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When a company needs to issue new shares (to investors, employees via ESOPs, or existing shareholders), the Authorised Share Capital must first be increased if it is insufficient. This requires an EGM/Board Resolution and filing of Form SH-7 and Form MGT-14 with MCA within 30 days. LegalSearch handles the complete process.
Increasing Authorised Capital allows the company to issue new shares to investors, employees (ESOPs), or in exchange for acquisitions.
Investors require sufficient headroom in Authorised Capital before committing funds. An adequate capital structure signals a growth-oriented company.
Employee Stock Option Plans require dedicated Authorised Capital. Increasing capital is the prerequisite for launching any ESOP scheme.
A higher capital base improves the company's debt-to-equity ratio, enabling better loan terms from banks and financial institutions.
Properly filing the capital increase with MCA keeps the company's records accurate and avoids scrutiny during due diligence or fundraising.
LegalSearch handles the amendment to the Memorandum of Association to reflect the increased capital, along with all filings.
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The Authorised Share Capital must be at least Rs. 1 lakh. There is no minimum limit for Paid-Up Share Capital after the 2015 amendment to the Companies Act.
No. There is no upper limit on Authorised Capital. A company can increase it to any amount as business needs require.
Authorised Capital is the maximum capital a company is permitted to issue. Paid-Up Capital is the portion of Authorised Capital for which shareholders have actually paid consideration.
MoA and AoA, Board Resolution for EGM, EGM Notice, Special Resolution Minutes, Form SH-7, and Form MGT-14.
Form SH-7 (for the capital increase) and Form MGT-14 (for the Special Resolution) must both be filed with MCA within 30 days of passing the resolution.
The fee for filing Form SH-7 is Rs. 300 for companies with Authorised Capital up to Rs. 1 lakh and increases progressively based on the capital amount.
Form SH-7 and Form MGT-14 must both be filed with the ROC within 30 days of passing the Special Resolution at the EGM.
No. An increase in Authorised Capital requires a Special Resolution, which must be passed at a General Meeting (EGM or AGM). It cannot be done through a Board Resolution alone.
Yes. Stamp duty is payable on the increase in Authorised Capital, calculated on the additional capital at rates varying by state.
Yes. In most Pvt. Ltd. companies, the same persons are both directors and shareholders. There is no restriction on this dual role.
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