To increase your company’s authorised share capital, first check that the Articles of Association allow it, and alter them if they do not. Then pass a board resolution, hold a general meeting, and pass an ordinary resolution to alter the capital clause of the Memorandum. Finally, file Form SH-7 with the Registrar within 30 days of the resolution, along with the prescribed fee and stamp duty on the increased amount.
What authorised capital is, and when you need to raise it
Authorised capital is the ceiling on the share capital a company is allowed to issue. Paid-up capital is what it has actually issued. You can issue shares freely up to the authorised ceiling, but the moment you want to issue more, to bring in an investor, expand an ESOP pool, or convert instruments, you first have to lift the ceiling. This is a routine step, but it has a defined procedure and a 30-day filing clock, and skipping it blocks the allotment you actually wanted to make.
The step-by-step process
- Check the Articles. The AoA must contain a power to increase authorised capital. If it does not, you alter the AoA first, which needs a special resolution.
- Board meeting. The board passes a resolution approving the proposed increase and calling a general meeting of shareholders.
- General meeting. Shareholders pass an ordinary resolution to alter the capital clause of the Memorandum. An increase of authorised capital is an ordinary resolution; it does not need a special resolution.
- File Form SH-7. File SH-7 with the Registrar of Companies within 30 days of the resolution, attaching the amended Memorandum and the resolution.
- Pay the fee and stamp duty. The MCA fee and the stamp duty on the increased capital are paid with the form.
Fees and stamp duty
Two amounts apply when you file SH-7. The MCA filing fee is calculated on the amount of the increase and the company’s revised capital. Stamp duty is charged on the increased authorised capital and is a state subject, so the rate depends on the state in which the company is registered. Because stamp duty scales with the size of the increase, it is worth deciding the new ceiling deliberately rather than picking a round number, but also leaving enough headroom that you are not back here in six months.
How long it takes
The procedure itself is quick once the paperwork is ready. The longer general meeting notice period can be shortened with shareholder consent, which most closely held companies use. The real timeline driver is whether the Articles already permit the increase. If they do, this is a matter of days. If the AoA has to be altered first, you add a special resolution to the same general meeting and file the AoA change as well.
Common mistakes
The recurring ones are simple. Founders allot shares to an investor first and discover only afterwards that the allotment breaches the authorised ceiling, which forces an awkward fix. Others miss the 30-day SH-7 deadline and pick up an additional fee. And some forget to check the Articles, then realise mid-process that an AoA alteration was needed. Sequence it properly: confirm the Articles, raise the ceiling, then allot.
Frequently asked questions
What resolution is needed to increase authorised capital?
An ordinary resolution of the shareholders to alter the capital clause of the Memorandum. If the Articles do not already permit an increase, a special resolution to alter the Articles is also required.
Which form is filed to increase authorised capital?
Form SH-7 is filed with the Registrar of Companies within 30 days of the resolution, along with the amended Memorandum, the MCA fee and stamp duty on the increased capital.
Is stamp duty payable on an increase in authorised capital?
Yes. Stamp duty is charged on the increased authorised capital. It is a state subject, so the rate depends on the state where the company is registered.
Can I issue shares beyond my authorised capital?
No. A company cannot allot shares beyond its authorised capital. You must increase the authorised capital first, then make the allotment.
Reviewed by CS Sapna Malpani, a practising Company Secretary in Bangalore who handles capital alterations and share allotments for private companies. This is general information, not legal advice. About Sapna Malpani.
Last reviewed: May 2026.