Legal Services by Nd Salva
As businesses expand, so does the need for capital. Increasing your authorized share capital is an essential
corporate action that allows your company to issue additional shares, bring in new investors, fund operations,
or support strategic restructuring.
At Nd Salva Advocates & Legal Consultants, we offer comprehensive legal support for increasing your
authorized share capital in full compliance with the Companies Act, 2013.
What is Authorized Share Capital?
Authorized share capital, defined under Section 2(8) of the Companies Act, 2013, represents the maximum capital
a company can issue to shareholders. It is specified in the Memorandum of Association (MOA).
Note: A company cannot issue shares exceeding its authorized capital. Therefore, increasing authorized
capital becomes mandatory before raising additional equity.
Why Increase Authorized Capital?
- Funding new business projects and expansion
- Issuing shares to new investors or partners
- Facilitating mergers or acquisitions
- Converting loans or debt into equity
- Restructuring capital base
- Meeting regulatory and investor requirements
Key Legal Considerations
- Requires amendment to MOA (Capital Clause)
- AOA must authorize capital increase; otherwise AOA must be amended first
- Needs an Ordinary Resolution at shareholders’ meeting
- Form SH-7 must be filed with the RoC within 30 days
- Stamp duty payable on increased capital amount
- Form MGT-14 is not required for private companies
Step-by-Step Process to Increase Authorized Share Capital
1. Review AOA Provisions
Ensure the Articles of Association permit capital increase or amend AOA first.
2. Board Meeting
Approve increase and call for an Extraordinary General Meeting (EGM).
3. Conduct EGM
Pass an Ordinary Resolution approving the capital increase.
4. File Form SH-7
Submit required documents and pay stamp duty within 30 days.
5. Update MOA & AOA
Incorporate revised capital clause in all company documents.
6. Issue New Shares
After approval, issue shares and file PAS-3 for allotment (if applicable).
Penalties for Non-Compliance
- ?10,000 penalty on company and officers (Section 450)
- ?1,000 per day additional penalty for SH-7 delays (up to ?25 lakhs)
- Risk of RoC rejection or invalid share issuance
Why Choose Nd Salva?
- Expert vetting of MOA & AOA provisions
- Accurate drafting of resolutions and legal notices
- Complete RoC filing support for SH-7 and related documents
- Stamp duty guidance and compliance
- End-to-end legal advisory throughout the process
- Transparent fees and efficient turnaround time