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Procedure to Increase the Authorized Share Capital of the Company (Form SH-7)

While receiving additional funds from investors or existing shareholders, a Company may have to increase its Authorized Share Capital so as to ensure that the new capital being brought in the company is within the authorized limit mentioned in the Memorandum of  Association of the Company.

Remember the basic rule: The Paid Up Capital of a Company can never exceed its Authorized Share Capital.

The procedure to Increase the Authorized Share Capital of the Company is given below:

1) Check the Articles of Association ("AOA") of the Company to ensure that suitable provision/clause with respect to the power to Increase the Authorized Share Capital of the Company is in place, otherwise suitable amendment should be made in the Articles of Association of the Company by passing a Special Resolution.

2) Issue notice for holding Board Meeting to discuss the following matters:

    a) Increase in Authorized Share Capital of the Company:
    b) To fix the date, place, time of the Extraordinary General Meeting ("EGM") of the Company.

3) Hold the Board Meeting to discuss the above matters.

4) Issue Notice for conducting Extraordinary General Meeting of the Company along with the explanatory statement as per Section-102 of the Companies Act, 2013.

5) Hold the Extraordinary General Meeting and pass an Ordinary Resolution to approve the Increase in Authorized Share Capital of the Company.

6) File Form SH-7 within 30 days of passing the Ordinary Resolution.

7) Upon approval of the Form SH-7 by the Registrar of the Companies, the new authorized share capital of the company shall be displayed on the MCA-21 Portal.

Mandatory Attachments of Form SH-7

1) Copy of resolution for Increase in Authorized Share Capital of the Company;
2) Altered Memorandum of Association ("MOA") depicting the new authorized share capital of the Company. 

Kind Attention: The information provided herein is for educational purposes only and the author assumes no responsibility or liability for any errors or omissions in the content. 


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