Authorized Capital

Authorized capital (also nominal or registered capital) is the maximum amount of share capital a company is legally permitted to issue as stated in Clause V of its Memorandum of Association (MoA) under Section 4(1)(e) of the Companies Act 2013.

Distinguish from:

• Issued capital — portion of authorized capital that has actually been offered to shareholders.
• Subscribed capital — portion of issued capital that shareholders have agreed to take up.
• Paid-up capital — portion of subscribed capital actually paid in. This is what appears on the balance sheet and what most regulatory thresholds reference.

A company cannot issue shares beyond its authorized capital. Allotment in excess is void.

Increasing authorized capital — the SH-7 process:

1. Board meeting to approve the increase and convene an EGM/AGM. 2. Members pass an ordinary resolution under Section 61(1)(a) (the articles must authorize the alteration; if not, a special resolution under Section 14 to amend AoA is needed first). 3. File Form SH-7 with the ROC within 30 days of the resolution along with the altered MoA, certified true copy of the resolution, and prescribed fee. 4. Stamp duty on the increase is payable at state-specific rates — Karnataka, Maharashtra, and Delhi rates differ materially.

Indian-context notes:

• The Companies (Amendment) Act 2015 removed the minimum paid-up capital requirement (earlier ₹1 lakh for private, ₹5 lakh for public). You can incorporate with ₹1 in paid-up if you wish.
• Stamp duty is the biggest cost in raising authorized capital — for a ₹10 crore increase in Karnataka, stamp duty alone can run into several lakhs.
• Plan authorized capital ahead of a funding round: each SH-7 takes 2–3 weeks and stamp duty is non-trivial.

Kapitalyze's Cap Table flags when a planned allotment would breach authorized capital and proposes the SH-7 filing automatically.