Change in Share Capital - Increase, Decrease, or Reclassify
'Change in share capital' covers every way a company can alter what's written in Clause V of its Memorandum of Association - increasing authorised capital to raise more funds, decreasing it to simplify an over-sized structure, consolidating shares into fewer higher-value shares, sub-dividing them into more lower-value shares, or converting shares from one class to another. Every route needs a special resolution and, in most cases, Form SH-7 filed with the ROC. If you already know exactly which change you need, go straight to our dedicated increase or decrease pages below - this page is the place to start if you're not yet sure which kind of change applies to you.
Change Your Share Capital
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The key facts, in one place
Everything a founder usually has to piece together from five different pages, in one place.
- Governing sections
- Sections 61-66, Companies Act, 2013Alteration and reduction of share capital
- Filing form
- Form SH-7Filed with the ROC after the special resolution
- Approval needed
- Special resolution (75% majority)Passed at a general meeting, in most cases
- Related filing
- Form MGT-14Filed within 30 days of the special resolution
- Document amended
- Clause V of the MoA (capital clause)Updated to reflect the new capital structure
- Processing time
- 20-30 working daysROC confirmation of the SH-7 filing
- Capital reduction (Section 66)
- Needs NCLT approvalOnly when reducing paid-up capital, not for a simple authorised capital decrease with no paid-up shares affected
- Our fee from
- ₹4,999Depends on which type of change applies
What does 'change in share capital' cover?
'Change in share capital' is an umbrella term for any alteration a company makes to the capital structure written into Clause V of its Memorandum of Association. It is not one single procedure - it's a family of related changes, each triggered by a different business need and following a slightly different process under Sections 61 to 66 of the Companies Act, 2013.
The two most common changes are increasing authorised capital (to create headroom for a fundraise, ESOP pool, or bonus issue) and decreasing authorised capital (to simplify a capital structure that's grown unnecessarily large, or to cut recurring stamp duty exposure in states where it applies). Beyond these, Section 61 also allows a company to consolidate shares (combine many low-value shares into fewer high-value ones), sub-divide shares (split high-value shares into more low-value ones, often to improve liquidity or make an ESOP grid easier to work with), convert fully paid-up shares into stock and reconvert stock into shares, and cancel shares that have not been taken up or agreed to be taken up by anyone.
If you already know you specifically need to increase or decrease authorised capital, our dedicated pages for each walk through that exact process in detail. This page exists for founders and directors who know something about their capital structure needs to change, but aren't sure yet which of these routes is the right one - and for anyone who wants the full picture of what 'change in share capital' can mean before picking a specific filing.
For a deeper walkthrough, read what authorised share capital actually means.
Which type of share capital change do you need?
Each type of change serves a different purpose and has a slightly different process. Use this to identify the right one before filing.
Increase
Raise more capital, create ESOP or fundraise headroom
Consolidation / Sub-division
Improve share liquidity, align share value with valuation
| Aspect | Increase | Consolidation / Sub-division |
|---|---|---|
| Typical reason | Raise more capital, create ESOP or fundraise headroom | Improve share liquidity, align share value with valuation |
| Governing section | Section 61(1)(a) / 62 | Section 61(1)(b) / 61(1)(d) |
| Approval | Special resolution | Special resolution |
| Filing | Form SH-7 + MGT-14 | Form SH-7 + MGT-14 |
| Effect on shareholders | No effect on existing holdings, unless shares are also allotted | Number of shares changes; total value held stays the same |
| Dedicated Bizeneed page | Increase Authorized Capital | Covered on this page |
A simple reduction of unused authorised capital (with no paid-up shares cancelled) does not require NCLT approval - only an actual reduction of paid-up share capital under Section 66 does. We confirm which applies to your situation before filing.
Who needs to change their share capital?
A change in share capital is triggered by a specific business event, not a routine annual requirement.
- A company about to raise a funding round that will take issued capital beyond the current authorised limit (needs an increase)
- A company with authorised capital far higher than it will ever use, looking to simplify its structure or reduce recurring stamp duty (needs a decrease)
- A company wanting to set up or expand an ESOP pool that requires more authorised capital headroom than currently exists
- A company whose share price has grown very high and wants to sub-divide shares to make them easier to allocate in smaller amounts (e.g., for an ESOP grid)
- A company with a large number of small-value shares wanting to consolidate them into fewer, higher-value shares to simplify the cap table
- A company reclassifying share capital between classes (for example, creating a new class of preference shares) ahead of a structured funding round
What documents do you need for a change in share capital?
Common to every entity
- Certificate of Incorporation and current Memorandum of Association (MoA)Mandatory
- Board resolution approving the proposed changeMandatory
- Special resolution passed at a general meetingMandatory
- Explanatory statement under Section 102Mandatory
- Notice of the general meeting with proof of dispatchMandatory
- Altered Memorandum of Association reflecting the new capital clauseMandatory
- NCLT order (only if paid-up capital is being reduced under Section 66)
Entity-specific
| Entity | Additional documents |
|---|---|
| Increase in authorised capital | Special resolution, altered MoA Clause V, Form SH-7, Form MGT-14 - see our dedicated Increase Authorized Capital page |
| Decrease in authorised capital (unissued portion only) | Special resolution, altered MoA Clause V, Form SH-7, Form MGT-14 - see our dedicated Decrease Authorized Capital page |
| Consolidation / sub-division of shares | Special resolution, revised share capital table, Form SH-7, updated register of members |
| Reduction of paid-up capital (Section 66) | Special resolution, NCLT petition and order, creditor consent/objections process, Form SH-7 post-approval |
Get the share capital change document checklist as a PDF
Covers increase, decrease, consolidation, and sub-division of share capital.
How a change in share capital works
Every type of change follows a similar core sequence - approve internally, get shareholder sign-off, file with the ROC.
Confirm which type of change you need
We review your current MoA and capital structure to confirm whether you need an increase, decrease, consolidation, sub-division, or reclassification - and whether NCLT approval is needed (only for an actual paid-up capital reduction).
Pass the board resolution
The board approves the proposal and calls a general meeting to seek shareholder approval, along with an explanatory statement under Section 102.
Pass the special resolution
Shareholders holding at least 75% of voting rights must approve the change at a general meeting (or by postal ballot/other permitted mode).
File Form MGT-14
Filed with the ROC within 30 days of the special resolution being passed, attaching the resolution and explanatory statement.
File Form SH-7
Filed with the ROC to give effect to the change, attaching the altered Memorandum of Association reflecting the new Clause V.
Receive ROC confirmation and update records
Once the ROC processes Form SH-7, the company's master data reflects the new authorised capital or share structure. We update internal registers to match.
If you already know you need a straightforward increase or decrease and nothing more unusual (like consolidation or an NCLT-approved reduction), it's faster to go directly to our dedicated Increase or Decrease Authorized Capital pages - this page is meant for figuring out which route applies when it isn't obvious yet.
How much does a change in share capital cost?
Our fee depends on the type of change. Government fees for Form SH-7 depend on your company's authorised capital slab under the MCA fee schedule.
Increase or Decrease (Standard)
Straightforward authorised capital increase or decrease, no NCLT involvement
- Special resolution drafting
- Form MGT-14 filing
- Form SH-7 filing
- MoA Clause V amendment
Consolidation / Sub-division
Restructuring the number and value of existing shares
- Everything in Standard plan
- Revised capital table drafting
- Updated register of members
- Shareholder communication support
Reduction with NCLT Approval
For an actual reduction of paid-up capital under Section 66
- Everything in Standard plan
- NCLT petition drafting and filing support
- Creditor objection process coordination
- Post-order ROC filing
Full fee breakdown
| Particulars | Government fee | Professional fee |
|---|---|---|
| Form SH-7 (government fee) | As per MCA fee schedule based on authorised capital slab | Included in plan |
| Form MGT-14 (government fee) | As per MCA fee schedule | Included in plan |
| NCLT filing fee (Section 66 reduction only) | As per NCLT fee schedule | Quoted separately |
| State registration stamp duty on capital increase | State-dependent | Not included - varies by state |
Not included in any tier:
- ✕ State stamp duty on the amended Memorandum of Association
- ✕ NCLT legal representation fees for a Section 66 paid-up capital reduction
- ✕ Share allotment against increased capital (separate service - see Allotment of Shares)
Which type of capital change do you need?
Answer three quick questions and we will point you to the right service and plan.
Are you looking to raise or lower your authorised capital?
Will any shareholder's actual paid-up shares be cancelled or reduced?
Is this tied to an upcoming fundraise or deadline?
Why keep your share capital structure current
Fundraising readiness
- A capital structure with the right headroom avoids last-minute scrambles when a term sheet is signed and investors expect shares within weeks
- Sub-division of shares can make ESOP grants and small allotments cleaner to administer as the company scales
Cleaner compliance and cap table
- Consolidating a fragmented share structure simplifies the register of members and reduces confusion during due diligence
- An accurate MoA capital clause avoids mismatches between what's on paper and what investors and auditors expect to see(Companies Act, 2013, Section 61)
Cost control
- Reducing an unnecessarily large authorised capital can lower recurring cost exposure tied to authorised capital slabs in some states
Common mistakes when changing share capital
Confusing a simple authorised capital decrease with a Section 66 paid-up capital reduction
Reducing unused authorised capital (nothing issued against it) is a straightforward special resolution + Form SH-7 process. Reducing actual paid-up capital held by shareholders needs NCLT approval under Section 66 - a much longer, more involved process. Confirm which one you actually need before starting.
Missing the 30-day Form MGT-14 deadline after the special resolution
Form MGT-14 must be filed within 30 days of the special resolution being passed, separately from and usually before Form SH-7. Missing it means additional government fees.
Not updating the register of members after consolidation or sub-division
Changing the number and value of shares changes every shareholder's share certificate numbers - the register of members and share certificates must be reissued to match, or disputes arise later.
Setting the wrong new authorised capital figure
Increasing by too little means doing this again soon; increasing by too much can mean unnecessary stamp duty in some states. We calculate the right figure based on your actual fundraise or ESOP plans.
Every rejection above has a fix - most come down to how the innovation note is written, not the business itself. Most applicants don't know that until after the rejection.
If you have already been rejected, or want to make sure it does not happen, the 15-minute call below is the fastest path.
Why handle your share capital change through us
Frequently asked questions
It's an umbrella term for any alteration to a company's share capital structure as recorded in Clause V of its Memorandum of Association - including increasing or decreasing authorised capital, consolidating or sub-dividing shares, converting shares to stock, and reclassifying share capital between classes.
A change in authorised share capital simply raises or lowers the ceiling in the MoA - it does not by itself affect what shareholders have paid. A change in paid-up capital (a genuine reduction under Section 66) actually affects shareholders' holdings and requires NCLT approval, unlike a simple authorised capital adjustment.
Only if you are reducing actual paid-up share capital under Section 66. A straightforward increase or decrease of unused authorised capital, or a consolidation/sub-division of existing shares, only needs a special resolution and Form SH-7 - no NCLT involvement.
Form SH-7 is filed with the ROC to give effect to the change, along with Form MGT-14 for the special resolution itself, filed within 30 days of the resolution being passed.
Typically 20-30 working days for ROC confirmation once the special resolution is passed and Form SH-7 is filed, assuming no queries are raised.
Consolidation combines a larger number of lower-value shares into a smaller number of higher-value shares, without changing the total value of anyone's shareholding. It's done under Section 61(1)(b) via special resolution.
Sub-division splits shares of a higher face value into a larger number of shares of a lower face value, again without changing the total value held by any shareholder - often done to make ESOP allocations or small investments easier to structure.
No. Any change to authorised share capital - increase, decrease, consolidation, or sub-division - requires a special resolution passed by shareholders holding at least 75% of voting rights, regardless of company size.
This page covers the full range of share capital changes and helps you identify which one applies. If you already know you specifically need to increase authorised capital, our dedicated Increase Authorized Capital page walks through that exact process in more depth.
Same relationship - this page is the broader starting point, while our dedicated Decrease Authorized Capital page focuses specifically on reducing an unused portion of authorised capital.
Nothing changes for existing shareholders purely from the increase itself - it only raises the ceiling. Their shareholding is only affected if and when new shares are actually allotted, which is a separate step with its own approval process.
No. Authorised capital must remain at least equal to the company's issued and paid-up capital at all times - it can never be reduced below the capital that has already been issued to shareholders.
No, changing share capital does not affect the company's PAN, GST registration, or other statutory registrations. It only affects the MoA capital clause and related ROC records.
Reclassification changes the class or type of existing share capital - for example, converting a portion of equity share capital into a preference share class - typically done ahead of structured funding rounds with specific investor rights.
Yes, in most states, increasing authorised capital attracts registration stamp duty on the incremental amount, in addition to the ROC government fee for Form SH-7. The exact rate depends on the state where the company is registered.
Written by Kabir Sethi, ROC Compliance Associate · Reviewed by CS Priyanka Rao, ACS, 11 years handling capital restructuring and ROC filings for private and public companies
Last updated 9 September 2026
Sources
- Ministry of Corporate Affairs - MCA Portal
- Companies Act, 2013 - Section 61 (Alteration of Share Capital)
- Companies Act, 2013 - Section 66 (Reduction of Share Capital)
- National Company Law Tribunal (NCLT) - Official Portal
Procedures and form references are based on the Companies Act, 2013 and MCA rules current as of the last updated date. Rules and fee schedules can change; confirm specifics with our team before initiating a capital change.
You might also need
Increase Authorized Capital (Form SH-7)
Dedicated page for a straightforward capital increase
Learn moreDecrease Authorized Capital (Form SH-7)
Dedicated page for a straightforward capital decrease
Learn moreAuthorised Share Capital
Understand the concept before you change it
Learn moreAllotment of Shares
Issue shares against your new authorised capital
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