When a company wants to issue more shares than its memorandum allows, it has to raise the ceiling first. That change is reported to the Registrar of Companies in Form SH-7, within 30 days of the resolution that approved it.
Two things surprise people about SH-7. The first is that it needs only an ordinary resolution, not a special one, which is the opposite of what most memorandum changes require. The second is the cost: taking a company from ₹1 lakh to ₹10 lakh of authorised capital carries an MCA fee of ₹31,000, and almost none of that is stamp duty.
What Is Form SH-7?
SH-7 is the notice to the Registrar of an alteration of share capital, filed under Section 64(1) of the Companies Act, 2013 read with Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014.
It is most often used for an increase in authorised capital, but it covers every alteration listed in Section 61(1), and also the redemption of redeemable preference shares.
| Alteration | Provision | Example |
|---|---|---|
| Increase in authorised share capital | Section 61(1)(a) | ₹1 lakh raised to ₹10 lakh |
| Consolidation and division | Section 61(1)(b) | Ten ₹10 shares combined into one ₹100 share |
| Conversion of shares into stock, or stock back into shares | Section 61(1)(c) | Fully paid shares converted into stock |
| Sub-division of shares | Section 61(1)(d) | One ₹100 share split into ten ₹10 shares |
| Cancellation of unissued shares | Section 61(1)(e) | Authorised capital reduced by shares never taken up |
| Redemption of preference shares | Section 64(1)(c) | Redeemable preference shares redeemed |
Consolidation or division that changes the voting percentage of any shareholder is the one exception that needs Tribunal approval under the proviso to Section 61(1)(b). Cancelling unissued shares is not a reduction of capital and does not need the NCLT route under Section 66.
Authorised Capital vs Paid-Up Capital
The distinction matters because SH-7 only ever touches the first of the two.
| Authorised capital | Paid-up capital | |
|---|---|---|
| What it is | The ceiling on shares the company may issue | What shareholders have actually paid in |
| Where it sits | The capital clause of the memorandum | The register of members and the balance sheet |
| Changed by | SH-7 | PAS-3, on each allotment |
| Drives | Most MCA filing fees | Small company status and audit thresholds |
A company can sit at ₹10 lakh authorised and ₹1 lakh paid-up indefinitely, and the figure shows on every annual compliance filing it makes. There is no requirement to issue up to the ceiling, and since the Companies (Amendment) Act, 2015 there is no minimum paid-up capital at all.
Ordinary Resolution or Special Resolution?
This is the most common point of confusion, and the answer is settled by the opening words of Section 13(1):
"Save as provided in section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum."
The capital clause is carved out of that requirement. Section 61(1) instead says a limited company may, "if so authorised by its articles, alter its memorandum in its general meeting", without prescribing a special resolution. So an ordinary resolution at a general meeting is enough for an increase in authorised capital. Every other clause of the memorandum still needs a special resolution.
There are two situations where a special resolution does come back into it:
- The articles require one. Some articles set a higher bar than the Act. Read them before drafting the notice.
- The articles do not authorise an increase at all. Section 61(1) only works if so authorised by its articles. Where that power is missing, the articles have to be altered first under Section 14, which does need a special resolution.
Is Form MGT-14 Required?
For a straightforward increase passed by ordinary resolution, no. MGT-14 is filed under Section 117 for special resolutions and for the specific ordinary resolutions listed in Section 117(3). An increase in authorised capital is not among them.
MGT-14 becomes necessary only where a special resolution was actually passed, which in practice means the articles demanded one, or the articles had to be altered first. In that case MGT-14 is due within 30 days of the resolution, alongside SH-7.
SH-7 Due Date
Thirty days from the date the resolution is passed, under Section 64(1). Note that the clock runs from the resolution, not from the date the increased capital is used or the new shares are allotted.
Where the articles had to be altered first, the two resolutions are usually passed at the same general meeting, so both the MGT-14 and the SH-7 deadlines run from that date.
SH-7 Fees: You Pay the Difference
There is no flat fee for SH-7. You pay the registration fee on the new authorised capital, minus the registration fee already paid on the existing capital, using Table 1 of the Companies (Registration Offices and Fees) Rules, 2014. The effect is that the company ends up having paid, in total, exactly what it would have paid had it incorporated at the higher figure.
| Increase (private company) | Fee on old capital | Fee on new capital | SH-7 fee payable |
|---|---|---|---|
| ₹1 lakh to ₹5 lakh | ₹5,000 | ₹21,000 | ₹16,000 |
| ₹1 lakh to ₹10 lakh | ₹5,000 | ₹36,000 | ₹31,000 |
| ₹5 lakh to ₹25 lakh | ₹21,000 | ₹81,000 | ₹60,000 |
| ₹10 lakh to ₹50 lakh | ₹36,000 | ₹1,56,000 | ₹1,20,000 |
| ₹1 crore to ₹2.5 crore | ₹2,06,000 | ₹3,18,500 | ₹1,12,500 |
One exception is worth knowing. One Person Companies and small companies pay a concessional flat ₹2,000 up to ₹10 lakh of capital, so an OPC going from ₹1 lakh to ₹10 lakh pays a differential of nil. The concession runs out at ₹50 lakh, above which the standard rates apply.
You can work out the exact figure for your own numbers with our MCA fees calculator, which handles the differential and the company type together.
Stamp Duty on the Increase
Stamp duty is charged by the state, not by the MCA, and it is collected on the portal along with the SH-7 fee. It is levied on the increase, on the same principle as the filing fee.
Because search interest in this is heavy, it is worth saying plainly: in most states the stamp duty on an increase is small or nil, and the MCA fee is the real cost. On a ₹1 lakh to ₹10 lakh increase, against an MCA fee of ₹31,000:
| State | Basis | Additional stamp duty |
|---|---|---|
| Gujarat | 0.5 percent, capped at ₹5 lakh | ₹4,500 |
| Delhi | 0.15 percent, capped at ₹25 lakh | ₹1,350 |
| Maharashtra | ₹1,000 per ₹5 lakh, capped at ₹50 lakh | ₹1,000 |
| Karnataka | ₹500 per ₹10 lakh | Nil |
| Rajasthan | 0.5 percent, minimum ₹5,000, capped at ₹22,500 | Nil, the minimum already applied |
| Tamil Nadu | Flat ₹300 | Nil |
| Uttar Pradesh | Flat ₹500 | Nil |
States with a flat rate or a low cap charge nothing further once the original amount has been paid. States that charge a percentage keep charging, which is why a large increase in Gujarat or Delhi is worth modelling before you pick the figure. These are the rates our calculator applies to the articles at incorporation, and the portal will compute the exact payable amount for your state at the time of filing.
Late Filing: Two Separate Costs
Filing SH-7 after 30 days attracts an additional fee of ₹100 per day, with no cap and no slab structure. It runs on the differential, so on the ₹31,000 example above, 45 days late costs ₹31,000 plus ₹4,500.
Separately, Section 64(2) provides a penalty of ₹1,000 for each day the default continues, or ₹5 lakh, whichever is less, on the company and on every officer in default. The per-day additional fee is charged automatically by the portal; the Section 64(2) penalty is an adjudication matter and is not applied as a matter of course, but it is the exposure that makes a long delay genuinely expensive.
Documents Required for SH-7
- Certified true copy of the ordinary resolution increasing the authorised capital. Mandatory
- Altered Memorandum of Association, showing the revised capital clause
- Notice of the general meeting with the explanatory statement
- Altered Articles of Association, where the articles were changed as well
- Certified copy of the special resolution and the MGT-14 SRN, where one was required
- DSC of an authorised director
The Procedure, Step by Step
- Check the articles. Confirm they authorise an increase. If not, plan a Section 14 alteration first
- Hold a board meeting to approve the increase and to call the general meeting, fixing the day, date, time and venue
- Issue the notice of the general meeting, giving 21 clear days under Section 101, or less with the consent of 95 percent of the members entitled to vote
- Pass the ordinary resolution altering the capital clause of the memorandum
- File SH-7 within 30 days of the resolution, with the fee differential and the state stamp duty
- Update every copy of the memorandum, and the articles where altered. The new figure will appear on the company master data record once the SRN is approved
Most companies pass the resolution at an extraordinary general meeting rather than waiting for the annual general meeting, because the increase is usually needed on a deal timetable.
How to File SH-7 on MCA V3
- Log in to mca.gov.in with the company business user credentials
- Open MCA Services, then e-Forms, then SH-7
- Enter the CIN. The existing authorised capital pre-fills from master data
- Select the type of alteration, here an increase in authorised share capital
- Enter the revised authorised capital and the breakdown by class of shares
- Enter the date of the resolution, and the MGT-14 SRN if a special resolution was filed
- Attach the resolution and the altered memorandum
- Affix the DSC, then pay the differential fee and stamp duty and note the SRN
SH-7 and PAS-3: The Order Matters
These two forms are regularly confused, and filing them in the wrong order is a common cause of rejection.
| SH-7 | PAS-3 | |
|---|---|---|
| Reports | A change in the authorised capital ceiling | Shares actually issued, to named allottees |
| Filed under | Section 64(1), read with Section 61 | Section 39(4), or 42(8) for private placement |
| Affects | Authorised capital | Paid-up capital |
| Approval | Ordinary resolution at a general meeting | Board resolution, plus a special resolution on some routes |
| Due | 30 days from the resolution | 30 days from allotment, 15 for private placement |
If a proposed allotment would take paid-up capital above the authorised ceiling, SH-7 has to go first. An allotment beyond the authorised limit cannot be regularised afterwards, and the PAS-3 will be rejected.
Common Reasons SH-7 Gets Rejected
- Articles did not authorise the increase and were never altered, so the resolution had no basis
- Altered memorandum not attached, or attached still showing the old capital clause
- Capital breakdown does not reconcile with the revised total, or with the existing classes of shares
- Wrong date of resolution, usually the board meeting date rather than the general meeting date
- Filed after an allotment that had already breached the old ceiling
- MGT-14 not filed where the articles required a special resolution
Planning the Increase
Because the fee is a differential, there is no penalty for going high in one step. A company that expects to raise ₹25 lakh over two years pays the same total whether it gets there in one SH-7 or three, but it saves two sets of board meetings, general meetings and filings by doing it once. The common mistake is incorporating at ₹1 lakh to save fees and then paying them anyway, with interest in the form of time, at the first funding round.
Leagully reads each company authorised and paid-up capital from live MCA data, flags when a planned allotment would breach the ceiling, and prepares SH-7 with the fee differential already calculated. For the filings that usually follow a capital increase, see our guides to PAS-3 for the allotment itself, DIR-12 for any new investor director, and the ROC compliance calendar for everything else due this year.