Change in Authorized Capital

Change in Authorized Capital

A company's Authorized Share Capital is the maximum amount of capital that the company is authorized to issue to shareholders. If a company wants to issue new shares beyond its existing authorized limit, it must first increase its authorized capital by altering the Capital Clause of the Memorandum of Association (MoA).

Why Increase Authorized Capital?

• Issue new shares to raise equity funding from investors.
• Issue bonus shares or rights shares to existing shareholders.
• Create an ESOP pool for employee stock options.
• Enable foreign investment (FDI) through share allotment.
• Increase the company's capitalization for better credit standing.

Process

1. Convene a board meeting and pass a board resolution proposing the increase in authorized capital.
2. Hold an Extraordinary General Meeting (EGM) and pass an ordinary resolution approving the increase.
3. File Form SH-7 with the MCA within 30 days of the EGM, along with the altered MoA.
4. File Form MGT-14 with the EGM resolution within 30 days.
5. Pay the additional ROC fee on the incremental authorized capital as per the slab applicable.
6. Receive MCA acknowledgment and update company records with the increased authorized capital.

Documents Required

• Board resolution proposing the increase in authorized capital.
• EGM notice and ordinary resolution approving the increase.
• Altered Memorandum of Association (Capital Clause) reflecting the new authorized capital.
• Existing Certificate of Incorporation.
• DSC of the authorized director for filing.

Timeline

Approximately 7–10 working days.

Why Choose Tax Precision?

• Expert computation of additional ROC fees on incremental capital.
• Complete EGM notice and resolution drafting management.
• Form SH-7 and MGT-14 filing within the 30-day deadline.
• Post-approval share allotment advisory and PAS-3 filing support.
• Cap table (shareholding structure) management advisory.