How To Increase Authorised Share Capital Of A Private Limited Company: Complete Guide To Form SH-7 And ROC Process

A lot of business owners face a situation where they have investors who're ready to invest new shareholders are coming on board or they need to issue additional shares but there is one big problem: the company does not have sufficient authorised share capital. This is one of the common compliance issues that startups, growing businesses and private limited companies face.

The good news is that increasing authorised share capital is a process if you follow the correct procedure. In this article we will understand what authorised share capital means, when it should be increased and the complete process of filing Form SH-7 with the Registrar of Companies.

What is Authorised Share Capital?

Authorised Share Capital is the amount of share capital that a company is legally permitted to issue to its shareholders. It is like a ceiling beyond which the company cannot issue shares unless the authorised capital is increased. For example, suppose a company is incorporated with a capital of ?10,00,000 and a face value per share of ?10. The company can issue a maximum of 1,00,000 equity shares. If the company wants to issue shares to investors, promoters or employees beyond this limit it must first increase its authorised share capital.