INCREASE IN PAID-UP CAPITAL

Increasing the paid-up capital of a company in India, as per the Companies Act, 2013, involves specific procedures and compliance with legal requirements. It is a process where the company issues more shares from its available total shares. This means the company raises money from new investors by giving them shares or existing investors buy additional shares by paying more money. This process usually requires the approval of shareholders, followed by submitting the necessary documents to the government authorities. By increasing the paid-up capital, the company has more funds available, which can be used to expand the business and invest in new projects.

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Below is a detailed guide to the process:

Check Articles of Association (AOA): Review the company's Articles of Association to ensure compliance with any specific provisions regarding the increase of paid-up capital.

Convene Board Meeting: Convene a meeting of the Board of Directors to propose the increase of paid-up capital. Prepare and circulate the agenda along with necessary documents to the board members in advance of the meeting.

Pass Board Resolution: During the board meeting, discuss and approve the proposal for increasing the paid-up capital. Pass a resolution by a majority vote of the directors present and voting. Specify the details of the proposed increase, including the amount of increase and any related matters.

Allotment of Shares: Determine the method of increasing the paid-up capital, such as issuing new shares, rights issue, bonus issue, or conversion of debentures or loans into shares. Allot the newly issued shares to existing shareholders or to new shareholders as per the applicable method.

Receive Payment: Ensure that the payment for the newly allotted shares is received from the shareholders. Payment can be made in cash, cheque, demand draft, electronic transfer, or any other acceptable mode as specified in the Companies Act, 2013.

File Form PAS-3: Within 30 days of the allotment of shares, file Form PAS-3 with the Registrar of Companies (RoC) to intimate them about the increase of paid-up capital. Attach the necessary documents, including the board resolution for allotment of shares and the list of allottees. Pay the prescribed filing fee.

Update Register of Members: Update the Register of Members maintained by the company to reflect the allotment of shares and the increase of paid-up capital. Ensure compliance with the requirements of Section 88 of the Companies Act, 2013, regarding maintenance of registers.

Update Other Records: Update other relevant records and documents, including the Share Certificate, Register of Members, and any agreements or contracts, to reflect the increase of paid-up capital.

Compliance with Disclosure Requirements: Ensure compliance with any additional disclosure requirements applicable to the increase of paid-up capital, such as those related to related party transactions or disclosure in financial statements.

By following these steps and adhering to the requirements of the Companies Act, 2013, a company can successfully increase its paid-up capital. It's essential to maintain proper documentation and ensure timely compliance with all legal and regulatory obligations.

Understanding Paid-up Capital

Process & Legal Compliance

Funding & Share Allotment Options

Practical & BizPriest Support

Understanding Paid-up Capital

It means the company is issuing additional shares or receiving further payments for existing shares, thereby increasing the total funds received from shareholders.

Authorised capital is the maximum limit a company can issue as share capital (as per its MOA). Paid-up capital is the portion actually issued and paid by shareholders. Paid-up capital can never exceed authorised capital.

Yes, if your authorised capital limit has been reached, you must first increase it before issuing more shares or raising additional funds.

Yes, but limited funds may restrict borrowing capacity, investor trust, and regulatory eligibility for certain licenses or contracts.

Process & Legal Compliance

Verify that your AOA allows the issue of additional shares.
Hold a Board Meeting to approve issuance.
Obtain shareholders’ approval via General Meeting.
Allot new shares and file Form PAS-3 with the ROC within 15 days.

Form PAS-3: Return of Allotment (mandatory).
Form MGT-14: If any special resolution was passed.
Form SH-7: If the authorised capital was also increased.

Typically 7–10 working days, provided all documents and approvals are ready.

Failure to file forms within the prescribed time may attract additional fees and penalties under Section 450 of the Companies Act, 2013.

Funding & Share Allotment Options

Through rights issue, private placement, bonus issue, conversion of loans to equity, or issue of sweat-equity shares.

Yes, foreign shareholders can subscribe to new shares subject to FDI regulations and sectoral caps.

Yes, via sweat-equity or ESOPs, following prescribed rules and shareholder approval.

Yes, shareholders can pay outstanding amounts on partly paid shares, thereby increasing the company’s paid-up capital.

Practical & BizPriest Support

While it’s legally possible to do it in-house, professional assistance ensures proper documentation, timely filing, and compliance with ROC and FEMA norms.

BizPriest handles AOA verification, board and shareholder resolutions, form filings, share allotment documentation, and end-to-end compliance.

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