Company Authorized Capital Increase Services
- Detailed review of your current capital structure and expert recommendations on the optimal increase amount.
- Preparation and revision of the Memorandum of Association to include the new authorized capital clause.
- Convening and drafting of Board and EGM resolutions to secure director and shareholder approval.
- End‑to‑end filing of Form SH‑7 with the ROC and handling of requisite e‑stamp duty payments.
- Updating statutory records, issuing share certificates, and ensuring full compliance after capital augmentation.
Need help?
Services
What is Authorized Capital?
Authorized capital is the maximum share capital a company can legally issue, as defined in its Memorandum of Association (MOA). It acts as a "capital ceiling" – your company cannot issue shares beyond this limit without formal approval. Increasing authorized capital is essential for:
- Raising funds for expansion
- Onboarding new investors
- Financing acquisitions
- Converting debt to equity
CA Vakeel simplifies capital increases with end-to-end legal compliance.
Key Differences
| Parameter | Authorized Capital | Paid-Up Capital |
|---|---|---|
| Definition | Maximum shares allowed by MOA | Actual shares issued & paid for |
| Purpose | Sets legal issuance limit | Reflects real investor funding |
| Flexibility | Requires formal increase to expand | Can increase within authorized cap |
| Example | MOA states ₹50L authorized capital | ₹30L shares issued to shareholders |
Pro Tip: Always keep authorized capital higher than paid-up capital for fundraising agility.
When Should You Expand Your Capital Limit?
- Business Scaling: Fund new projects/markets.
- Investor Onboarding: Issue shares to VC/angel investors.
- Mergers & Acquisitions: Use shares as acquisition currency.
- Debt Conversion: Swap loans for equity.
- ESOP Pools: Create employee stock ownership plans.
- Regulatory Compliance: Meet industry-specific capital requirements.
How to Increase Authorized Capital in 5 Phases
Phase 1: AOA Review & Amendment
- Check Articles of Association (AOA) for capital alteration provisions.
- If silent, amend AOA first via special resolution (Section 14).
Phase 2: Board Approval
- Issue 7-day notice for board meeting.
- Pass resolution to convene EGM + approve MOA amendment draft.
Phase 3: Shareholder Approval
- Send 21-day EGM notice (shorter with 95% consent).
- Pass ordinary resolution (50% votes) for MOA change.
Phase 4: ROC Filings
| Form | Purpose | Deadline | Attachments |
|---|---|---|---|
| MGT-14 | Register resolution with ROC | 30 days | - EGM notice - Resolution copy - Revised MOA |
| SH-7 | Notify capital increase | 30 days | - Stamped MOA - Board resolution - Payment proof |
Phase 5: Post-Filing Compliance
- Update all MOA/AOA copies.
- Pay e-stamp duty on increased capital.
- Issue new shares (if planned).
Essential Papers for Capital Increase
- Revised MOA: With updated capital clause.
- Board Resolution: Authorizing EGM.
- EGM Documents:
- 21-day notice + attendance sheet
- Ordinary resolution copy
- Stamp Duty Receipt: Paid via MCA portal.
- Director KYC: PAN/DSC of signing directors.
CA Vakeel drafts all documents & handles e-stamping.
Risks of Late/Missed Filings
- Late SH-7 Filing: ₹1,000/day (max ₹25 lakh).
- General Default: ₹10,000 + ₹1,000/day ongoing penalty.
- Share Issuance Block: Cannot allot shares beyond old limit.
- Investor Liability: Directors personally liable for illegal issuances.
Your Capital Increase Partner
CA Vakeel delivers: End-to-End Management: AOA check → EGM → ROC filings. Resolution Drafting: Shareholder notices + board resolutions. Stamp Duty Optimization: State-specific fee calculation. Post-Increase Support: Share issuance + cap table updates. Compliance Guarantee: 100% penalty protection.
*"We’ve processed ₹500Cr+ capital hikes for 200+ companies."*
Key Features:
- MOA/AOA Redlining: Tracked-change drafts for transparency.
- Investor Coordination: Secure e-voting for resolutions.
- Multi-City EGM Support: Hybrid meeting facilitation.
- Real-Time Portal: Track application status 24/7.