A capital ceiling gives no warning until the day it blocks a filing. A Bengaluru company with a signed term sheet cannot allot one share above the figure sitting in Clause V of its memorandum. The allotment return stalls, the money waits in the account, and the investor's counsel starts asking why. Increasing authorized capital is what clears it. For a Karnataka company the job has two halves, and founders usually meet them in the wrong order: the resolution your own articles dictate, and the Karnataka stamp duty that rides on the new figure.
Does your Bengaluru company actually need this filing?
Only a company with share capital has an authorized capital clause to raise. Private limited companies, one person companies and public companies all carry one, and all three take the same route. An LLP does not, because its money comes in as contribution under the LLP agreement, so a Bengaluru LLP taking in more funds is on an entirely different form. A section 8 company limited by guarantee without share capital has no ceiling to lift either.
The next question is whether you need the increase this year at all. The trigger is almost never the bank balance. It is the next allotment.
- Paid up capital has climbed close to the ceiling and the coming round will cross it
- An ESOP pool has to be carved out and the shares to back it do not exist yet
- A convertible instrument or a director's loan is being converted into equity
- An incoming investor wants a percentage the present ceiling simply cannot deliver
Companies at Whitefield and HSR Layout come to us on the fourth reason more often than on the other three together.
Which three records decide how this gets drafted?
Pull three things before drafting starts: Clause V of the memorandum as it reads today, the article dealing with alteration of capital, and the master data MCA holds against your CIN. The third one is where problems surface. A Bengaluru company whose CIN carries the KA state code will find its authorized capital printed on that public record. If it disagrees with your own file, an earlier increase was never completed, and that has to be cleaned up first.
After that the list is short.
- The revised figure you want, because the Karnataka stamp charge is worked out on it
- The register of members and current shareholding, so the notice reaches the right people
- A live digital signature for a director, and a DIN that has not gone inactive on DIR-3 KYC
- The last audited balance sheet, worth having when the jump in capital is a large one
Pick the target figure with the next two rounds in mind rather than the one in front of you. The paperwork is identical whichever number you choose; only the fees move.
When does the thirty day clock start running?
The clock starts at the general meeting. Not at the board meeting, and not on the day the funds land. Form SH-7 reaches the Registrar inside thirty days of the members' resolution, with the altered memorandum attached to it.
Check the articles before you fix a meeting date. Where the articles already carry the power to increase capital, section 61 lets the members do it by an ordinary resolution in general meeting. Where they do not, the articles are altered first, and that is a special resolution which itself has to reach the Registrar on Form MGT-14 inside thirty days.
Two earlier dates sit in front of both. An extraordinary general meeting needs twenty one clear days notice unless the members consent to shorter notice, and the board meeting approving that notice comes before it. A Koramangala founder who calls on a Monday saying the round closes on Friday is really asking for shorter notice consent, and it is far better to ask the shareholders for it than to file late.
What does a late SH-7 cost, and who pays?
Late is rarely fatal, but it is expensive in a way that resurfaces during diligence two years on. The extra MCA fee is only the visible part of it.
| What slips | What follows |
|---|---|
| SH-7 not filed inside thirty days of the resolution | ₹1,000 for each day the default runs, capped at ₹5 lakh, on the company and on every officer in default |
| MGT-14 missed where the articles had to be altered | A separate charge on the company starting at ₹10,000 and growing by ₹100 for each further day |
| SH-7 lodged after the window but before anyone asks | Additional fee on top of the normal MCA fee, calculated on the days of delay |
| Nothing filed and the ceiling left as it is | No allotment above the old figure, so the round, the ESOP grant or the conversion waits |
Officers in default are named alongside the company, which is why a director who resigned last year sometimes hears about an old capital filing at the worst possible moment.
What happens between your first call and the approved form?
- Clause V, the articles and the MCA master data are read together, and out of that comes the target figure and the type of resolution your company genuinely needs.
- We draft the board resolution, the notice with its explanatory statement and the members' resolution, and you circulate them to the shareholders.
- After the meeting we compute the Karnataka stamp duty on the increase and the MCA fee, so you approve one total before a rupee is paid.
- Form SH-7 goes up on MCA V3 with the altered memorandum, and MGT-14 travels with it where the articles changed. The file is examined by ROC Bengaluru, which MCA also writes as ROC Bangalore, and which is the one registrar for the whole of Karnataka.
- Once the form is taken on record we check the authorized capital now shown on the master data and hand over the complete set.
Nobody travels anywhere for any of this. Each of these is an MCA V3 filing signed with a digital signature, and there is no counter in Bengaluru at which a capital increase is taken over paper. What is genuinely local is the stamp duty and the registrar, not a queue.
On the Karnataka schedule, articles of association carry ₹5,000 per ₹10 lakh of share capital or any part of it, and the charge stops at a ceiling of ₹1 crore. So it climbs in steps rather than smoothly, and a figure chosen just above a step costs more than founders expect. We work out what your revised capital attracts on that schedule and show you the number first. It is the single item first time filers most often get wrong.
Which Bengaluru founders hit this ceiling first?
- A Koramangala SaaS founder in the middle of a seed round, who meets the ceiling only when the investor's counsel asks for a revised cap table
- An aerospace components and testing venture in Yelahanka bringing a strategic partner onto the register for the first time
- A Whitefield services company turning a founder's loan into equity as the financial year closes
- A team at HSR Layout carving out an option pool their present ceiling cannot hold
The pattern repeats. The commercial deal is agreed, then somebody opens the memorandum. Our Koramangala clients in particular tend to arrive with a closing date already promised to an investor, which is why we settle the resolution type in the first call rather than after the meeting has been convened.
Who handles the capital increase, and what do they check?
Our CA and CS team handles the whole sequence for ₹1,999: the review, every resolution, the altered memorandum, the Karnataka stamp computation and the filings themselves. We do this for Bengaluru companies week after week. The questions that stall a first attempt, an article with no power to increase capital or master data that disagrees with the file, are settled before drafting rather than after a rejection. If you want the national picture behind the local one, read increase authorized capital in India explained, then send us your memorandum and we will tell you what your increase needs.