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Startup ecosystem · Incorporation

Authorised share capital: how to set it and why it matters

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  1. Facts

    Authorised share capital is the maximum shares a company can issue. Most startups incorporate with ₹1L authorised capital (1,00,000 shares at ₹1 face value). This is always too low.

  2. Provisions and law

    • Companies Act 2013, Sec 61 | Form SH-7

  3. Analysis

    Before issuing ESOP, raising a round, or onboarding a co-founder, you must increase authorised capital, requiring a board resolution, special resolution, SH-7 filing, and state ROC stamp duty (varies: typically ₹1,000–₹10,000 per increase). Set it right from day 1: Incorporate with ₹10L–₹50L authorised capital (10L–50L shares at ₹1 face value). The govt stamp duty on initial incorporation is lower than subsequent increases.

  4. Conclusion

    Talk to a Savvy for the exact next step on your case.

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