Raise the ceiling on your share capital,before you raise the money.
A funding round on the horizon, an ESOP pool to reserve, a bonus or rights issue coming up, or a shareholder loan being converted into equity. Each of these needs authorised capital headroom, and where the headroom is not there, the ceiling is raised first.
Brief last revised · July 2026
How the filing works
From the shareholder resolution to the amended capital clause on the MCA record.
Situations that bring people to this filing
Authorised capital is the ceiling on how many shares your company is legally permitted to issue. When the ceiling is too low for what you want to do next, it has to be raised before you can issue. These are the four patterns behind almost every capital-increase filing:
- i.
Getting ready for a funding round
Your lead investor is coming in at a valuation that requires you to issue fresh shares. Your existing authorised capital does not have headroom to accommodate the new shares. The increase is filed before the shares are allotted, so the round can close cleanly.
Increase for a funding round - ii.
Setting up an ESOP pool
You are hiring senior people and want to reserve, say, 10% of the fully-diluted equity for employee stock options. Reserving that pool means increasing the authorised capital first, then setting the shares aside for the ESOP scheme. Without headroom, the ESOP grants are on paper only.
Set up an ESOP pool - iii.
Converting a loan to equity
A shareholder loan, a convertible note, or a founder's working capital advance is being converted into shares. The conversion needs authorised capital to sit on. Where the debt is large and the current ceiling is small, the increase precedes the conversion.
File the increase for a conversion - iv.
Introducing a new class of shares
You are moving from a single equity class to a structure with preference shares or compulsorily convertible preference shares (CCPS), which many VC term sheets require. The new class is added to the capital clause of the MoA and the authorised capital is enlarged to hold both.
Add a new class of shares
What SH-7 actually does
An increase in authorised share capital is authorised by an ordinary resolution of the shareholders at a general meeting, provided the AoA permits the board to do it. If the AoA is silent or restrictive, a special resolution is required and the AoA has to be amended in the same meeting. Section 61 of the Companies Act 2013 sits behind this.
Once the resolution is passed, the capital clause of the Memorandum is amended to reflect the new ceiling, and Form SH-7 is filed with the Ministry of Corporate Affairs within 30 days of the resolution. The filing carries the notice of alteration, the amended capital clause, and the government filing fee, which is charged on the amount of the increase.
State stamp duty also has to be paid on the increase itself. Every state charges duty at a different rate, and it is calculated on the incremental amount (not the whole authorised capital). Underpaying the stamp duty is a common and expensive mistake.
The paperwork
- SH-7The main filing. Reports the notice of increase to the Ministry, with the amended capital clause and the resolution. Filed within 30 days.
- MGT-14Filed alongside SH-7 if a special resolution was required (because the AoA was restrictive) or if the AoA is being amended in the same meeting to give the board wider powers over capital.
- EGM NOTICE + MINUTESThe notice calling the general meeting and the signed minutes of the resolution. Retained as part of the company's records and attached to SH-7.
- STAMP DUTY RECEIPTProof of stamp duty paid to the state government on the increase. Attached to SH-7. The exact amount is state-specific and calculated on the incremental capital.
Documents you will need to send
The paperwork is compact, but every piece has to be exact for MCA to accept the filing.
About the company
- Certificate of Incorporation, current MoA and AoA
- Latest audited balance sheet, so the existing authorised and paid-up capital positions can be reconciled
- Board resolution recommending the increase and calling the general meeting
- Shareholders' register with contact details for the notice of meeting
About the increase itself
- The new authorised capital figure and, if you are adding a new class of shares, the terms of that class
- Where the AoA restricts capital changes, a draft of the AoA amendment to be passed alongside
- State stamp duty receipt for the incremental capital, calculated per your registered-office state
- Digital Signature Certificate of a director for signing SH-7
Done within 5 to 7 working days
Most capital-increase filings wrap within a week from a clean start. Timing stretches only if the general meeting has to be run on full 21-day notice, or if state stamp duty payment takes longer than expected in your state.
- Day 1
Briefing and headroom check
You share the current authorised capital, the target new figure, and the reason. If your existing paid-up already has room, you may not need SH-7 at all; this is confirmed first.
- Days 1–2
Board resolution and EGM notice
The board resolves to recommend the increase to the shareholders and issues the notice calling the general meeting with the ordinary or special resolution as appropriate.
- Days 2–3
EGM and shareholders' resolution
The general meeting is held (short-notice with universal consent, or on full 21-day notice). The resolution to increase authorised capital is passed and minuted.
- Days 3–4
Stamp duty paid and MoA amended
State stamp duty is calculated against the incremental amount, paid to the state government, and the receipt kept. The capital clause of the MoA is rewritten.
- Days 4–5
SH-7 filed, certified by PCS
SH-7 is filled with the amended clause, the receipt, and the resolution attached. Signed by a director and certified by a Practising Company Secretary.
- Days 5–7
MCA approval and update
MCA processes SH-7 in two to three working days. Once accepted, the new authorised capital is live on the public record. Any downstream allotment can now proceed.
Our fee
Starting at ₹8,000 for the filing itself.
- Professional fee₹8,000Per increase. Includes drafting the board resolution and EGM notice, the amended capital clause, SH-7 preparation, PCS certification, and MCA follow-up.
- Government filing feeBy slabCharged by MCA on SH-7. The fee is calculated on the amount of the increase, not the total authorised capital. Larger increases attract higher fees.
- State stamp dutyState-specificCalculated on the incremental amount against your registered-office state. Maharashtra is 0.2%. Delhi is 0.15%. Karnataka is a fixed schedule. Your exact number comes from the state rate applied to your increment.
- MGT-14 (if AoA amendment needed)IncludedOnly where the AoA is restrictive and has to be amended alongside. No additional professional fee; MCA filing fee is separate but included in the overall estimate.
Your exact all-in number, including the state stamp duty on your specific increment, appears in the online form before any payment is taken.
What changes on the ground
Once SH-7 is accepted, the amended authorised capital is on the public record. The company can now legally issue up to the new ceiling. Downstream steps depend on what the increase was for.
- Amended MoA on recordThe company's official copy of the MoA is updated with the new capital clause. The old version is retained for reference.
- Capital structure noted in registersThe register of members is updated to reflect the new authorised capital, and space is prepared for the anticipated allotment that follows the increase.
- Downstream allotment preparedIf the increase was for a specific issue (funding round, ESOP grant, bonus issue, rights issue), the allotment paperwork is now set up to run. PAS-3 filing follows within 30 days of the allotment.
- Investor and lender recordsShareholder agreements, subscription agreements, and lender documents are updated to reflect the new authorised. Term sheets that were pending on this increase can now close.
- Bank and tax recordsThe company's bank is informed of the new capital position where the account records currently show authorised. Nothing changes on PAN, TAN, or GST because those do not track authorised capital directly.
- Board minutes and financial statementsThe next set of board minutes acknowledges the increase, and the following annual financial statements disclose it in the capital-structure note.
- Website and disclosure documentsInvestor decks, information memoranda, and public disclosure documents that quote the capital structure are refreshed.
- Statutory audit briefThe statutory auditor is informed so they can update their audit brief and cover the increase in the next year's audit report.
Common mistakes to avoid
SH-7 is one of the more straightforward MCA filings. Most of the expensive mistakes happen at the edges, in things people forget to line up.
Under-paying state stamp duty on the increase
Stamp duty is charged on the incremental capital and every state has its own rate. Maharashtra is 0.2%. Delhi is 0.15% up to certain slabs. Karnataka is a fixed schedule. Under-paying leaves the increase legally challengeable, and the deficient duty can be recovered with penalty at up to ten times the shortfall. Get the calculation right against your registered-office state.
Confusing authorised, issued, and paid-up capital
You do not always need to increase authorised capital to raise money. If your authorised is ₹10 lakh and paid-up is ₹1 lakh, you can issue up to ₹9 lakh more without any SH-7 filing. Only when the new issue would push paid-up above the authorised ceiling is the increase actually needed.
Filing SH-7 without checking whether AoA permits
If the AoA restricts capital changes (some standard templates cap the increase at a specific multiple of the original), the ordinary resolution is not enough. The AoA has to be amended first with a special resolution. Filing SH-7 with an ordinary resolution when a special one was needed makes the filing recallable by any dissenting shareholder.
Ignoring class-specific capital calculations
If you are adding a new class of shares (preference, CCPS), the authorised capital includes both the equity class and the new class, and each may have different face values. The capital clause has to spell out the split precisely. Rounded or approximate numbers here cause SH-7 rejection.
Not updating pending investor documents
If the increase is being run alongside a funding round, the shareholder agreement, share subscription agreement, and term sheet all quote authorised capital numbers. Amending the MoA without updating those documents leaves the round paperwork out of sync with MCA records, which slows the money hitting the bank.
Understanding capital
The structural background, read at your pace, in any order.
Authorised, issued, subscribed, paid-up
Company law talks about four different capital numbers. They sit on top of each other, from largest to smallest. Understanding which is which is the first step to knowing whether you actually need an SH-7 filing.
Authorised capital
The ceiling. The maximum number of shares of a given face value the company is permitted to issue. Set in the capital clause of the MoA. Can be raised through this filing; cannot be exceeded without raising it first.
Issued capital
The portion of authorised capital that the company has actually issued to shareholders. Cannot exceed authorised capital. Increases when new shares are allotted (through a rights issue, private placement, ESOP grant, or bonus issue).
Subscribed capital
The portion of issued capital that shareholders have actually agreed to take. In most private companies this equals issued capital, since every issue is fully subscribed by the intended recipient. Public offerings can have a gap if the issue is undersubscribed.
Paid-up capital
The portion of subscribed capital where the money has actually been received by the company. Where shares are issued at a call basis, part of the price sits as unpaid until the calls are made. In most Indian private companies, shares are fully paid at issue, so paid-up equals subscribed.
State stamp duty on the increase
Every state charges stamp duty on the increase in authorised capital under its own Stamp Act. The rate is applied to the incremental amount, not the total authorised after the increase. Getting this right against your registered office state is important; MCA will not accept SH-7 without a receipt for the correct amount.
| State | Rate on the increase | Notes |
|---|---|---|
| Maharashtra | 0.2% | Applied to the increment. Cap of ₹50 lakh. |
| Karnataka | Fixed slabs | Amount depends on the increment slab; check the current schedule before payment. |
| Delhi | 0.15% | On the incremental amount, minimum ₹1,000. |
| Tamil Nadu | 0.15% – 0.3% | Depends on whether the company is inside or outside the CMDA area. |
| West Bengal | Fixed slabs | Kolkata and non-Kolkata rates differ; separate schedules. |
| Gujarat | 0.1% – 0.2% | Rates vary by incremental slab and by the class of company. |
| Other states | State-specific | Each has its own Stamp Act schedule. The paralegal on the filing pulls the exact number for your state before execution. |
When you do not need to increase
Not every capital-related change needs an SH-7. Some situations people assume require an increase actually do not.
You are issuing new shares within existing headroom
If your authorised is ₹10 lakh and only ₹2 lakh has been issued so far, you have ₹8 lakh of headroom. A new issue of ₹5 lakh sits inside the headroom and does not need an SH-7. Only the allotment paperwork (board resolution, PAS-3 filing) is needed.
You are converting a loan into shares within headroom
Debt-to-equity conversion is a fresh issue of shares. If it fits inside your authorised capital, the conversion is filed as a normal allotment through PAS-3. If it does not fit, SH-7 comes first.
You are re-classifying shares between existing classes
Moving shares from one class to another (say converting some CCPS into equity per their terms) is not a capital increase. It happens within the existing authorised total and is recorded through PAS-3 and the register of members, not SH-7.
You are bringing in a partial-paid to fully-paid position
Where existing shares were issued partly paid and you are now making the outstanding call, no SH-7 is needed. Paid-up capital increases, authorised stays the same. Only PAS-3 and the appropriate register entries are needed.
If the 30-day deadline is missed
SH-7 has to be filed within 30 days of the resolution. Missing the deadline does not invalidate the increase itself, but MCA charges an additional fee that multiplies with delay, from twice the normal fee for delays up to a month, to twelve times the normal fee beyond six months.
Frequently paired with this.
Change Business Activity
Add or remove a business activity by amending the Main Object clause in your MoA.
Add or Remove Director
Add or remove a director in a Pvt Ltd or OPC. Filed via DIR-12 with the Registrar.
Change Company Name
Change your company's name. Name reservation, special resolution, INC-24 filing, and a fresh Certificate of Incorporation.
- i.
Fill the online form
Save and resume anytime. No pressure to finish in one sitting.
- ii.
Review the scope and fee
The exact all-in fee, the timeline, and what's included appear together before any payment.
- iii.
Filing begins
Your dashboard tracks every step. Every form is signed and certified by a Practising Company Secretary.