Authorized Capital Increase
Increasing the ceiling on a company's share capital so it has room to issue new shares, through shareholder approval and Registrar filing.
A company's authorized capital — the maximum share capital it is permitted to issue — can be increased by passing an ordinary resolution at a general meeting, provided the articles allow it, and filing Form SH-7 with the Registrar along with the altered capital clause of the memorandum. This is typically the first step before a fresh allotment of shares that would otherwise exceed the existing authorized limit.
What our capital increase service covers
Making sure the increase is in place before new shares are allotted.
- Checking whether the articles permit a capital increase, and amending them if not
- Drafting the board and ordinary resolution for the increase
- Preparing the altered capital clause of the memorandum
- Filing Form SH-7 with the Registrar along with applicable stamp duty
- Sequencing the increase ahead of a planned share allotment
- Updating statutory registers to reflect the new authorized capital
Why companies increase authorized capital
Usually tied to a funding round or ESOP pool.
Funding Rounds
Making room to issue new shares to incoming investors without breaching the existing limit.
ESOP Pools
Reserving additional authorized shares to back an employee stock option plan.
Bonus or Rights Issues
Ensuring sufficient headroom before a bonus issue or rights issue to existing shareholders.
Our process
From initial consultation to completion.
Headroom Check
Comparing the current authorized capital against the shares planned to be issued.
Resolution
Passing the board and ordinary resolution approving the increase.
Form SH-7 Filing
Filing with the Registrar along with the altered memorandum and stamp duty payment.
Register Update
Recording the new authorized capital in statutory registers ahead of allotment.
Why the sequencing matters
What sets our approach apart.
Allotment can't exceed authorized capital
Shares cannot be issued beyond the authorized limit, so the increase must be completed first.
Stamp duty applies on the increase
State stamp duty is payable on the incremental authorized capital and varies by state.
Timing affects funding round closing
Investors typically expect the increase to be filed before the share subscription agreement is executed.
Authorized Capital Increase questions answered
What people ask before engaging us.
Planning to raise capital or issue new shares?
We'll get your authorized capital increase filed before the round closes.
