Increase Authorized Share Capital (Form SH-7)

Authorized Share Capital: Meaning, Limits & How to Increase It via Form SH-7

Here’s the short version: authorized share capital is the cap on how many shares your company can legally issue, written into the Memorandum of Association. You raise that cap by getting shareholders to pass an ordinary resolution and then filing Form SH-7 with the Registrar within 30 days. Skip that deadline and MCA charges ₹100 for every day you’re late, with no ceiling on how high that number can climb.

Key Takeaways

Authorized Capital vs Paid-Up Capital: Core Differences

Founders mix these two up constantly, and it’s an easy mistake to make because both terms have the word “capital” in them and both show up on incorporation paperwork. They’re not the same thing, though, and the gap between them matters the moment you’re trying to raise money or grant stock options.

Authorized capital is the number written into your MOA’s Capital Clause - the absolute ceiling on what the company is permitted to issue. Paid-up capital is what’s actually been issued and paid for by shareholders at any given moment. A company registered with ₹10 lakh in authorized capital might have issued only ₹2 lakh worth of shares so far; the remaining ₹8 lakh is headroom it hasn’t used yet. What a company can never do is flip that relationship - paid-up capital has to stay at or below the authorized number, full stop.

A rough mental shortcut that’s worked for the founders I’ve explained this to: think of authorized capital as the size of the glass, and paid-up capital as how much liquid is currently in it. You can own a huge glass and keep it mostly empty on purpose - plenty of companies hold far more authorized capital than they’ve issued, specifically so they don’t need a fresh SH-7 filing every time they want to bring in an investor or set up an ESOP pool.

Does Private Limited Company Need a Minimum Authorized Capital?

Not since 2015. Before that year’s amendment to the Companies Act, a private company had to show a minimum paid-up capital of ₹1 lakh, and public companies needed ₹5 lakh - and because of how the rules were drafted, most incorporations simply matched their authorized capital to that same figure out of habit. The Companies (Amendment) Act, 2015 deleted that minimum requirement from Sections 2(68) and 2(71) entirely. Technically, a company today could be incorporated with an authorized capital of ₹1. Nobody does that in practice, mostly because it leaves zero room to issue even a single founder’s share without filing SH-7 within days of incorporation - but the legal floor simply isn’t there anymore.

Legal Steps to Increase Authorized Share Capital under Companies Act

Section 61(1)(a) gives a company the right to raise its authorized capital, provided the Articles of Association already permit it. Here’s how the sequence actually plays out in practice:

A timing mistake I see founders make fairly often: they wait until investment money has actually landed in the bank before starting this whole process. That’s backwards. Share allotment through PAS-3 is blocked until SH-7 has cleared and MCA’s records show the higher authorized capital - and if the first SH-7 attempt gets kicked back for a correction, that gap can stretch into several weeks right when you least want delays.

MCA Fee Calculator & State-Wise Stamp Duty Breakdown for Form SH-7

People ask “how much will this cost me” expecting one number, and the honest answer is that it’s three different charges bolted together, two of which depend entirely on where your registered office happens to sit.

The ROC filing fee comes from Table A of the Companies (Registration Offices and Fees) Rules, 2014, and it’s based on your authorized capital after the increase - but you don’t pay the full fee for that slab. You pay the difference between what that slab costs and whatever you already paid at your old, lower capital level.

So if you’re going from ₹1 lakh to ₹10 lakh, you’re not paying ₹4,000 - you’re paying ₹4,000 minus the ₹2,000 you already paid, which comes to ₹2,000. The number that genuinely surprises people shows up once you cross ₹1 crore. Jump from ₹1 crore to ₹5 crore and you’re paying ₹75,000 for each additional crore - four of them - which adds up to ₹3,00,000 in ROC fees before stamp duty or anyone’s professional charges even enter the picture. If you know you’ll need more headroom down the line, there’s a real argument for going bigger in one filing rather than doing it twice, since the drafting and professional work cost roughly the same either way.

State stamp duty is the second piece, and this is where things genuinely diverge depending on geography:

Delhi stands out here - a flat ₹100 regardless of how large the increase is, while a Maharashtra-registered company doing the same increase could pay thousands more. These rates come from each state’s own Stamp Act and get revised by state notification periodically, so don’t treat the table above as gospel on filing day. The MCA V3 portal calculates your exact stamp duty automatically once you punch in your state and capital figures - that number, not any published chart, is the one that actually governs what you pay.

Professional fees for handling the resolutions, the e-MOA entry, and the filing itself typically land somewhere between ₹3,000 and ₹15,000, depending on how complicated your capital restructuring is.

Put it all together and a Delhi company moving from ₹1 lakh to ₹10 lakh is looking at roughly ₹2,000 in ROC fees, ₹100 in stamp duty, and a few thousand in professional charges - a modest total bill. The same move for a Maharashtra company adds a meaningful chunk more in stamp duty alone. None of this matters much at smaller amounts. It starts to matter a lot once you’re increasing capital by crores, where the ROC fee’s ₹75,000-per-crore structure becomes the dominant cost regardless of which state you’re in.

Documents & E-Forms Required for Capital Alteration

Before opening Form SH-7 on the portal, get these together:

If there’s one thing that derails these filings more than anything else, it’s a mismatch between what the resolution says and what gets typed into the e-MOA module - the total capital figure, the split between equity and preference shares, the face value per share. All three have to line up exactly across the resolution, the e-MOA entry, and your intended capital structure. Double-checking that alignment before you hit submit saves you a resubmission cycle that otherwise eats several extra weeks.

Frequently Asked Questions