SH-7: Filing for Increase in Authorised Capital

To increase the authorised capital of a company, Form SH-7 must be filed with the Registrar of Companies (ROC). This process involves obtaining board and shareholder approval, paying the requisite stamp duty, and filing the form within 30 days of the passing of the special resolution. The company's authorised capital can be increased to facilitate business expansion, financing, or other corporate actions.

Why Increase Authorised Capital?

A company may need to increase its authorised capital for various reasons, including issuing new shares to investors, making acquisitions, or expanding its business operations. The authorised capital represents the maximum amount of share capital that a company is authorised to issue, and increasing it allows the company to access more funds and pursue growth opportunities.

Eligibility and Requirements

• The company must have a valid Memorandum of Association and Articles of Association.
• The company must have obtained the necessary board and shareholder approvals for the increase in authorised capital.
• The company must pay the requisite stamp duty on the increased authorised capital.

Stamp Duty on Increased Authorised Capital

State	Stamp Duty Rate
Andhra Pradesh	0.7% to 1.5% of the increased authorised capital
Delhi	0.2% of the increased authorised capital
Maharashtra	0.5% of the increased authorised capital

Verify the current stamp duty rates with the relevant state government, as these rates are subject to change.

Procedure for Filing SH-7

1. Convene a board meeting to approve the increase in authorised capital.
2. Convene an extraordinary general meeting (EGM) to obtain shareholder approval for the increase in authorised capital.
3. Pay the requisite stamp duty on the increased authorised capital.
4. File Form SH-7 with the ROC within 30 days of the passing of the special resolution.

The increase in authorised capital is a critical step for companies seeking to expand their business operations or access new funding opportunities. It is essential to comply with the relevant regulatory requirements and obtain the necessary approvals to ensure a smooth and successful process.

Frequently Asked Questions

What is the purpose of Form SH-7?

Form SH-7 is used to notify the ROC of an increase in the authorised capital of a company.

What is the timeline for filing Form SH-7?

Form SH-7 must be filed with the ROC within 30 days of the passing of the special resolution.

What are the consequences of not filing Form SH-7?

Failure to file Form SH-7 may result in penalties and fines, and may also impact the company's ability to access funding or pursue business opportunities.

The bottom line

Increasing the authorised capital of a company is a significant step that requires careful planning and compliance with regulatory requirements. By following the necessary procedures and obtaining the required approvals, companies can successfully increase their authorised capital and pursue new business opportunities.