Increase Authorized Capital
Increase Authorized Capital
When a company grows, the need for additional funds becomes inevitable. Authorised share capital, the maximum limit of capital that a company can issue to its shareholders, plays a crucial role in enabling this growth. Paid-up capital cannot exceed the authorised share capital, making it essential for businesses to increase their authorised capital when planning expansion, restructuring, or raising new funds.
At Cardiff Service, we provide complete guidance for increasing authorised capital in compliance with the Companies Act, 2013 and MCA regulations. Whether your business needs capital for expansion, funding new ventures, or meeting shareholder demands, our team ensures a smooth, hassle-free process.
Top Reasons to Increase Authorised Share Capital
Expansion & Growth: To raise more funds for scaling operations, expansion, or restructuring by issuing additional shares.
Starting New Ventures: Subsidiary or new projects often require more capital that exceeds the existing paid-up share capital.
Compliance with Funding Requirements: New investments or shareholder demands often require alignment with the authorised capital limits.
What is Authorised Share Capital?
Authorised share capital is the maximum share capital a company is legally allowed to issue, as stated in the Memorandum of Association (MOA). It can only be increased with shareholder approval and necessary filings with the MCA.
Understanding Authorised Capital
As per Section 2(8) of the Companies Act, 2013, authorised capital (or nominal capital) is the maximum amount of share capital a company is authorised to issue, as stated in its Memorandum of Association (MOA).
If your company plans to raise additional funds for business expansion, you must first increase your authorised share capital. Below are some important FAQs to help you understand this process better:
Frequently Asked Questions (FAQs)
Q1. What do we mean by Authorised Capital or Nominal Share Capital?
Authorised capital means the maximum amount of money a company can raise through share capital, as permitted by its MOA. It is also called nominal capital.
Q2. Is Stamp Duty applicable on increasing Authorised Capital?
Yes . Stamp duty is applicable on every increase in authorised share capital as per the respective State Stamp Act.
Q3. How much time does ROC take to approve Form SH-7?
Approval timelines vary across different ROCs. Generally, it may take 1 to 2 weeks since SH-7 is an approval-based form (not STP).
Q4. What documents are required to be attached with Form SH-7?
Certified true copy of the Ordinary Resolution with Explanatory Statement.
Altered MOA.
Altered AOA (if required).
Shorter notice consent (if meeting held at shorter notice).
Any other applicable supporting documents.
Documents Required to Increase Authorised Capital
When planning to increase your company’s authorised share capital, it is essential to prepare and submit the right set of documents with the Registrar of Companies (ROC) to ensure compliance with the Companies Act, 2013. At Cardiff Service, we help businesses draft, review, and file all necessary documents with accuracy and efficiency.
Key Documents Required:
Existing MOA & AOA of the Company – Current constitutional documents that need to be altered for authorised capital increase.
Digital Signature Certificate (DSC) – Of one of the authorised directors or signatories, mandatory for e-filing with MCA.
Board & Shareholder Resolutions – Drafted and finalised to approve the increase in authorised share capital.
Certified True Copy of Resolution – Required as proof of the decision passed by the company to increase share capital.
Altered Memorandum of Association (MOA) – To reflect the revised authorised share capital limits.
Altered Articles of Association (AOA) – If changes are required to empower the company for capital increase.
Step-by-Step Procedure to Increase Authorised Capital
At Cardiff Service, we simplify the process of increasing authorised share capital by handling legal drafting, resolutions, and MCA filings on your behalf. Below is the step-by-step guide:
Step 1: Review Articles of Association (AOA)
Check if the company’s AOA permits increase in authorised capital.
If not, amend the AOA by passing a Special Resolution in a General Meeting under Section 14 of the Companies Act, 2013, and file Form MGT-14 with ROC.
Step 2: Hold Board Meeting & Issue EGM Notice
Conduct a Board Meeting (minimum 7 days prior notice).
Agenda includes proposal for increasing authorised share capital and fixing date of the EGM.
Notice of EGM to be sent to all members at least 23 days prior.
Draft altered MOA reflecting the revised authorised capital.
Authorise Directors to sign, certify, and file forms with ROC.
Step 3: Conduct Extraordinary General Meeting (EGM)
Hold the EGM and pass the Ordinary Resolution under Section 61(1)(a) of the Companies Act, 2013.
Ensure quorum is present as per law.
Resolution must authorise alteration of the Capital Clause of MOA.
Step 4: File Form SH-7 with ROC
File Form SH-7 within 30 days of passing the Ordinary Resolution.
Attach altered MOA and necessary supporting documents.
Pay applicable stamp duty (as per respective state laws) electronically.
Mandatory Attachments in SH-7
Certified true copy of the Ordinary Resolution.
Altered Memorandum of Association (MOA).
Altered Articles of Association (if required).
Optional supporting documents (if applicable).
Step 5: Verification by ROC
ROC verifies documents and attachments filed in SH-7.
Once verified, ROC approves SH-7 and updates MCA Master Data with the revised authorised share capital.
Process is complete once the alteration is reflected in the company’s master records.
Frequently Asked Questions
A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.
If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.
It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.
For a company name search in Cardiff, you may need:
Proposed company name
Business entity type (Ltd, LLP, Partnership, etc.)
Jurisdiction (Cardiff / UK)
Owner or shareholder details (if applicable)
Business description
A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.
Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms