What Documents are Required for Increasing the Capital. When a company grows and needs additional funds, it may decide to increase its authorized share capital. This decision allows the business to issue more shares, raise investments, and strengthen its financial base. However, to remain compliant with the Companies Act, 2013, specific legal documents must be prepared and filed with the Registrar of Companies (ROC).
Let’s go step-by-step through all the documents required for increasing capital.
🧾 Board Resolution for Capital Increase
The first step in the process is to pass a Board Resolution.
The Board of Directors must approve the proposal to increase the authorized share capital and decide to hold an Extraordinary General Meeting (EGM).
This document records the board’s consent and authorizes the next legal steps. Moreover, it gives directors the power to issue a notice for the EGM and prepare draft resolutions.
🧑‍⚖️ Notice of Extraordinary General Meeting (EGM)
After the board approves the proposal, the company must send a notice of EGM to all shareholders. The notice should be issued at least 21 days before the meeting and must clearly include the agenda, date, time, and venue.
In addition, an explanatory statement must accompany the notice. This statement helps shareholders understand the reasons behind the increase in capital.
🪙 Shareholders’ Resolution
During the EGM, shareholders need to pass a Special Resolution under Section 61(1)(a) of the Companies Act, 2013. This resolution formally authorizes the increase in the company’s capital.
Once the shareholders approve it, the company can proceed to alter its Memorandum of Association (MOA) to reflect the new capital amount.
đź“ś Alteration of Memorandum of Association (MOA)
After obtaining shareholder approval, the company must alter Clause V of its MOA. This clause specifies the authorized capital amount.
Updating this clause ensures that the company’s legal document now matches its new financial structure.
Before submission, the altered MOA should be signed, verified, and certified by a professional such as a Chartered Accountant or Company Secretary.
🧾 Filing Form SH-7 with ROC
Next, the company must file Form SH-7 with the ROC within 30 days of passing the resolution.
This form officially notifies the ROC about the capital increase. It must include essential attachments and the prescribed government fee.
đź“Ž Attachments include:
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Certified copy of the Board Resolution
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Certified copy of the Special Resolution
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Altered MOA
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Notice of EGM with Explanatory Statement
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Proof of ROC fee payment
Submitting Form SH-7 accurately helps the company update its details in ROC records without delay.
đź—‚ Proof of ROC Fee Payment
Finally, after filing Form SH-7, the company must retain a copy of the payment challan or acknowledgment receipt from the ROC portal. This proof ensures the filing was successful and complete.
Keeping these records safely helps in future audits and corporate verifications.
đź“Š đź“‹ Checklist of Documents for Increasing Capital
| S.No. | Document Name | Purpose |
|---|---|---|
| 1 | Board Resolution | Records approval of directors |
| 2 | EGM Notice | Informs shareholders of the meeting |
| 3 | Shareholders’ Resolution | Grants consent for capital increase |
| 4 | Altered MOA | Updates company’s capital clause |
| 5 | Form SH-7 | Filed with ROC for approval |
| 6 | ROC Fee Proof | Confirms completion of filing |
âś… Conclusion
To sum up, increasing a company’s capital requires careful preparation and accurate documentation. Each document—from the board resolution to the ROC filing—plays a vital role in the process.
By following each step in sequence, the company can easily stay compliant, avoid legal hurdles, and prepare for business expansion.