Authorised Capital Planner — How Much to Set
Decide how much authorised capital to declare at incorporation. Enter your planned paid-up now and any near-term issuance; the planner recommends an authorised level with headroom, enforces the rule that authorised ≥ paid-up, and compares setting high now vs starting low and increasing later via SH-7. There's no minimum capital (abolished 2015); SPICe+ fee is ₹0 up to ₹15L and stamp duty scales with authorised capital — so low-now is usually cheaper unless you're certain you'll need more soon.
Plan Your Authorised Capital
Recommends a level + compares set-high-now vs increase-later. Indicative figures.
How to Use the Planner
- Enter paid-up capital now — what shareholders will actually invest at the start.
- Add expected near-term issuance — further shares you realistically expect in the next year or two.
- Pick your state band (stamp duty scales with authorised capital).
- Optionally enter an authorised level you're considering, then Plan & Compare for a recommendation and the set-high-now vs increase-later cost comparison.
CA Tip: Authorised capital is just a ceiling — it isn't money you must deposit. Keep it modest unless you're confident of issuing more soon. For the full incorporation budget, use the incorporation cost estimator.
Authorised vs Paid-Up Capital
Authorised capital is the maximum share capital a company may issue, set in the capital clause of the MoA. Paid-up capital is what shareholders have actually paid for shares allotted. The hard rule: paid-up can never exceed authorised — authorised is the ceiling, paid-up sits within it.
You can issue more shares up to the authorised limit with no MoA change; to go beyond it you must increase authorised capital first (Form SH-7). There's no minimum capital any more — the ₹1 lakh minimum was removed by the Companies (Amendment) Act 2015. The capital clause and every change to it are filed with the MCA, and the company files its returns through the income-tax department. See Patron's authorised vs paid-up guide.
Recommended authorised ≈ (paid-up now + near-term issuance) × headroom
Issue freely up to authorised; beyond it → SH-7
How the Planner Decides
The recommendation covers your planned paid-up plus expected issuance, with a sensible headroom so you don't file SH-7 for a small top-up, rounded to a clean figure (₹1L, ₹5L, ₹10L, ₹15L, …). It keeps the recommendation at or below the ₹15 lakh SPICe+ free-fee ceiling where your needs allow, since that's the cost-efficient sweet spot.
The comparison then prices two paths for the same end-state:
- Start low now — minimal authorised at incorporation (covering immediate paid-up), then a later SH-7 increase when you actually need more: lower upfront cost, a second filing later.
- Set higher now — the full recommended/considered authorised at incorporation: higher upfront stamp duty (and SPICe+ fee above ₹15L), but no later filing.
It flags which is cheaper overall and reminds you that the "start low" saving is only real if the later need is genuine — plans change, and money has time value.
Need Help with Capital Structure & Incorporation?
Patron Accounting LLP supports founders deciding authorised / paid-up capital and incorporating or increasing capital — for Pune, Mumbai, Delhi, Gurugram and pan-India clients.
Increasing Authorised Capital Later (SH-7)
If you start low and later need more, increasing authorised capital is a defined process under Section 61 of the Companies Act 2013: a board resolution, an ordinary resolution by shareholders at a general meeting, an amendment to the MoA capital clause, and Form SH-7 filed with the ROC within 30 days. You pay an ROC fee tiered on the increase amount, plus state stamp duty on the increase, plus a professional fee.
If the Articles don't permit capital alteration, amend them first by special resolution with MGT-14. There's no penalty for starting low — see Patron's increase authorised capital guide and the change in authorised capital service.
Typical Authorised Capital Levels
| Stage | Typical authorised capital |
|---|---|
| Early-stage / bootstrapped startup | ₹1 lakh (paid-up ₹1 lakh) |
| Startup expecting a small round / co-founder | ₹5–₹15 lakh (stays in free SPICe+ slab) |
| Startup with confirmed investor interest | ₹25 lakh – ₹1 crore |
| Medium enterprise | ₹50 lakh – ₹5 crore by need |
These are common ranges, not rules — pick a structure first with the entity type selector, and price the stamp duty with the incorporation stamp duty calculator.
Note: Indicative planning tool. SPICe+ fees, ROC tiers and state stamp duty change by notification — confirm the exact figures and the best structure with a professional before incorporating.
Capital Structure and Fundraising Readiness
Authorised capital and the share structure matter most the moment you raise money. When an investor comes in, you issue fresh shares — which pushes up paid-up capital — and if that issuance would breach the authorised ceiling, you must first run an SH-7 increase, adding days to a closing you'd rather complete quickly. So a little authorised headroom is genuinely useful for a company that expects a round, even though the authorised figure itself is not money in the bank and signals nothing to investors on its own.
What investors actually examine is paid-up capital, the cap table and valuation, not the authorised number. A startup seeking benefits under the Startup India scheme should also keep its structure clean: DPIIT recognition via the Startup India portal and downstream incentives attach to the entity, and the share-capital movements feed into accounts prepared under ICAI standards. Setting authorised capital with one funding round of headroom — without over-paying stamp duty for capital you may never issue — is usually the right balance.
If you do raise and need to issue beyond the ceiling, the increase is routine; the planner above shows what that SH-7 step would cost so you can decide whether to build the headroom in now or later.
Tip: Planning ESOPs alongside the round? The authorised capital must also accommodate the option pool once exercised — size it with the ESOP pool sizing calculator.