MCA Services

Increase Authorize/Paid Up Capital

A company can increase its authorised share capital under Section 61(1)(a) of the Companies Act, 2013 by passing an ordinary resolution at a general meeting, provided the Articles permit it. It then files Form SH-7 with the Registrar within 30 days along with the altered Memorandum, and pays the ROC fee and the state stamp duty on the increase. Paid-up capital is increased separately, by issuing and allotting new shares and filing Form PAS-3.

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Service Overview

What is Increase Authorize/Paid Up Capital?

Authorised share capital is the maximum amount of share capital a company is permitted to issue, as stated in the capital clause of its Memorandum. Issued capital is the part actually offered to shareholders, and paid-up capital is the amount received on those shares. Increasing authorised capital only raises the ceiling and does not itself bring in money or issue shares; paid-up capital increases only when new shares are allotted and paid for. Paid-up capital can never exceed authorised capital.

An increase needs an ordinary resolution of shareholders, meaning a simple majority, under Section 61, as long as the Articles authorise it. If they do not, the Articles must first be altered by special resolution under Section 14. Form SH-7 is filed with the Registrar within 30 days, with the altered MOA, and stamp duty is payable on the increase as per the law of the state where the registered office is located. One source gives examples such as Rs 1,000 per Rs 5 lakh of increase in Maharashtra, 0.15% (capped at Rs 25 lakh) in Haryana and about 0.15% in Delhi, but these rates should be verified for the current year.

Increase Authorize/Paid Up Capital

Who Needs This Service

Companies that are about to raise funds from investors, issue ESOPs, make a bonus issue or bring in new shareholders need this service. If the authorised capital has been used up, the company cannot allot new shares until it increases the limit.

Startups often incorporate with a small authorised capital to save on fees and stamp duty, and then need to increase it when they raise a funding round. Planning the increase before the term sheet is signed avoids delays at closing.

Existing companies that want to expand operations, acquire assets or convert loans into equity also need to increase capital. Foreign-owned subsidiaries that receive additional foreign capital must increase capital and also report the allotment to the RBI.

If you only want to raise funds without issuing new shares, such as through loans, you do not need to increase authorised capital.

Key Benefits

Capital headroom ready for funding rounds, ESOPs and bonus issues
Correct resolution, SH-7 filing and stamp duty for your state
Clear separation between authorised and paid-up capital steps
Support for PAS-3, share certificates and registers
Avoids delays at investor closing

Next Steps & Related Services

After the increase, allot shares as needed and file PAS-3.

Related services: MOA/AOA Alteration, Share Transfer, Annual Compliance, Seed Funding and Pitch Deck.

Common Mistakes

Increasing authorised capital without checking the Articles.
Missing the 30-day SH-7 deadline.
Underpaying stamp duty because of the wrong state rate.
Confusing authorised capital with paid-up capital.
Allotting shares before the increase is registered.

Timeline, Costs & Practical Tips

SH-7 must be filed within 30 days of the resolution. Costs include ROC fees (which depend on the amount of the increase), state stamp duty and professional fees.

Practical tip: increase the authorised capital a little above the immediate requirement so that another increase is not needed for the next round.

Additional Information

Section 61 of the Companies Act, 2013 allows a limited company with share capital to alter its capital clause, including increasing authorised capital, if its Articles permit. The capital clause is part of the Memorandum, so any change must be reported to the Registrar through Form SH-7. State stamp duty laws, derived from the Indian Stamp Act, 1899, impose duty on the increase, and rates vary by state. Understanding the difference between authorised, issued and paid-up capital avoids errors in fundraising documents.

Written By

Raghav Sharma

Operations Executive

10+ Years Experience

As seen on

Raghav Sharma has 10+ years of experience covering Company Registration - Operation, MCA Services - Operation, Corporate Operation, Import Export Services - Operation, Goverment Licence Services - Operation, FSSAI - Operation, SEBI - Operation, Labour Compliance - Operation, Fund Raising - Operation, Licence & Certificate - Operations.

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Frequently asked questions

Need clarity?

Which resolution is needed to increase authorised capital?

An ordinary resolution under Section 61, if the Articles permit.

Within how many days must SH-7 be filed?

Within 30 days of the resolution.

Does increasing authorised capital bring in money?

No. Money comes in only when shares are allotted and paid for.

Is stamp duty payable?

Yes, as per the state of the registered office; rates vary.

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