How to Increase the Authorised Share Capital of a Private Company (SH-7)
Increasing authorised capital: check AoA, board meeting, ordinary resolution of shareholders, alter MoA capital clause and file SH-7 within 30 days.
Short answer
To increase authorised capital, confirm the AoA permits it, hold a board meeting to call a general meeting, and pass an ordinary resolution of shareholders (a special resolution if the AoA requires). Alter the capital clause of the MoA and file SH-7 with the ROC within 30 days, paying the ROC fee and state stamp duty on the increase.
- Law
- Section 61(1)(a), Companies Act 2013
- Approval
- Ordinary resolution (special if AoA requires)
- ROC form
- SH-7
- Deadline
- 30 days from resolution
- MGT-14
- Only if a special resolution is passed
- Costs
- ROC fee and stamp duty on the increase
When do you need to increase authorised capital?
Authorised capital is the ceiling on shares a company can issue. You need to raise it before a funding round, ESOP exercise, rights issue or conversion of instruments if the new shares would push issued capital above the ceiling. Investors usually ask for this to be done as a condition before closing, so plan it into the funding timeline.
What approvals are needed?
Section 61 allows a company limited by shares to increase its authorised capital if its articles authorise it. Most AoAs do. Shareholders approve the increase by ordinary resolution at a general meeting, unless the articles specify a special resolution. If your AoA lacks the power, first alter the articles by special resolution and file MGT-14.
If the increase also creates a new class, such as preference shares for a CCPS round, reflect that in the capital clause with the number and value of each class.
Documents for SH-7
SH-7 is a short form, but the attachments must match exactly: the amount in the resolution, the altered capital clause and the figures entered in the form. Mismatches lead to resubmission.
- Notice of the general meeting with explanatory statement
- Certified copy of the shareholders' resolution
- Altered MoA with the new capital clause
- Altered AoA, if the capital clause is also in the articles
- Board resolution calling the meeting
What will it cost?
The ROC fee on SH-7 is calculated on the amount of increase, using the slab table in the Companies (Registration Offices and Fees) Rules, 2014. Stamp duty on the increase is payable under the relevant state's stamp law and is collected through the MCA portal for most states. Because both depend on the size of the increase, many startups increase capital in steps aligned to their next round rather than to a very large round number.
Timeline
The process can be completed within a couple of weeks if shareholders consent to shorter notice for the general meeting. Otherwise allow for 21 clear days' notice before the meeting date.
| Step | Timing |
|---|---|
| Board meeting | Day 0 |
| General meeting (21 days' notice or shorter with consent) | Day 1 to 21 |
| Ordinary resolution passed | Meeting date |
| SH-7 filed | Within 30 days |
| MGT-14 (if special resolution) | Within 30 days |
How does authorised capital differ from paid-up capital?
Authorised capital is the maximum the company may issue; paid-up capital is the amount shareholders have actually paid for shares issued. Increasing authorised capital does not bring in any money or change ownership. It only creates room. Paid-up capital rises when you allot shares and file PAS-3. Note that the small company test uses paid-up capital, now up to ₹10 crore, not authorised capital.
Common mistakes
Founders often allot shares before SH-7 is approved, which makes the allotment exceed authorised capital and invalid until regularised. Other errors are mismatched amounts between the resolution and the form, forgetting to create a preference share class, and paying stamp duty under the wrong state. Late SH-7 filings attract additional fees that increase with delay.
Step by step
- 1Check AoA
Confirm the articles allow an increase and the type of resolution needed.
- 2Decide amount and classes
Plan headroom for the next round and ESOPs.
- 3Board meeting
Approve the proposal and call a general meeting.
- 4Shareholder approval
Pass the ordinary (or special) resolution.
- 5Alter MoA
Update the capital clause, and AoA if needed.
- 6File SH-7
File within 30 days with fee and stamp duty.
- 7File MGT-14 if needed
Only where a special resolution was passed.
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 a special resolution needed to increase authorised capital?
Usually not. An ordinary resolution suffices unless the AoA requires a special resolution.
What is the deadline for SH-7?
30 days from the date of the shareholders' resolution.
Can I issue shares before SH-7 is approved?
It is unsafe. Allot only after the increase is effective and registered to avoid an invalid allotment.
Is stamp duty payable on increase of authorised capital?
Yes, as per the state stamp law, along with the ROC fee.