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Increase Authorized Capital
Prepare your company for new investors, ESOP pools, or rights issues. We ensure seamless compliance under Section 61 of the Companies Act, 2013, handling your AOA amendments and Form SH-7 filings.
Start Your Capital IncreaseWhy Increase Authorized Share Capital?
Every growing company eventually hits a ceiling where the paid-up capital reaches the authorized limit. Increasing this limit is a mandatory step before you can issue new equity. You will need to increase your authorized capital when:
- Raising Funds: Inducting new investors or venture capital .
- Issuing ESOPs: Creating an Employee Stock Ownership Plan pool for your team.
- Rights Issues: Offering additional shares to existing shareholders.
The Legal Process & MCA Compliance
The process is strictly governed by the Companies Act, 2013, and requires precise execution to avoid regulatory delays.
Step-by-Step Execution
- Verify AOA: First, we review your Articles of Association (AOA) to ensure it contains a provision enabling the alteration of share capital[cite: 6]. If not, the AOA must be amended first.
- Board Meeting: Convene a Board Meeting to recommend the increase and call an Extraordinary General Meeting (EGM).
- Shareholder Approval (EGM): Pass an ordinary or special resolution to approve the increase in authorized capital and alter the Memorandum of Association (MOA).
- File Form SH-7: File Form SH-7 via the MCA V3 portal within a strict 30-day window from the date of the resolution.
Frequently Asked Questions (FAQs)
What is the difference between Authorized and Paid-Up Capital?
Authorized share capital is the maximum limit up to which a company can issue shares. Paid-up capital is the actual amount received from shareholders for issued shares. Paid-up capital can never exceed authorized capital.
Is shareholder approval necessary?
Yes. After the Board of Directors approves the proposal, the company must hold an Extraordinary General Meeting (EGM) to get the shareholders' approval via a formal resolution.
Are there government fees involved?
Yes, increasing the authorized capital involves paying a fee to the Ministry of Corporate Affairs (MCA) and state-specific stamp duty, which varies based on the quantum of the increase and the state where your registered office is located.
How long does the MCA approval take?
If all documents and resolutions are correctly drafted and filed within the 30-day window, the company can typically become investment-ready within 7 to 15 working days.
Ready to Scale Your Business?
Don't let compliance hurdles delay your funding round. Let our experts at Corporate Mitras handle your Form SH-7 filings accurately and on time.
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