Increase your company's authorized capital - file Form SH-7 with ROC
Increasing authorized capital allows your company to issue more shares to new investors, employees (ESOPs), or existing shareholders. The process requires a special resolution (75% shareholder approval), filing Form SH-7 with the ROC, and amending Clause V of the MoA. We manage the entire process - from board resolution to ROC confirmation - ensuring your company can raise fresh capital or issue ESOPs without delay.
Increase Authorized Capital
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The key facts, in one place
Everything a founder usually has to piece together from five different pages, in one place.
- Governing sections
- Section 62 & 63, Companies Act, 2013Increase of authorized capital
- Forms used
- Form SH-7 + MGT-14ROC filing for capital increase
- Shareholder approval
- Special resolution (75% majority)Mandatory for capital increase
- Right of pre-emption
- Section 62(1) - existing shareholders firstUnless special resolution waives it
- MoA amendment
- Clause V (capital clause) amendedAuthorized share capital increased
- Fresh issue
- Form PAS-3 for subsequent share issuanceActual shares issued after increase
- Processing time
- 20-30 working daysROC confirmation
- Our fee from
- ₹4,999End-to-end capital increase
What is increasing authorized capital?
Authorized capital is the maximum amount of share capital that a company is authorized to issue, as specified in Clause V of its MoA. When a company wants to issue new shares - to raise fresh investment, issue ESOPs, or expand operations - it must first ensure that the authorized capital ceiling allows it. If the current authorized capital is insufficient, the company must increase it before issuing new shares.
Increasing authorized capital is governed by Section 62 (further issue of capital) and Section 63 (increase of authorized capital) of the Companies Act, 2013. The process requires: (a) a special resolution passed by shareholders holding at least 75% of voting rights, (b) filing Form SH-7 with the ROC for confirmation of the increase, (c) filing Form MGT-14 within 30 days of the special resolution, and (d) amending Clause V of the MoA to reflect the new authorized capital.
Section 62(1) gives existing shareholders the pre-emptive right to subscribe to the new shares in proportion to their existing holding. However, a special resolution can waive this right, allowing the company to issue shares to new investors without offering them first to existing shareholders. This is commonly done for fundraising rounds where new investors are brought in.
At Bizeneed, our CA team handles the complete process: we verify the proposed new capital amount, draft the special resolution (including any waiver of pre-emptive rights), prepare explanatory statements, file Form SH-7 and MGT-14 with the ROC, and amend the MoA's capital clause. We also coordinate with the company's advisors to ensure the capital increase aligns with the overall funding strategy.
Methods of increasing capital
There are several ways to increase a company's share capital, each with different legal requirements.
Rights Issue (Section 62(1))
Existing shareholders in proportion
Preferential Allotment (Section 62(3))
Selected investors (new or existing)
| Aspect | Rights Issue (Section 62(1)) | Preferential Allotment (Section 62(3)) |
|---|---|---|
| Who gets the shares | Existing shareholders in proportion | Selected investors (new or existing) |
| Pre-emptive right | Mandatory unless special resolution waives it | Waiver of pre-emptive right required |
| Notice period | Minimum 21 days' notice to shareholders | Special resolution for waiver |
| Pricing | Usually at market or par value | Can be at premium (common for investors) |
| Valuation | Board-determined (fair value) | Requires valuation report (SEBI/ICAI norms) |
| Typical use | Pro-rata capital increase to all shareholders | Fundraising from new investors, ESOP issuance |
| Form required | Form PAS-3 (return of allotment) | Form PAS-3 + Section 64/67 disclosures |
| Compliance | Simpler - standard procedure | More elaborate - valuation, disclosures, approvals |
Bizeneed visual guide
Increase your company's authorized capital - file Form SH-7 with ROC
Increase your company's authorized capital under Section 62/63 of the Companies Act, 2013. File Form SH-7 with ROC for capital increase. Attract investors, issue more shares, and scale operations. From ₹4,999.
Understand requirement
Prepare documents
Complete filing
Client
Bizeneed
Result
Who needs to increase authorized capital?
Increasing authorized capital is necessary whenever a company needs to issue more shares than its current authorized limit allows.
- Company is raising a funding round - needs more shares to issue to investors
- ESOP pool needs to be created or expanded - requires additional authorized shares
- Current authorized capital is nearly exhausted - need headroom for future issuances
- Company wants to issue bonus shares (Section 63) to reward shareholders
- Business expansion requires fresh equity investment from new partners
- Debt-to-equity conversion - lenders converting debt to equity requires additional shares
- Strategic investor onboarding - institutional investor requires a large share allocation
- Company was incorporated with a low authorized capital and needs to scale
- Preparing for IPO - SEBI requires minimum net worth and capital structure
- Family business restructuring - next-generation inducted via share issuance
By entity type
| Entity | Governed by | Eligible |
|---|---|---|
| Private Limited Company | Companies Act, 2013, Section 62/63 | ✓ Yes |
| Public Limited Company | Companies Act, 2013, Section 62/63 | ✓ Yes |
| One Person Company (OPC) | Companies Act, 2013, Section 62/63 | ✓ Yes |
| Section 8 Company | Companies Act, 2013, Section 62 (with prior CG approval) | ✓ Yes |
| Producer Company | Companies Act, 2013, Section 62/63 | ✓ Yes |
| Unlimited Company | Companies Act, 2013, Section 62/63 | ✓ Yes |
| LLP | Not applicable - contribution flexible | ✕ No |
Common capital increase scenarios
Startups
- Pre-Series A: increase authorized capital to accommodate VC investment
- Create ESOP pool (5-15% of post-money shares)
- Series A/B/C rounds require capital increase at each stage
SMEs going public
- Pre-IPO capital increase to meet SEBI requirements
- Bonus issue to existing shareholders before IPO
- Institutional placement of shares via QIP
Family businesses
- Gift shares to next generation - increase capital first
- Bring in a strategic investor - increase for preferential allotment
- Convert loans to equity (debt-to-equity swap)
Manufacturing companies
- Capacity expansion funded via fresh equity
- Debt-to-equity restructuring after high leverage
- Greenfield project funded via rights issue to existing shareholders
What does not qualify
- ✕LLPs increase partner contribution via LLP agreement amendment, not capital increase
- ✕Partnership firms increase capital via partnership deed amendment
- ✕Proprietorships have no concept of authorized capital
Documents required for increase of authorized capital
Common to every entity
- Special resolution passed by shareholders (75% majority)Mandatory
- Notice of EGM with explanatory statementMandatory
- Current MoA (Clause V - capital clause)Mandatory
- Current AoAMandatory
- Latest audited balance sheet and P&LMandatory
- DSC of an authorized directorMandatory
- PAN of the companyMandatory
- Current CoIMandatory
Entity-specific
| Entity | Additional documents |
|---|---|
| Private Limited Company (Section 62 rights issue) | Special resolution, MGT-14, explanatory statement, audited balance sheet, MoA, AoA, DSC, PAN, CoI, Form SH-7, rights issue notice |
| Private Limited Company (Section 63 preferential allotment) | Special resolution waiving pre-emptive rights, valuation report, explanatory statement, MoA, AoA, MGT-14, Form SH-7, Form PAS-3 |
| Public Limited Company | Same as Pvt Ltd + stock exchange intimation (if listed), SEBI disclosure requirements, merchant banker certificate |
| Section 8 Company | Special resolution + prior Central Government approval, Form SH-7 with CG NOC |
| Bonus issue (Section 63) | Special resolution, audited balance sheet showing free reserves, Form SH-7, MoA amendment if needed |
Get the capital increase checklist
A one-page checklist showing exactly what you need for Form SH-7 filing.
How increase of authorized capital works
The capital increase process requires shareholder approval, ROC confirmation, and MoA amendment - then new shares can be issued.
Board resolution and EGM notice
The board passes a resolution to convene an EGM for approving the capital increase. We draft the board resolution, EGM notice, and explanatory statement. For preferential allotment (Section 62(3)), the explanatory statement includes valuation details and the identity of the allottee.
Board of Directors
EGM and special resolution
Shareholders pass a special resolution (75% majority) approving the increase. The resolution specifies current authorized capital, proposed new authorized capital, the increase amount, and for preferential allotment, waiver of pre-emptive rights. We record minutes and voting details.
Shareholders
MGT-14 filing
We file Form MGT-14 with the ROC within 30 days of the special resolution. MGT-14 registers the resolution with the ROC and includes the resolution text, explanatory statement, and EGM notice.
Our CA
Form SH-7 filing
We prepare and file Form SH-7 with the ROC, applying for confirmation of the capital increase. The form includes the special resolution, audited balance sheet, explanatory statement, and details of the proposed increase. The ROC reviews and processes the application.
Our CA
ROC confirmation and MoA amendment
The ROC processes Form SH-7 and issues a confirmation order. With the ROC order, we amend Clause V of the MoA to reflect the new authorized capital. The amended MoA is filed with the ROC. The company's authorized capital is now increased and ready for new share issuances.
Our CA + CS
Share issuance (optional, post-increase)
Once authorized capital is increased, the company can issue new shares to investors, employees, or existing shareholders. We assist with Form PAS-3 (return of allotment), issuance of share certificates, and updating the register of members. For ESOP issuance, we also prepare the ESOP scheme and related disclosures.
Our CA
If you are increasing capital for a preferential allotment to investors, the ROC may scrutinize the valuation more carefully. We recommend obtaining an independent valuation report from a registered valuer before filing. Also, ensure all pending ROC filings (AOC-4, MGT-7) are complete before filing Form SH-7 - the ROC may hold up the application if there are outstanding defaults.
How long does authorized capital increase take?
From board resolution to ROC confirmation, the process typically takes 20-30 working days.
| Stage | Duration |
|---|---|
| Board resolution + EGM notice | 3-5 days |
| EGM + special resolution (75% approval) | 5-7 days |
| MGT-14 filing (within 30 days) | 2-3 days |
| Form SH-7 preparation | 3-5 days |
| Form SH-7 filing + ROC processing | 10-15 days |
| MoA amendment + ROC order compliance | 5-7 days |
Total: 20-30 working days. For preferential allotment, add 5-7 days for valuation report preparation.
What it costs
Government fees for capital increase are nominal. Our fee covers the complete process.
Basic
Authorized capital increase only
- Special resolution drafting
- MGT-14 filing
- Form SH-7 preparation and filing
- MoA amendment
- Email support
Standard
Capital increase + fresh share issuance
- Everything in Basic
- Form PAS-3 filing
- Share certificate issuance
- ROC follow-up
- WhatsApp support
Premium
Capital increase with investor onboarding
- Everything in Standard
- Valuation report (preferential allotment)
- Shareholders agreement support
- Dedicated CA (1 month)
- Post-increase compliance calendar
- Priority processing
Full fee breakdown
| Particulars | Government fee | Professional fee |
|---|---|---|
| Form SH-7 (capital increase) | ₹500-2,000 (capital-dependent) | Included |
| Form MGT-14 (special resolution filing) | ₹1,000-2,000 | Included |
| Stamp duty on amended MoA | ₹200-1,000 (state-dependent) | Included |
| Valuation report (preferential allotment) | Nil | ₹3,000-10,000 (varies) |
| Professional fee - Basic | Nil | ₹4,999 |
| Professional fee - Standard | Nil | ₹7,999 |
| Professional fee - Premium | Nil | ₹12,999 |
Not included in any tier:
- ✕ Stamp duty on amended MoA (varies by state)
- ✕ Independent valuation fee for preferential allotment (included in Premium)
- ✕ Professional fees of a CA for tax advisory
- ✕ Cost of new DSC if existing one is expiring
Which plan fits your capital increase?
Answer a couple of quick questions and get a plan recommendation.
Why are you increasing authorized capital?
How much are you increasing the authorized capital by?
Why increase your company's authorized capital
Fundraising readiness
- Issue fresh equity shares to investors - VCs, angels, and institutional investors
- Increase authorized capital before a funding round to avoid delays
- Create an ESOP pool for employee retention and recruitment
Shareholder flexibility
- Rights issue to existing shareholders - give them first dibs on new shares
- Bonus issue (Section 63) - reward shareholders without cash outlay
- Preferential allotment - bring in strategic investors on favorable terms
Business scaling
- Fund expansion plans, new offices, or acquisitions via fresh equity
- Consolidate balance sheet - reduce debt-to-equity ratio
- Strengthen net worth for tenders and government contracts
Strategic positioning
- Increase capital before an IPO or listing to meet SEBI requirements
- Create a larger authorized capital base for future funding rounds
- Signal growth ambitions to investors and stakeholders
Common mistakes during authorized capital increase
Increasing capital during an active fundraising round
Increase authorized capital before starting fundraising negotiations. Doing it mid-round causes delays. We recommend doing it at least 30 days before investor discussions.
Not offering pre-emptive rights properly
Under Section 62(1), existing shareholders must be offered new shares first. If you want to issue shares to new investors instead, you need a special resolution waiving pre-emptive rights. We ensure the correct procedure.
Forgetting MGT-14 within 30 days
MGT-14 must be filed within 30 days of the special resolution. Late filing attracts penalties. We track the deadline and file promptly.
New authorized capital set too low
Plan ahead - set the new authorized capital with room for 1-2 more rounds of funding. Repeating the process every few months is inefficient.
Not getting valuation done for preferential allotment
For preferential allotment to investors, a valuation report from a registered valuer is mandatory. We coordinate with registered valuers for compliant valuations.
Confusing authorized capital increase with share issuance
Increasing authorized capital (Form SH-7) is only the first step. You still need to issue new shares via Form PAS-3. Both steps are separate and both required. We handle both.
Every rejection above has a fix - most come down to how the innovation note is written, not the business itself. Most applicants don't know that until after the rejection.
If you have already been rejected, or want to make sure it does not happen, the 15-minute call below is the fastest path.
Why choose Bizeneed for capital increase
Frequently asked questions
The process involves: (1) Board resolution convening an EGM, (2) EGM notice with explanatory statement sent to shareholders, (3) Special resolution (75% majority) approving the increase, (4) Filing Form MGT-14 with ROC within 30 days, (5) Filing Form SH-7 with ROC for confirmation, (6) ROC issues confirmation order, (7) Amending Clause V of the MoA, and (8) Issuing new shares via Form PAS-3. The entire process takes 20-30 working days.
Authorized capital is the maximum amount of share capital a company can issue (set in MoA Clause V). Issued capital is the actual amount of shares that have been issued to shareholders. A company can issue shares up to its authorized limit. For example, a company with ₹10 lakh authorized capital and ₹2 lakh issued capital can still issue ₹8 lakh worth of new shares without increasing authorized capital.
Section 62 deals with 'Further issue of share capital' - the actual issuance of new shares. It covers: (1) Rights issue to existing shareholders (Section 62(1)), (2) Employee stock options/benefits (Section 62(1)(b)), (3) Preferential allotment to selected investors (Section 62(3)). Existing shareholders have pre-emptive rights unless waived by special resolution.
Section 63 deals with the 'Issue of bonus shares' - converting free reserves or securities premium into share capital. Bonus shares increase issued capital without bringing in fresh money, reward shareholders proportionally, and require a special resolution. They are issued in a specific ratio (e.g., 1:1 bonus means 1 new share for every 1 held).
Section 62 is for issuing new shares for fresh capital - new money comes into the company. It requires Form SH-7 (if authorized capital needs increase) + Form PAS-3. Section 63 is for issuing bonus shares from existing reserves - no new money comes in, but share capital increases. Both require Form SH-7 + Form PAS-3.
Form SH-7 is the application for confirmation of increase in authorized share capital, filed with the ROC under Section 63 of the Companies Act, 2013. It must be filed within 15 days of passing the special resolution and includes the special resolution, explanatory statement, audited balance sheet, and details of the proposed increase. The ROC processes it and issues a confirmation order.
Yes. Under Section 63(2) read with Section 62, a company can increase authorized capital only by passing a special resolution in a general meeting. A special resolution requires approval from shareholders holding at least 75% of voting rights. For preferential allotment, the resolution must also waive pre-emptive rights.
Under Section 62(1), existing shareholders have the right to subscribe to new shares in proportion to their existing holding before shares are offered to anyone else. This right can be waived by passing a special resolution. Companies typically waive it when bringing in new investors or issuing ESOPs to employees.
Government fee for Form SH-7 depends on the increase in authorized capital: up to ₹1 lakh: ₹200. ₹1 lakh to ₹10 lakh: ₹400. ₹10 lakh to ₹1 crore: ₹600. ₹1 crore to ₹10 crore: ₹1,200. Over ₹10 crore: ₹2,400. Fees are subject to MCA notifications.
Yes. You can increase authorized capital by amending the MoA (via Form SH-7) without actually issuing new shares. The increased authorized capital becomes available for future issuances. Many companies increase authorized capital proactively to create a buffer for future funding rounds without needing another ROC filing.
Increasing authorized capital does not change the shareholding pattern - it only raises the ceiling for future issuances. The shareholding pattern changes only when new shares are actually issued (via Form PAS-3). Once new shares are issued, the pattern is updated in the next MGT-7 filing.
After authorized capital is increased and ROC confirmation is received, issuing new shares via Form PAS-3 takes 5-10 working days. The entire process (capital increase + share issuance) takes 25-35 working days. We handle both steps as part of our Standard and Premium plans.
A valuation report is not required for a simple increase in authorized capital (Section 63). However, for preferential allotment under Section 62(3) - issuing shares to selected investors at a premium - a valuation report from a registered valuer is mandatory under Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014.
Yes, there is no limit. Each increase requires a fresh special resolution, MGT-14 filing, and Form SH-7. Many startups increase authorized capital at each funding stage. We recommend increasing in larger increments to minimize the number of filings.
Increasing authorized capital requires amending the MoA, which may attract stamp duty depending on the state. Maharashtra: ₹200-1,000. Karnataka: ₹1,000 for every ₹1 lakh increase. Some states charge a percentage of the increase. We calculate the exact stamp duty based on your state.
Written by Rohan Kulkarni, Compliance Content Lead · Reviewed by CA Ananya Reddy, B.Com, FCA - corporate secretarial and capital restructuring
Last updated 6 September 2026
Sources
- Ministry of Corporate Affairs - Form SH-7
- Companies Act, 2013 - Section 62
- Companies Act, 2013 - Section 63
- Companies (Share Capital and Debentures) Rules, 2014
- Form PAS-3
Filing procedures, fee amounts, and statutory references on this page are verified against the sources above. Rules and fees can change with MCA notifications - confirm with our team or your CA before filing.
Where are you right now?
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Where are you right now?
Tell us about your company's capital needs and we'll recommend the best approach.