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Financial Blueprint

Alteration of Capital:
Redesigning Your Company's Financial Blueprint.

Business needs change—so should your company's capital structure. Whether you're raising funds, restructuring equity, or boosting governance, altering your share capital provides the flexibility to scale, attract investment, or streamline operations.

Restructure Your Capital
Fundraising Ready ROC Compliant NCLT Assistance
The Legal Framework

Understanding Capital Alterations

Alteration of capital means changing the authorized, issued, or paid-up share capital of your company, as permitted by law (Sections 61, 62, 64, 66 of the Companies Act, 2013) and your Articles of Association (AoA).

Increasing Capital

Essential for fundraising and business expansion, this involves creating more room for new shares and then issuing them.

  • Authorized Capital Increase: Required before issuing new shares beyond your current limit. Done via an ordinary resolution and filing Form SH-7.
  • Paid-Up Capital Increase: Issuing new shares through a Rights Issue, Preferential Allotment, Private Placement, or ESOPs.

Key Filings

Form SH-7 (Increase Authorized) & PAS-3 (Allotment of Shares) are critical.

Restructuring & Reduction

Used for streamlining equity, adjusting for losses, or returning surplus capital to shareholders.

  • Consolidation/Sub-division: Changing the face value of shares (e.g., ten ₹1 shares to one ₹10 share).
  • Cancellation of Shares: Removing unissued shares from your authorized capital.
  • Reduction of Capital: A complex process requiring a special resolution and mandatory NCLT approval to protect creditors.

NCLT Approval

Reduction of Share Capital under Section 66 is a court-driven process and takes several months.

Our Process

Step-by-Step Guide to Alteration

The process varies based on the type of alteration. We manage them all.

Increase Authorized Capital

1. Check AoA.
2. Hold Board & EGM for Ordinary Resolution.
3. File Form SH-7 with ROC.
4. Update MoA.

Issue New Shares

1. Board Meeting to approve issue.
2. Send Offer Letters.
3. Allot shares.
4. File PAS-3 within 15 days.

Sub-divide / Consolidate

1. Board & EGM for Ordinary Resolution.
2. File SH-7 with ROC.
3. Update MoA & share certificates.

Reduce Share Capital

1. Pass Special Resolution.
2. Apply to NCLT.
3. Serve notice to creditors.
4. File NCLT order with ROC.

The Reality

Strategic Edge vs. Operational Realities

Understanding the opportunities and challenges of capital alteration.

The Strategic Edge

A well-executed alteration can significantly enhance your company's potential.

  • Enables Fundraising: Creates the necessary framework for private placements, rights issues, and venture capital funding.
  • Better Governance: Allows for restructuring shareholding, issuing ESOPs to incentivize employees, and defining investor rights.
  • Cleans Balance Sheet: Cancellation of unissued shares or a formal reduction of capital can write off losses and present a healthier financial picture.

Operational Realities

The process is governed by strict rules and timelines that cannot be ignored.

  • Strict Filings & Penalties: Missing ROC filing deadlines for forms like SH-7 or PAS-3 invites heavy additional fees and legal risk.
  • Complex Timelines: Fresh allotments and other changes must adhere to strict timelines prescribed by the Companies Act.
  • Lengthy NCLT Process: Capital reduction requires a formal, multi-month NCLT process involving creditor notices and public advertisements.
Take Action

Restructure for Growth

Restructure your capital with zero stress. Krystal7 handles all legal, procedural, and ROC requirements end-to-end, keeping your company future-ready.

ROC Filings
SH-7, PAS-3

100% Compliant
Companies Act, 2013

NCLT Support
End-to-End

Ready to change your capital structure?

Let Krystal7 manage the compliance, so you focus on growth. Fill the form for a free consultation!

Questions Answered

Frequently Asked Questions

Everything you need to know about Alteration of Capital

No. The paid-up capital of a company can never exceed its authorized capital. You must first file Form SH-7 to increase the authorized capital limit before you can issue new shares.

Form SH-7 (for increasing authorized capital) must be filed within 30 days of the members' resolution. Form PAS-3 (Return of Allotment) must be filed within 15 days of the allotment of shares.

It depends. A rights issue to existing shareholders may only require board approval. However, a private placement, preferential allotment, or ESOP issue requires a special resolution from the shareholders.

Yes, a valuation report from a registered valuer is mandatory for any shares issued through a preferential allotment, private placement, or for ESOPs to determine the fair market value of the shares.

Missing the filing deadlines results in heavy additional fees (penalties) levied by the ROC. For persistent non-compliance, the ROC can take further action, and the allotment itself may be questioned.

Yes. Any reduction of paid-up share capital under Section 66 of the Companies Act, 2013 requires a confirmed order from the National Company Law Tribunal (NCLT) to ensure creditor interests are protected.

No. Procedures like buy-back of shares or forfeiture have their own rules, but a formal "reduction of share capital" under Section 66 always requires an NCLT order.

Yes, a company can increase its authorized capital as many times as needed, provided it follows the procedure (passing a resolution, filing SH-7, and paying ROC fees) each time.

Yes, all e-forms filed with the Registrar of Companies (ROC), including SH-7 and PAS-3, must be digitally signed by a director of the company and often certified by a practicing professional (CS/CA).

Absolutely. Our end-to-end service includes preparing and issuing new share certificates, and updating all statutory registers (like the Register of Members) to ensure your records are fully compliant.