SH-7 Filing: How to Report Changes in Share Capital to MCA

A company increases its authorised share capital, changes its share structure or redeems preference shares—but when does that change actually need to be reported to the MCA?

Changes in a company's share capital are not merely accounting entries. Certain alterations must be formally reported to the Registrar of Companies through Form SH-7.

Under Section 64(1) of the Companies Act, 2013, a company is required to file a prescribed notice with the Registrar when it alters its share capital in the manner covered by Section 61, when an order of the Central Government results in an increase in authorised capital under Section 62, or when the company redeems redeemable preference shares. The prescribed form is SH-7, and the filing is generally required within 30 days of the relevant alteration, increase or redemption.

For businesses in Delhi, Noida, Gurugram, Ghaziabad, Faridabad and across India, understanding SH-7 is particularly important when the company is preparing for fundraising, issuing new shares, restructuring its capital or changing the authorised share capital.

What Is SH-7?

SH-7 is the MCA form used to notify the Registrar of certain alterations in a company's share capital.

The current MCA Instruction Kit identifies Section 64(1) of the Companies Act, 2013 and Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014 as the legal basis for SH-7.

The form can become relevant when a company:

• Alters its share capital in a manner covered by Section 61

• Increases authorised share capital pursuant to an applicable government order under Section 62

• Redeems redeemable preference shares

• Increases the number of members in circumstances covered by the applicable provision

The MCA Instruction Kit expressly states that when a company alters its share capital or increases the number of members, the return is to be filed with the Registrar within 30 days of the alteration or increase.

SH-7 Is Not the Same as PAS-3

This distinction is extremely important.

SH-7 generally deals with changes in the company's share capital structure, particularly authorised capital and other alterations covered by Section 61.

PAS-3 deals with the actual allotment of securities.

For example, suppose a company currently has:

Authorised capital: ₹10 lakh

but wants to issue new shares requiring:

Authorised capital: ₹50 lakh

The company may first need to increase its authorised share capital.

That capital alteration can trigger SH-7.

Later, when the company actually allots shares to investors, PAS-3 may become relevant.

Therefore:

Increase authorised capital → SH-7

Actual allotment → PAS-3

Depending on the transaction, MGT-14 may also be relevant for the resolution approving the alteration.

When Is SH-7 Required?

The MCA Instruction Kit states that SH-7 is required where a company alters its share capital in a manner specified in Section 61, where a government order results in an increase in authorised capital under Section 62, or where redeemable preference shares are redeemed.

Common situations to examine include:

• Increase in authorised share capital

• Consolidation of share capital

• Division of shares into shares of smaller amount

• Conversion of shares into stock and reconversion into shares, where applicable

• Subdivision of shares

• Cancellation of shares in circumstances covered by the Act

• Redemption of redeemable preference shares

• Other alterations specifically covered by Section 61 or Section 64

The exact applicability depends on the corporate action and the company's existing capital structure.

Section 61 and Alteration of Share Capital

Section 61 gives a company limited by shares certain powers to alter its share capital if authorised by its Articles.

Subject to the applicable provisions, a company may alter its memorandum in relation to share capital by:

• Increasing authorised share capital

• Consolidating and dividing share capital into shares of larger amount

• Converting fully paid shares into stock and reconverting stock into shares

• Subdividing shares into shares of smaller amount

• Cancelling shares that have not been taken or agreed to be taken by any person

These are different forms of capital alteration and should not be treated as identical transactions.

The company should first identify exactly what change is being made before selecting the appropriate MCA filing.

SH-7 for Increase in Authorised Share Capital

This is probably the most common SH-7 situation for private companies.

Suppose a Delhi private limited company has:

Authorised share capital: ₹10 lakh

Paid-up share capital: ₹8 lakh

The company plans to raise additional equity from investors.

The proposed fundraising may require a higher authorised capital.

Suppose the company increases authorised capital to:

₹50 lakh

The company should complete the applicable corporate approval process and then file SH-7 within the prescribed timeline.

The increased authorised capital then provides the company with sufficient authorised capacity for the proposed share issue, subject to the separate requirements applicable to the actual allotment.

Authorised Capital vs Paid-Up Capital

These two terms are often confused.

Authorised Share Capital

The maximum share capital that the company's constitutional documents authorise it to issue, subject to the Companies Act and applicable provisions.

Issued Capital

The portion of authorised capital that the company offers or issues for subscription.

Subscribed Capital

The portion of issued capital subscribed by members.

Paid-Up Capital

The amount credited as paid-up on the shares, subject to the applicable accounting and statutory treatment.

Example

Suppose:

Authorised capital: ₹1 crore

Issued capital: ₹60 lakh

Subscribed capital: ₹55 lakh

Paid-up capital: ₹50 lakh

A company can increase its authorised capital without immediately increasing its paid-up capital.

This is why SH-7 and PAS-3 often appear in the same broader transaction but perform different compliance functions.

Why Do Companies Increase Authorised Capital?

Companies may increase authorised capital for several practical reasons.

For example:

• Raising equity investment

• Issuing shares to new investors

• Rights issue

• Preferential issue

• Employee-related share issuance

• Bonus issue

• Corporate restructuring

• Bringing existing capital structure in line with future funding plans

A startup preparing for a funding round may therefore need to review authorised capital before completing the allotment.

Example: Noida Startup Raising Investment

Suppose a Noida startup has:

Authorised capital: ₹10 lakh

Paid-up capital: ₹5 lakh

An investor proposes to subscribe to shares requiring the company's authorised capital to be increased.

The company may first need to:

• Review its Articles

• Approve the proposed increase

• Pass the required resolution

• File MGT-14 where applicable

• File SH-7

• Update the Memorandum

• Complete the subsequent share issue

• File PAS-3 after allotment

The exact sequence depends on the transaction structure and applicable provisions.

The important point is that SH-7 does not itself allot the shares to the investor.

SH-7 and MGT-14

An increase in authorised share capital generally involves a shareholder resolution.

Where the resolution is required to be filed under the applicable provisions, MGT-14 may form part of the process.

The sequence can therefore look like:

Board proposal

↓

Shareholder approval

↓

MGT-14, where applicable

↓

SH-7

↓

Updated authorised capital

↓

PAS-3 after actual allotment, where applicable

This is why companies should map the entire transaction rather than treating SH-7 as an isolated filing.

What Is the SH-7 Filing Deadline?

Section 64(1) provides a 30-day period for filing the prescribed notice after the relevant alteration, increase or redemption. Rule 15 prescribes SH-7 for this purpose.

For example:

Date of capital alteration: 10 September

The company should calculate the statutory filing period from the relevant event date and complete SH-7 within the prescribed 30-day period.

The company should not confuse this deadline with:

• Financial year-end

• AGM deadline

• AOC-4 deadline

• MGT-7 deadline

• PAS-3 deadline

SH-7 is an event-based filing.

What Information Is Required in SH-7?

The exact fields depend on the type of capital alteration, but the company should generally prepare information concerning:

• CIN

• Company name

• Registered office

• Existing authorised capital

• Revised authorised capital

• Existing share structure

• Revised share structure

• Number of shares

• Face value

• Class of securities

• Nature of alteration

• Date of alteration

• Details of resolution

• Other prescribed capital information

The company's Memorandum, Board records, shareholder resolution and accounting records should all be consistent with the information entered into SH-7.

Documents Required for SH-7

The exact attachments depend on the transaction.

A practical SH-7 file can include:

• Certified copy of the relevant resolution

• Altered Memorandum

• MGT-14 acknowledgement, where applicable

• Board resolution

• Shareholder meeting documents

• Explanatory statement, where applicable

• Supporting capital structure statement

• Relevant government order, where applicable

• Other documents required by the current MCA form

The current MCA Instruction Kit also contains validation requirements concerning MGT-14 and, where applicable, INC-28.

Why Is the Altered Memorandum Important?

Section 64 requires the prescribed notice to be filed along with an altered memorandum in the situations covered by Section 64(1).

This means that when authorised capital changes, the company's constitutional documents should reflect the revised capital clause.

For example, if the Memorandum previously states:

Authorised share capital: ₹10 lakh

and the company increases it to:

₹50 lakh

the updated capital clause should reflect the new authorised capital.

The MCA filing and the company's constitutional records should therefore remain consistent.

SH-7 for Subdivision of Shares

SH-7 is not limited to increasing authorised capital.

A company may also alter its share capital by subdividing shares.

For example:

Existing structure:

1,00,000 shares × ₹10 each

After subdivision:

2,00,000 shares × ₹5 each

The nominal value per share changes, but the total nominal share capital may remain the same.

The company should examine the applicable Section 61 and Section 64 requirements and determine whether SH-7 is required.

The company should also update:

• Share certificates/demat records

• Register of members

• Share capital records

• Financial records

• Constitutional documents where applicable

SH-7 for Consolidation of Shares

A company may also consolidate shares into shares of a larger denomination where permitted.

For example:

Before consolidation:

10,00,000 shares × ₹1

After consolidation:

1,00,000 shares × ₹10

Again, the total nominal capital can remain unchanged while the number and denomination of shares change.

Such an alteration should be evaluated under Section 61 and the corresponding SH-7 requirement.

SH-7 for Cancellation of Unissued Shares

Section 61 also covers cancellation of shares that have not been taken or agreed to be taken by any person.

This should not be confused with:

Buy-back of issued shares

or:

Reduction of share capital

These are separate corporate actions with different statutory provisions.

The company should identify the exact nature of the proposed cancellation before selecting the compliance route.

SH-7 and Redemption of Preference Shares

Section 64 also specifically covers the redemption of redeemable preference shares.

Therefore, a company redeeming redeemable preference shares should examine the SH-7 requirement.

For example, suppose a company has:

₹1 crore redeemable preference shares

and completes a statutory redemption.

The company should review the applicable:

• Redemption provisions

• Board/member approvals

• Capital records

• Accounting entries

• SH-7 filing

• Other relevant MCA compliance

The redemption should be properly reflected in the company's capital structure.

SH-7 and Number of Members

The MCA Instruction Kit states that where a company alters its share capital or increases the number of members, a return is to be filed with the Registrar within 30 days of the alteration or increase.

This requirement should be examined carefully based on the company's particular circumstances and the applicable provisions.

Companies should therefore avoid assuming that SH-7 is relevant only when the authorised capital amount changes.

SH-7 vs PAS-3 vs MGT-14

These three forms can appear together in capital transactions, but they serve different purposes.

Example

A company wants to raise equity.

The company first increases its authorised capital.

MGT-14: resolution filing, where applicable

SH-7: authorised capital alteration

The company then actually allots shares.

PAS-3: return of allotment

This sequence demonstrates why one form should not be treated as a substitute for another.

Common Mistake: Increasing Paid-Up Capital Without Increasing Authorised Capital

Suppose a company has:

Authorised capital: ₹10 lakh

Paid-up capital: ₹9 lakh

The company plans to allot shares with a nominal value of ₹10 lakh.

The proposed allotment cannot simply be recorded without considering whether sufficient authorised capital exists.

The company may first need to increase its authorised capital.

This is one reason SH-7 often becomes relevant before a major equity allotment.

Common Mistake: Filing SH-7 Without the Required Resolution

A capital alteration generally needs an underlying corporate approval.

The company should not treat SH-7 as an independent transaction.

Before filing, check:

• Articles

• Board resolution

• Shareholder resolution

• MGT-14, where applicable

• Altered MOA

• Capital structure

The MCA filing should reflect a properly authorised corporate action.

Common Mistake: Wrong Authorised Capital Amount

Suppose the company intends to increase authorised capital from:

₹10 lakh → ₹1 crore

but SH-7 is prepared with:

₹10 lakh → ₹50 lakh

This creates a mismatch between the corporate resolution and the MCA filing.

The company should reconcile the amount across:

• Resolution

• Memorandum

• SH-7

• MCA master data

• Accounting records

before filing.

Common Mistake: Confusing Authorised Capital With Paid-Up Capital

This is particularly common among startups.

If a company says:

"We raised ₹2 crore, so our authorised capital is ₹2 crore."

that is not necessarily correct.

Investment amount and authorised share capital are different concepts.

For example:

Authorised capital: ₹1 crore

Paid-up capital: ₹40 lakh

Securities premium: ₹1.60 crore

The company can receive an investment where a significant portion is accounted for as securities premium, subject to the applicable issue terms.

Therefore, capital calculations should be prepared carefully before SH-7.

Common Mistake: Not Checking the Articles of Association

The company's Articles should be reviewed before changing authorised capital.

If the Articles do not provide the necessary authority or require a particular corporate procedure, the company may need to address that issue first.

The company should therefore review:

• Existing Articles

• Capital clause

• Shareholder rights

• Alteration powers

• Required approvals

before initiating the change.

Common Mistake: Filing SH-7 After the 30-Day Period

The statutory timeline under Section 64 is 30 days from the relevant alteration, increase or redemption.

Companies should therefore create an immediate compliance reminder after:

• Passing the capital alteration resolution

• Completing the relevant alteration

• Government order increasing capital, where applicable

• Redemption of redeemable preference shares

Waiting for the annual ROC filing cycle can lead to additional filing consequences.

Common Mistake: Ignoring MCA Validation Requirements

The current SH-7 Instruction Kit includes several technical validation checks.

These include:

• Valid CIN

• Valid signatory details

• Valid DSC

• Registered DSC

• Valid professional membership/COP details where certification is required

• Valid MGT-14 SRN where applicable

• Valid INC-28 SRN where applicable

• No other SH-7 pending for payment or approval

• Correct MGT-14 purpose where an MGT-14 SRN is entered

The company should therefore complete technical checks before attempting final submission.

SH-7 and MGT-14 SRN

The current MCA Instruction Kit specifically states that where an MGT-14 SRN is provided in SH-7, it should be a valid and approved SRN associated with the company's CIN, and the purpose selected in MGT-14 should be "Alteration in authorized share capital" where applicable.

This is an important practical point.

If the company files MGT-14 first, it should ensure that the correct resolution purpose has been selected before using that SRN in SH-7.

Example: Delhi Company Increasing Authorised Capital

Suppose a Delhi private limited company has:

Authorised capital: ₹20 lakh

Paid-up capital: ₹15 lakh

The company plans to raise a new investment requiring authorised capital of:

₹1 crore

A practical compliance sequence can be:

Step 1

Review the Articles and current capital structure.

Step 2

Prepare the proposed increase.

Step 3

Obtain the required Board approval.

Step 4

Obtain shareholder approval as applicable.

Step 5

File MGT-14 where required.

Step 6

File SH-7 within the prescribed 30-day period.

Step 7

Update the Memorandum and internal records.

Step 8

Proceed with the proposed share allotment.

Step 9

File PAS-3 after the actual allotment, where applicable.

This prevents the common mistake of treating authorised capital alteration and share allotment as the same event.

Example: Gurugram Company Subdividing Shares

A Gurugram company has:

5 lakh shares × ₹10 each

It proposes to subdivide them into:

10 lakh shares × ₹5 each

The total nominal capital remains:

₹50 lakh

But the number and denomination of shares change.

The company should evaluate the proposed alteration under Section 61 and the applicable SH-7 requirement, then update its corporate records accordingly.

Example: Noida Company Redeeming Preference Shares

A Noida company has redeemable preference shares outstanding.

It completes the redemption in accordance with the applicable provisions.

The company should examine whether SH-7 is triggered by the redemption and ensure that the capital records, accounting records and MCA filings are updated consistently.

Section 64 specifically includes redemption of redeemable preference shares within the notice requirement.

SH-7 Compliance Checklist

Before filing SH-7, a company should check:

• What exactly has changed in the share capital?

• Does Section 61 apply?

• Is the event an increase, consolidation, subdivision, conversion or cancellation?

• Is the company increasing authorised capital?

• Is there a government order involved?

• Are redeemable preference shares being redeemed?

• Has the required corporate approval been completed?

• Do the Articles permit the proposed alteration?

• Is MGT-14 required?

• If MGT-14 was filed, is the SRN valid and approved?

• Is the MGT-14 purpose correct?

• Is the altered Memorandum ready?

• Is the revised capital structure correct?

• Is the event date correct?

• Is SH-7 being filed within 30 days?

• Are the required attachments ready?

• Is the DSC valid and registered?

• Is professional certification required and correctly completed?

• Is another SH-7 already pending?

• Has the MCA acknowledgement been preserved?

SH-7 Filing Workflow

A practical workflow can be:

1. Identify the capital alteration

Determine exactly what has changed.

2. Check the Articles

Confirm that the company has authority to undertake the proposed alteration.

3. Determine the applicable section

Review Section 61, Section 62 and Section 64 as relevant.

4. Complete corporate approvals

Pass the necessary Board/shareholder resolutions.

5. File MGT-14 where applicable

Complete the resolution filing where required.

6. Prepare the altered Memorandum

Update the capital clause where applicable.

7. Prepare SH-7

Enter the revised capital details.

8. Verify supporting documents

Check resolutions, MOA and other applicable records.

9. File within 30 days

Submit the form within the statutory period.

10. Update internal records

Ensure the company's registers and capital records reflect the alteration.

11. Complete subsequent filings

Where shares are later allotted, consider PAS-3 and other applicable filings.

Why SH-7 Matters During Due Diligence

A company's authorised and paid-up capital are frequently reviewed during:

• Investor due diligence

• Bank financing

• Mergers

• Acquisitions

• Corporate restructuring

• Share transfers

• Fundraising

• Legal audits

If the company's internal records state one authorised capital amount while MCA records show another, the discrepancy may need to be explained and corrected.

Maintaining accurate SH-7 records therefore helps preserve consistency between the company's constitutional documents and MCA records.

Final Takeaway

SH-7 is the MCA filing used to notify the Registrar of specified alterations or increases in a company's share capital and certain redemptions of redeemable preference shares.

Under Section 64 and Rule 15, the prescribed notice is generally filed in Form SH-7 within 30 days of the relevant alteration, increase or redemption.

For a company planning a fundraising or capital restructuring, the compliance sequence should be clearly mapped:

Capital decision → corporate approval → MGT-14 where applicable → SH-7 → updated capital records → PAS-3 after allotment where applicable.

For companies in Delhi, Noida, Gurugram, Ghaziabad, Faridabad and across India, careful coordination between the company secretary/compliance team, accounts team and management can help ensure that the authorised capital shown in the company's documents matches its MCA records.

Need Help With SH-7 and Share Capital Compliance?

If your company needs assistance with SH-7 filing, authorised share capital increase, capital alteration, MGT-14, PAS-3 or broader ROC/MCA compliance, FilingSuvidha can help coordinate the applicable compliance process.

Website: FilingSuvidha
Phone: +91-9625995981
Email: info@filingsuvidha.com

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Disclaimer

This article is intended for general informational purposes only and should not be treated as legal, company-secretarial, accounting or professional advice. SH-7 applicability depends on the nature of the capital alteration, the company's constitutional documents and the provisions applicable to the transaction. Companies should verify the latest Companies Act, applicable rules, MCA forms, instruction kits and notifications before filing.