists, you are on Path A (ordinary resolution, no MGT-14). If the Articles are silent or fix a maximum capital, you are on Path B and must alter the Articles by special resolution and file MGT-14. Getting this wrong is the most frequent cause of ROC objections on SH-7.
Step-by-Step Procedure to Increase Authorized Share Capital
Step-by-Step Guide
How to Increase Authorized Share Capital
The statutory sequence under the Companies Act 2013
Verify the Articles of Association
Confirm the AOA contains a clause permitting alteration of capital. If it does not, the AOA must be altered first by special resolution under Section 14 (Path B).
AOA checkConvene a Board meeting
Pass a board resolution approving the proposed increase, fixing the day, date, time and venue of the general meeting, and authorizing issue of the notice with an explanatory statement.
BoardIssue notice of the general meeting
Send at least 21 clear days notice of the EGM (or AGM) to all members, directors and auditors, with the explanatory statement under Section 102. Shorter notice is valid only with consent of members holding 95% of voting rights.
21 daysPass the resolution in general meeting
Members pass an ordinary resolution to increase authorized capital and amend Clause V of the MOA (Section 61). On Path B, also pass a special resolution to alter the AOA (Section 14).
EGMFile MGT-14 if a special resolution was passed
Only on Path B: file Form MGT-14 with the ROC within 30 days of the special resolution altering the AOA (Section 117(3)).
If Path BFile Form SH-7 with the ROC
File Form SH-7 within 30 days of the resolution (Section 64) with the certified resolution, altered MOA, EGM notice and explanatory statement, and pay the fee plus stamp duty.
30 daysSource: Companies Act 2013, Sections 14, 61, 64, 102, 117; Companies (Share Capital and Debentures) Rules 2014, Rule 15; mca.gov.in
Step 1: Verify and, if needed, alter the Articles
Read Clause V of the MOA (the capital clause) and the Articles together. If the Articles carry an express power to alter capital (Table F companies usually do), proceed on Path A. If not, the Board must propose a special resolution to insert or amend the enabling clause, which the members pass at the same general meeting.
Step 2: Board resolution and calling the general meeting
The Board meets, approves the quantum of increase (for example, from an authorized capital of Rs 10,00,000 to Rs 50,00,000), and resolves to call an Extraordinary General Meeting. The board resolution also authorizes a director or the company secretary to issue the notice and, later, to sign and file the forms. Keep the signed minutes: a certified copy of this resolution is an SH-7 attachment.
Step 3: The 21 clear days notice
Under Section 101, a general meeting requires at least 21 clear days notice in writing (electronic mode is permitted). "Clear days" excludes the date of dispatch and the date of the meeting, and the Act deems 48 hours for postal service. The notice must carry an explanatory statement under Section 102 setting out the reason for the increase. A meeting on shorter notice is valid only if members holding not less than 95% of the voting rights consent.
Step 4: Passing the resolution
At the meeting, members pass an ordinary resolution (Section 61(1)(a)) to increase the authorized capital and correspondingly amend Clause V of the MOA. An ordinary resolution passes when votes cast in favour exceed votes against. On Path B, members also pass a special resolution (Section 14) to alter the Articles, which needs at least a three-fourths majority.
Step 5: File MGT-14 (Path B only)
If a special resolution was passed to alter the AOA, file Form MGT-14 with the Registrar within 30 days, attaching the certified special resolution, the explanatory statement, and the altered AOA (Section 117(3)). On Path A, where only an ordinary resolution was passed for the capital increase, MGT-14 is not required; the ordinary resolution under Section 61 does not fall within the Section 117(3) filing list.
Step 6: File Form SH-7
Form SH-7 is the notice to the Registrar of the alteration of share capital under Section 64, read with Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014. File it within 30 days of the resolution. Standard attachments:
- Certified true copy of the ordinary resolution (and the special resolution, on Path B)
- Altered Memorandum of Association reflecting the new Clause V
- Altered Articles of Association (Path B only)
- Notice of the general meeting with the explanatory statement
- Optionally, a copy of the board resolution
On filing, the system computes the MCA fee on the enhanced capital plus the applicable stamp duty, and the Registrar records the increased authorized capital against the company's master data.
ROC Fees and Stamp Duty on the Increase
Two charges apply when you file SH-7: the MCA filing fee on nominal capital, and state stamp duty on the altered MOA.
MCA fee on nominal (authorized) capital
The MCA fee is computed on a slab basis under the Companies (Registration Offices and Fees) Rules, 2014. For a company having share capital (other than a One Person Company or small company), the standard slab structure is set out below. When you increase capital, the fee payable is broadly the difference between the fee applicable to the new authorized capital and the fee already borne on the existing authorized capital.
Tax Rate Chart
MCA Fee Slabs on Nominal Share Capital
Standard Table of Fees for a company having share capital (other than OPC/small company). Verify the exact figure on the MCA fee calculator before filing.
Up to Rs 1,00,000
Fixed base fee
Rs 1,00,000 to Rs 5,00,000
Rs 5,000 base + Rs 400 for every Rs 10,000 or part
Rs 5,00,000 to Rs 50,00,000
Rs 21,000 base + Rs 300 for every Rs 10,000 or part
Rs 50,00,000 to Rs 1,00,00,000
Rs 1,56,000 base + Rs 100 for every Rs 10,000 or part
Above Rs 1,00,00,000
Rs 2,06,000 base + Rs 75 for every Rs 10,000 or part, capped at Rs 2.5 crore
Source: Companies (Registration Offices and Fees) Rules 2014, Table of Fees; mca.gov.in
To read the table: the base figure for each higher slab already includes the full fee accumulated across the lower slabs. For example, a company raising authorized capital from Rs 10,00,000 to Rs 50,00,000 falls in the Rs 5,00,000 to Rs 50,00,000 slab, where the fee at Rs 50,00,000 works out to Rs 21,000 plus Rs 300 for every Rs 10,000 above Rs 5,00,000. The net SH-7 fee is that amount reduced by what was already payable on the pre-increase capital of Rs 10,00,000. Because these figures are subject to amendment, always confirm the exact rupee amount using the MCA fee calculator on mca.gov.in at the time of filing.
Stamp duty on the altered MOA
Stamp duty on the increased authorized capital is a state subject, levied under the Indian Stamp Act as adopted by each state, and rates vary widely. Some states charge a percentage of the increased capital, some impose a fixed amount, and some cap the total. Because the rate depends on the state where your registered office sits, the exact stamp duty cannot be stated generically; the MCA portal usually collects it along with the SH-7 fee based on the state selected. Confirm the current rate for your state before you budget for the increase.
Timeline: How Long Does It Take?
The binding constraint is the 21 clear days notice period, not the filing itself.
| Stage | Time | Statutory basis |
|---|---|---|
| Board meeting to approve and call the EGM | Day 0 | Section 173 / Articles |
| Notice of general meeting | At least 21 clear days | Section 101 |
| EGM and passing of resolution(s) | Day ~22 | Sections 61 / 14 |
| File MGT-14 (Path B only) | Within 30 days of the special resolution | Section 117(3) |
| File Form SH-7 | Within 30 days of the resolution | Section 64 |
With full notice, the process runs roughly three to four weeks from board meeting to EGM, plus the filing window. Where all members consent in writing to shorter notice (95% of voting rights), the EGM can be held sooner, compressing the timeline to a few days. The 30-day SH-7 clock starts from the date the resolution is passed, so file promptly once the meeting concludes.
Common Mistakes That Get SH-7 Rejected
1. Filing SH-7 before the resolution is passed. Form SH-7 is a notice of an alteration that has already happened. Filing it before the general meeting validly passes the resolution means there is no alteration to report, and the form is defective. Always: resolution first, filing within 30 days after.
2. Not altering the AOA when it caps capital. If the Articles fix a maximum capital or lack an enabling clause, passing only an ordinary resolution is insufficient. The increase is ultra vires the Articles until they are altered by special resolution under Section 14. Skipping this makes the whole increase vulnerable.
3. Forgetting to attach the altered MOA. The capital clause (Clause V) of the Memorandum must actually be amended to show the new authorized figure, and the altered MOA is a mandatory SH-7 attachment. Reporting the increase without updating the MOA text is a frequent ground for objection.
4. Missing MGT-14 on Path B. When a special resolution alters the AOA, MGT-14 is due within 30 days under Section 117(3). Companies often file only SH-7 and overlook MGT-14, leaving the AOA alteration unregistered and exposing the company to additional-fee liability.
5. Missing the 30-day SH-7 window. Section 64(2) provides that a company and every defaulting officer are liable to a penalty extending to Rs 1,000 for each day the default continues, subject to a maximum of Rs 5,00,000. Late filing also attracts MCA additional fees on a multiple-of-normal-fee basis. Filing on time keeps you clear of both, and helps reduce exposure to penalties.
Private vs Public Company: What Differs
The core procedure, ordinary resolution under Section 61, SH-7 within 30 days, MGT-14 where the AOA is altered, is the same for private and public companies. The practical differences lie in the mechanics of the general meeting and the follow-on issue of shares:
- Quorum: a private company needs 2 members personally present; a public company needs 5, 15 or 30 members depending on membership size (Section 103).
- Notice and process rigour: listed and larger public companies face additional secretarial standards, e-voting requirements under Section 108, and stricter disclosure in the explanatory statement.
- Downstream allotment: once authorized capital is increased, a private company typically issues shares via a rights issue (Section 62) or private placement (Section 42); a public company may additionally access a further public offer. These are separate steps reported through PAS-3, not part of SH-7.
The authorized-capital increase itself, however, does not change based on company type. What changes is the meeting formality and the route by which the new shares are eventually issued.
Let Tax Garden Handle the Filing
Increasing authorized capital is procedure-sensitive: the Articles check, the correct resolution type, the notice period, and two possible ROC filings inside overlapping 30-day windows. A single misstep, filing SH-7 before the resolution or missing the AOA alteration, can force a refiling and additional fees.
Tax Garden reviews your MOA and AOA to identify the correct path, drafts the board and shareholder resolutions and explanatory statement, prepares the altered MOA (and AOA where needed), and files Form SH-7 and MGT-14 with the Registrar within the statutory window, with the fee and stamp duty computed for your state.
Frequently Asked Questions
Do I need an ordinary or special resolution to increase authorized share capital?
An ordinary resolution under Section 61(1)(a) is sufficient to increase authorized capital, provided the Articles of Association already permit the alteration. A special resolution under Section 14 is required only where the Articles must first be altered to enable the increase, for example where they fix a maximum capital or carry no enabling clause.
Is MGT-14 mandatory when increasing authorized capital?
No, not for a pure capital increase passed by ordinary resolution. The ordinary resolution under Section 61 does not fall within the Section 117(3) filing list, so no MGT-14 is required. MGT-14 becomes mandatory only when a special resolution is passed to alter the Articles under Section 14, since that special resolution must be filed within 30 days.
What is the time limit to file Form SH-7?
Form SH-7 must be filed with the Registrar within 30 days of passing the resolution that increased the authorized capital, under Section 64 of the Companies Act 2013 read with Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014. The 30-day clock runs from the date of the resolution, not the date of the board meeting.
What documents must be attached to Form SH-7?
A certified true copy of the ordinary resolution (and the special resolution, if the AOA was altered), the altered Memorandum of Association showing the revised Clause V, the altered Articles where applicable, and the notice of the general meeting with the explanatory statement. A copy of the board resolution is commonly attached as well.
How much does it cost to increase authorized share capital?
Two charges apply: the MCA filing fee, computed on a slab of the new authorized capital under the Companies (Registration Offices and Fees) Rules 2014, and state-specific stamp duty on the altered MOA. The net SH-7 fee is broadly the difference between the fee on the new capital and the fee on the existing capital. Use the MCA fee calculator for the exact figure at the time of filing.
What happens if I file Form SH-7 late?
Under Section 64(2), the company and every officer in default are liable to a penalty extending to Rs 1,000 for each day the default continues, subject to a maximum of Rs 5,00,000. Late filing also attracts MCA additional fees calculated as a multiple of the normal fee based on the delay. Filing within the 30-day window helps reduce exposure to penalties.
Does increasing authorized capital bring money into the company?
No. Increasing authorized capital only raises the ceiling up to which shares can be issued. It brings in no funds by itself. Money enters the company only in the next step, when shares are actually issued and paid up against the enlarged authorized capital, and that allotment is reported separately through Form PAS-3.
This guide references the Companies Act 2013 (in particular Sections 14, 61, 64, 101, 102 and 117), the Companies (Share Capital and Debentures) Rules 2014 (Rule 15), and the Companies (Registration Offices and Fees) Rules 2014, together with the Form SH-7 and MGT-14 filing requirements as published on mca.gov.in. Stamp duty is governed by the Indian Stamp Act as adopted by the relevant state.