What is Minimum Share Capital Requirement

When starting a company, one of the most important questions every entrepreneur asks is — “How much minimum capital do I need to start my company?”
The answer depends on the type of company structure you choose. The Companies Act, 2013 earlier prescribed a minimum share capital requirement, but this rule has changed significantly over the years.

Let’s understand what minimum share capital means, how it has evolved, and what the current requirements are for businesses in India.

🏦 Meaning of Minimum Share Capital

The term minimum share capital refers to the lowest amount of capital that shareholders must contribute to start a company.
It represents the initial financial base of the business and is divided into small units known as shares.

In simple words, when you register a company, you must declare a minimum capital amount, even if it is small. This shows the government that the company has some funds to begin operations.

📜 Legal Changes in Minimum Capital Requirement

Before the introduction of the Companies (Amendment) Act, 2015, the law made it mandatory for:

• Private Limited Companies to have a minimum paid-up capital of ₹1 lakh.

• Public Limited Companies to have a minimum paid-up capital of ₹5 lakh.

However, after the 2015 amendment, the minimum capital requirement was removed.
Now, a company can be incorporated with any amount of capital, even as low as ₹1 or ₹10.

This change encouraged ease of doing business and allowed startups and small entrepreneurs to register companies without facing financial barriers.

💡 Current Minimum Capital Rules

As of today, under the Companies Act, 2013, there is no statutory minimum share capital requirement for incorporation.
The company’s promoters can decide how much capital to invest based on their business plan and funding needs.

Still, the company must declare the authorized capital in its Memorandum of Association (MOA) — usually set as ₹1 lakh for private limited and ₹5 lakh for public limited for practical and ROC fee purposes.

This amount defines the maximum limit of shares the company can issue. The paid-up capital, on the other hand, can be much lower.

⚙️ Practical Considerations for Entrepreneurs

Even though there is no legal minimum, you should plan your share capital wisely.
Here are some practical tips:

• 💼 Keep Authorized Capital Realistic: Set a modest amount (e.g., ₹1 lakh) to reduce ROC fees.

• 💳 Maintain Bank Compliance: Some banks may ask for proof of initial capital for opening a current account.

• 📊 Avoid Zero Capital: Having at least ₹10,000–₹50,000 shows credibility and helps in vendor or investor discussions.

• 🧾 Update if Needed: You can always increase authorized capital later by filing Form SH-7.

✅ Conclusion

In summary, the minimum share capital requirement has been abolished under the Companies Act, 2013.
You can now start a company in India with any small amount of capital.
However, it’s wise to set a reasonable initial capital to ensure smooth compliance, financial credibility, and future flexibility.

Starting small is no longer a barrier – what matters most is how efficiently you grow your business.