Procedure for Increasing Authorised Share Capital

A company may need to increase its authorised share capital before issuing new equity shares and increasing paid-up capital. Authorised share capital is the total value of shares a company can issue, while paid-up capital is the total value of shares the company has issued. Paid-up capital can never exceed authorised capital. Hence, if a company having an authorised capital of Rs.10 lakhs and paid-up capital of Rs.10 lakhs would like to induct new shareholders, it can do so either by:

Increasing authorised share capital and issuing new shares. (or)
Transferring shares from existing shareholders to the new shareholders.

In most cases, new shares are issued and authorised capital is increased. In this article, we look at the procedure for increasing authorised share capital in detail. Get in touch with an IndiaFilings Advisor at

sales@indiafiilngs.com for assistance with increasing authorised share capital.

Verify AOA of the Company

Before commencing the procedures for increasing authorised share capital, verify the AOA to ensure there is enabling provision in the Articles of Association (AOA) particularly with reference to increase authorized share capital. If there are no provisions for increasing authorised share capital, the company must first make changes to the AOA of the company.

Note: Most of the AOA's will have enabling provisions for increasing authorised share capital.

Convene Board Meeting

To increase the authorised share capital, first, convene a Board Meeting by providing notice to the Director. At the Board Meeting, obtain approval from the Board of Directors for increasing authorised share capital. Then fix a date, time and place for conducting an Extra-Ordinary General meeting to obtain approval of shareholders for the increase of authorised share capital and making changes to the MOA of the company. Finally, obtain approval of the Board of Directors of Company Secretary present at the meeting to present notice of Extra-Ordinary General Meeting to the shareholders. Based on the approval, present the Notice of Extra-Ordinary General Meeting to all shareholders, Directors and Auditor of the Company.

Extra-Ordinary General Meeting

On the time, date and place mentioned on the Notice of Extra-Ordinary General Meeting, conduct the Extra-Ordinary General Meeting and obtain shareholders approval for increase of authorised capital. The approval of shareholders for increasing authorised share capital must be in the form of an ordinary resolution.

File ROC Forms

Once the ordinary resolution is passed at the Extra-Ordinary General Meeting, Form SH-7 must be filed by the company within 30 days of passing of ordinary resolution. Along with Form SH-7, the prescribed government fee for authorised capital must be paid and the following documents must be attached:

Notice related to EGM.
Authorized True copy of Ordinary Resolution.
Changed Memorandum of Association. (Showing higher authorised capital)

If the procedures for increasing authorised capital are followed as mentioned in the Companies Act and Companies Rules, then the Registrar would approve the filing and increase the authorised share capital of the company. The new authorised share capital of the company would be reflected on the MCA portal.

Allotment of Shares

Post the increase in authorised share capital, the paid-up share capital of the company can be increased by issuing fresh equity shares.

Procedure for issuing shares is covered in this article.

Back to Learn

Frequently Asked Questions

Common questions about Increasing Authorised Share Capital Procedure in India.

Increasing authorised share capital allows a company to issue more shares and raise additional funds from new shareholders. It enables the company to expand its operations, fund growth initiatives, or meet its financial obligations by increasing its paid-up capital.

A company should consider increasing its authorised share capital when it needs to issue new equity shares but has already reached the maximum limit of its current authorised capital. This typically occurs when the company seeks to raise additional funds or induct new shareholders.

Authorised share capital is the maximum amount of share capital a company is authorized to issue, as stated in its Memorandum of Association. Paid-up share capital, on the other hand, is the amount of share capital that has been actually issued and paid for by the shareholders.

No, a company cannot issue more shares than its authorised share capital. The paid-up share capital of a company cannot exceed its authorised share capital at any given time. If the company needs to issue additional shares, it must first increase its authorised share capital.

The procedure for increasing authorised share capital involves verifying the company's Articles of Association, convening a Board Meeting, conducting an Extra-Ordinary General Meeting to obtain shareholders' approval, filing Form SH-7 with the Registrar of Companies, and paying the required government fees.

Yes, shareholders' approval is mandatory for increasing the authorised share capital of a company. This approval must be obtained through an ordinary resolution passed at an Extra-Ordinary General Meeting.

The time taken by the Registrar of Companies to approve the increase in authorised share capital can vary depending on the completeness of the application and the workload at the respective Registrar's office. However, it typically takes a few weeks for the approval process to be completed.

No, a company cannot issue new shares immediately after increasing its authorised share capital. The company must first follow the prescribed procedure for issuing new shares, which includes convening a Board Meeting, obtaining shareholders' approval, and filing the necessary forms with the Registrar of Companies.

Increasing authorised share capital through an ordinary resolution is a relatively simpler and less time-consuming process compared to other methods, such as amending the Memorandum of Association. It allows the company to expedite the process of raising additional funds or inducting new shareholders.

There is no specific limit to how much a company can increase its authorised share capital. However, the company must ensure that the increased authorised share capital is sufficient to meet its current and future funding requirements, as well as any potential dilution of existing shareholders' equity.