Every company registered in India under the Companies Act, 2013 must maintain and disclose its authorized share capital and paid-up share capital with the Ministry of Corporate Affairs (MCA).

Company Authorized & Paid-Up Capital Update Services

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Fast, Legally Compliant Increase or Reduction in Capital — With Full Documentation & MCA Filing Support

Changes in capital — whether increase, reduction, or reclassification Common Reasons for Capital Modification

🚀 Startup Fundraising

To issue fresh equity or preference shares to angel investors, VCs, or strategic partners. Helps raise capital while maintaining compliance with MCA and valuation norms.

👩‍💻 ESOP or Sweat Equity Plans

Allot shares to employees or founders as a reward for performance or early contribution. Boosts retention and aligns incentives without upfront cash payouts.

🎁 Bonus Issue

Distribute fully paid-up shares to existing shareholders from free reserves. A non-cash way to reward shareholders and improve market perception.

📈 Right Issue

Offer additional shares to existing shareholders in proportion to their holdings. Raises internal equity without bringing in external dilution or new investors.

✂️ Capital Reduction

Reduce share capital legally to absorb accumulated losses or simplify structure. Used in restructuring, exit planning, or clean-up of balance sheets.

🌍 Business Expansion

Issue shares or restructure equity to fund new projects, geographies, or verticals.Enables long-term scaling while maintaining statutory equity discipline.

⚖️ 2. Legal Framework

Act/RuleRelevant SectionsForms
Companies Act, 2013Sec 61 (Authorized), Sec 62 (Paid-Up), Sec 13 (MOA)SH-7, PAS-3, MGT-14
Companies (Share Capital and Debentures) Rules, 2014Rule 15 & Rule 23Governs rights issue, bonus issue

Authorized vs Paid-Up Capital – Key Differences

FeatureAuthorized CapitalPaid-Up Capital
Change Requires MOA Amendment✅ Yes❌ No
Board Approval Required✅ Yes✅ Yes
Shareholder Approval Required✅ Yes (Special Resolution)✅ Sometimes (Rights, Bonus)
Forms RequiredSH-7 + MGT-14PAS-3
Fees Payable to ROC✅ Yes✅ No (but stamp duty may apply)

Step-by-Step Process: Capital Update

🔼 To Increase Authorized Share Capital:

  1. Board Meeting → Proposal to increase capital

  2. Shareholders EGM → Special Resolution (Sec 61)

  3. MOA Amendment → Clause V updated

  4. File MGT-14 → Within 30 days of EGM

  5. File SH-7 → With altered MOA and Board Resolution

  6. ROC Approval → Formally updated in MCA portal

📌 Timeline: ~3–5 working days after EGM

MCA Forms, Deadlines & Government Fees

FormPurposeTimelineGovt Fee (varies by capital slab)
SH-7Authorized capital increaseWithin 30 days of resolution₹1,200 – ₹10,000+
MGT-14Special resolution (MOA change)Within 30 days of EGM₹200 – ₹600
PAS-3Return of share allotmentWithin 15 days₹200 – ₹600
GNL-2File board resolution (for capital reduction)OptionalVariable

DSC & DIN Rules

✔️ Ensure all directors have valid Class-3 Digital Signature Certificates (DSC)
✔️ DIR-3 KYC must be updated before MCA will accept form filing
✔️ Our system auto-checks DSC expiry, mismatch errors, and DIN deactivation issues before submission

🔼 To Increase Paid-Up Share Capital:

  1. Board Meeting → Approve share allotment

  2. Offer Letter / PAS-4 (if Rights/Private Placement)

  3. File PAS-3 → Allotment return within 15 days

  4. Update Register of Members

  5. Issue Share Certificates

MOA & AOA Amendments – When and Why?

If the capital clause in the Memorandum of Association (MOA) doesn’t reflect the new capital structure:

  • You must file MGT-14 with a copy of altered MOA

  • The AOA may also need update if it limits the shareholding or class structure

We provide track-changed MOA & AOA drafts, director declarations, and shareholder notice formats pre-filled for your case. 📌 Timeline: Within 15 days of allotment

 
📉 Penalties for Non-Compliance

Equity, ROC, and Board Process Lapses Can Be Costly

📄 Not Filing SH-7 or PAS-3

₹100 per day per form with no upper limit until filed. Delays in share capital updates can attract compounding action by ROC.

📑 Allotment Without Board Resolution

Allotment is considered null and void, with funds to be refunded with interest. Violates Section 42/62 of the Companies Act — may erode investor trust.

📜 Non-Issuance of Share Certificate

₹500 per day per defaulting officer until certificate is issued. Must be issued within 60 days of allotment to avoid penal provisions.

⚠️ Misstatement in Forms

Punishable under Section 447 – Fraud, with fine + imprisonment. Covers deliberate errors, false declarations, or misleading disclosures.

Post-Filing Compliance Checklist

ItemActionDeadline
PANUpdate capital info with IT Dept30 days
GSTAmend business profile if required15 days
Bank AccountsSubmit fresh capital structure + share certsASAP
Share RegisterEnter allotments in electronic registerImmediate
Statutory Audit NoteUpdate in notes to accountsBefore filing AOC-4

FAQs — Your Top Questions Answered

1. What is the difference between Authorized Capital and Paid-Up Capital?

Authorized Capital is the maximum amount a company can legally raise by issuing shares, while Paid-Up Capital is the actual amount received from shareholders against the shares issued.

2. Is it mandatory to increase Authorized Capital before increasing Paid-Up Capital?

Yes. You cannot issue shares beyond the limit of your Authorized Capital. If more capital is needed, the company must first increase its Authorized Capital through board and shareholder approval.

3. Which MCA forms are required to update Authorized Capital?

You need to file SH-7 (Return of Change in Authorized Capital) and MGT-14 (if MOA is altered) with the MCA after passing a Special Resolution.

4. Which form is used to update Paid-Up Capital after issuing shares?

PAS-3 must be filed within 15 days of share allotment to update the paid-up share capital on MCA records.

5. Do we need to amend the MOA for increasing Authorized Capital?

Yes. Clause V of the MOA (Capital Clause) must be amended through a Special Resolution, which is then filed using MGT-14.

FAQs — Your Top Questions Answered

6. What are the government fees for increasing Authorized Capital?

The fees vary based on the new capital slab and can range from ₹5,000 to ₹1 lakh or more. You also pay stamp duty depending on the state of incorporation.

7. How long does it take to process a capital increase on the MCA portal?

Typically, it takes 3–5 working days after filing all forms correctly. However, delays may occur if SRNs are marked for resubmission or if MOA is not properly drafted.

8. Can we issue shares to investors without increasing capital?

Only if your current Authorized Capital allows it. Otherwise, you must increase it first. Attempting to issue shares beyond the authorized limit is invalid and non-compliant.

9. Is there a penalty for late filing of SH-7 or PAS-3?

Yes. A penalty of ₹100 per day per form applies, with no maximum cap. Delays can also lead to complications in audits and ROC scrutiny.

10. Can the capital update affect PAN, GST, or Bank KYC?

Yes. Once updated on MCA, you must also inform the Income Tax Department, GST portal, and your company’s bank to reflect the correct capital structure.

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