What is Change in Share Capital?

A Change in Share Capital refers to modifying the existing authorized or paid-up share capital of a company. This includes:

• Increase in authorized share capital

• Increase in paid-up share capital

• Reduction of share capital

• Stock split or share consolidation

• Conversion of shares

This change must comply with the Companies Act, 2013, and requires proper board approval, special resolution, and filing with the ROC.

Updating share capital is vital for raising investment, rewarding shareholders, business expansion, or restructuring ownership. It ensures the company’s equity structure aligns with its current financial and operational strategy.

✅ Benefits of Changing Share Capital
🎯 Written from the client’s perspective.

1️⃣ Enables my company to raise additional funds from investors
2️⃣ Helps restructure equity based on ownership or operational needs
3️⃣ Facilitates issuance of ESOPs or bonus shares
4️⃣ Allows reduction of excess capital to reflect actual liabilities
5️⃣ Legally records changes in shareholding with the MCA
6️⃣ Supports business expansion with higher authorized capital
7️⃣ Builds credibility and transparency with stakeholders and investors

📑 Documents Required for Change in Share Capital
📂 Important documents with brief descriptions.

1️⃣ 📝 Board Resolution – To approve the change in share capital
2️⃣ 📋 Shareholder Resolution – Special resolution for certain changes
3️⃣ 📄 MOA (Altered) – Updated Memorandum reflecting the new capital
4️⃣ 🗂️ Form SH-7 – Filed with ROC to update share capital
5️⃣ 🪪 List of Shareholders – Updated list reflecting new structure
6️⃣ 📑 MGT-14 – Filed for special resolutions (if applicable)

👤 Eligibility for Change in Share Capital
🧾 Who can make this change?

The following entities can change their share capital structure:

• Private Limited Companies

• Public Limited Companies

• One Person Companies (OPC)

• Startups looking to raise funding

Pre-conditions include:

• Authorized capital must be increased before increasing paid-up capital

• The company must be compliant with ROC filings and active status

• Changes must be permitted by the company’s Articles of Association (AOA)

🔄 Process of Changing Share Capital
🔁 Step-by-step explanation of how the service is executed.

1️⃣ Review AOA – Ensure Articles permit the proposed change
2️⃣ Hold Board Meeting – Pass resolution for capital restructuring
3️⃣ Call Shareholders’ Meeting – For special resolution (if needed)
4️⃣ File MGT-14 (if required) – For special resolution with ROC
5️⃣ File SH-7 with ROC – Along with altered MOA and resolutions
6️⃣ Update Records – Reflect changes in statutory registers and share certificates

⏱️ Timeline for Change in Share Capital
⏳ Duration and influencing factors.

• Preparation of Resolutions & MOA Drafting – 1–2 working days

• Shareholders Meeting & Filing – 2–3 working days

• ROC Processing Time – 7–10 working days

Total Estimated Time: Around 7–12 working days, depending on documentation and ROC response.

❓ Frequently Asked Questions (FAQs) about Change in Share Capital

1️⃣ What is authorized vs paid-up share capital?
Authorized capital is the maximum capital a company can issue; paid-up is the actual amount issued to shareholders.

2️⃣ Can I increase my paid-up capital without increasing authorized capital?
No. You must first increase authorized capital before increasing paid-up capital.

3️⃣ Is ROC filing mandatory for share capital changes?
Yes, ROC must be informed via Form SH-7 and MGT-14 (if applicable).

4️⃣ What are the government fees for this process?
Fees vary based on the increase in authorized capital. It is calculated slab-wise as per MCA norms.

5️⃣ Can I reduce the share capital of my company?
Yes, through a capital reduction process under Section 66 of the Companies Act, with approval from the NCLT.

6️⃣ Do I need to change the MOA?
Yes, for an increase in authorized capital, your MOA must be amended.

7️⃣ Is a special resolution always required?
Yes, for changes that alter the MOA or shareholding structure.

8️⃣ What if my company is non-compliant with ROC filings?
You must first clear pending ROC filings before applying for any capital changes.

9️⃣ Can startups raise funding by increasing share capital?
Absolutely. This is a common method to bring in angel investors or venture capital.

🔟 Do you provide complete filing and compliance support?
Yes, we handle everything – from resolution drafting to ROC submissions and post-approval updates.