Authorised capital: meaning, limits and how to increase it
Authorised capital is the maximum share capital a company may issue under its MoA. No legal minimum applies; raising it needs a resolution and Form SH-7.
Short answer
Authorised capital is the maximum amount of share capital a company is allowed to issue, as stated in the capital clause of its Memorandum of Association. It is a ceiling, not money in the bank. A company with ₹10 lakh authorised capital can issue shares only up to ₹10 lakh unless it first increases the limit.
- Where stated
- Capital clause of the MoA
- Legal minimum
- None since the 2015 amendment
- Increase filing
- Form SH-7 within 30 days of the resolution
How authorised capital works
When you incorporate through SPICe+, you choose an authorised capital figure, for example ₹1 lakh divided into 10,000 equity shares of ₹10 each. The company may then allot shares up to that limit. The part actually allotted becomes issued capital, and the money received on it becomes paid-up capital.
The Companies Act, 2013 originally required a minimum paid-up capital, but the Companies (Amendment) Act, 2015 removed it. Founders can therefore start with a modest figure and raise it later.
Increasing authorised capital
If the Articles of Association permit, a company can increase authorised capital under section 61 by passing a resolution at a general meeting. It must then file Form SH-7 with the Registrar of Companies within 30 days, together with the altered MoA, and pay the ROC fee and state stamp duty on the increase.
Both the ROC fee and stamp duty are calculated on the increased amount, so many founders choose a figure that covers the next one or two funding rounds rather than increasing it every few months.
Why it matters for startups
Before issuing shares to an investor, granting an ESOP pool or issuing bonus shares, check there is enough unissued authorised capital. If there is not, the increase must be approved and filed first, which adds time to a funding round. A cap table that maps authorised, issued and fully diluted capital helps you plan this headroom early.
Related services
Sources
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Is authorised capital the same as the money invested in the company?
No. Authorised capital is only a ceiling on how many shares can be issued. The money actually received from shareholders is paid-up capital, which can be much lower.
Can a company reduce its authorised capital?
Yes. Under section 61 a company can cancel shares that have not been taken up and reduce its authorised capital by the cancelled amount. This is different from a reduction of paid-up capital, which needs a tribunal-approved process.
Does authorised capital affect government fees?
Yes. ROC registration fees and state stamp duty on the MoA depend on authorised capital, so a higher figure costs more at incorporation or on increase.