Increase in Authorised Share Capital

What increasing authorised capital actually does

Authorised (or nominal) share capital is the maximum nominal amount of shares the company's memorandum permits it to issue. It is not the amount shareholders have subscribed, paid, or invested. A company can increase this constitutional ceiling without receiving a rupee or creating any new shareholder. An actual issue or allotment of shares is a separate corporate transaction governed by the Companies Act, 2017, the applicable further-issue regulations and a distinct Form-3 filing.

For example, a company with authorised capital of PKR 10 million and issued capital of PKR 4 million may increase its authorised ceiling to PKR 25 million. The remaining unissued shares do not automatically become issued capital. The register of members, consideration received and beneficial ownership position remain unchanged until a separate lawful issue or transfer occurs.

The principal statutory route is section 85 of the Companies Act, 2017. It applies to a company having share capital and requires authority in its articles and a special resolution to alter the capital condition in the memorandum. The company must then notify the registrar within the statutory period. Regulation 30 of the Companies Regulations, 2024 prescribes Form-7; section 150 separately governs filing the special resolution.

This guide concerns a conventional increase in the authorised share-capital ceiling. Consolidation or subdivision of shares, cancellation of unissued shares, a reduction of paid-up capital, a new share issue, and changes in class rights raise different legal questions. Although some are reported using other parts of Form-7, they should not be treated as the same transaction.

Who may use the procedure, and what must be checked

Private limited companies and single-member companies. A company limited by shares can use section 85 if its articles confer the power. In a multi-member company, the members' special resolution must be properly convened and recorded. A single-member company must comply with the Act's single-member decision and record-keeping rules; it should not fabricate a meeting or signatures of non-existent members. Review any shareholders' agreement, investor veto or contractual consent in addition to statutory requirements.

Public, listed and regulated companies. The section 85 corporate mechanism is not itself a securities offering approval. A public or listed issuer must additionally review its securities, listing, depository and governance requirements if the capital increase is linked to an actual issue, class change or capital-market transaction. Banks, insurers, NBFCs, securities intermediaries and other licensed entities should check licence conditions and sectoral capital or prior-consent requirements before implementation; there is no universal assertion that every authorised-capital increase requires a separate sectoral licence.

Companies without share capital. A company limited by guarantee without share capital cannot simply use the Form-7 increase-in-authorised-share-capital route. An LLP or partnership is not a company with memorandum share capital and follows a different legal framework. A foreign company's Pakistani registration does not automatically confer the right to amend the foreign entity's overseas charter through section 85.

Articles and classes. Verify that the articles authorise an alteration of capital, identify the existing and proposed classes and face values, and assess whether a simultaneous change of class rights, articles or investor protections requires additional approvals. An increase in the ceiling does not, by itself, justify reducing existing rights or disregarding pre-emption rights when shares are subsequently offered.

Contractual obligations. Form-7 has a field for an increase pursuant to an obligation under an agreement. That field is not a general substitute for the statutory authority in section 85. Obtain transaction-specific advice before relying on an exceptional contractual or court-directed route.

Application file: mandatory items and conditional evidence

Start with the company's current SECP profile and certified or accepted constitutional record. Reconcile the corporate unique identification number (CUIN), registered name, current authorised share capital, issued capital, number of shares, face value and class descriptions. The increase must be arithmetically consistent across the resolution, amended memorandum and Form-7.

• Constitutional documents: current memorandum and articles; clean revised memorandum capital clause showing the proposed total and share denomination; amended articles if their text must also change.
• Corporate approvals: notice and explanatory material for the members' meeting, board recommendation or meeting convening record where applicable, signed special resolution, attendance and voting record or lawful single-member decision.
• SECP statutory filings: Form-26 for the special resolution under section 150 and Form-7 (Part II) for the capital alteration under section 85, including the correct resolution date and old, added and new capital.
• Prescribed Form-7 enclosures: amended memorandum and articles, and the original challan or other fee-payment evidence where filing is not electronic; the current form expressly dispenses with the physical challan enclosure for online filing.
• Fee evidence: current capital-enhancement fee computation and separate applicable statutory filing fee, with receipt or portal acknowledgement.
• Conditional material: regulated-sector no-objection or approval where a specific licence or binding rule requires it; relevant class-consent or investor approval; representative's authority; supporting agreement if the transaction is claimed to arise from a contractual obligation.

Do not request a new share subscription agreement, valuation or bank receipt as an automatic requirement for every authorised-capital increase: those are potentially relevant to a subsequent allotment or particular regulated transaction. Conversely, if the company's proposed change actually combines an increase with a new share issue, the documents and approvals for both processes must be prepared.

Step-by-step SECP filing and registration procedure

1. 01
   Audit the existing capital clause

   Obtain the latest memorandum and articles, the company master data and last accepted capital-alteration filings. Check that the existing authorised capital matches SECP records. Compare the proposed ceiling against planned financing, class structure and share denomination. A discrepancy in the old figure can cause rejection or an inaccurate statutory record.

2. 02
   Determine the corporate authority

   Read the articles for the power to alter capital and any restrictions. If that authority is absent or qualified, first identify the appropriate lawful amendment and its consequences; do not assume that a directors' resolution alone increases authorised capital. Consider sectoral and contractual consents where relevant.

3. 03
   Prepare the board proposal and members' notice

   Draft the proposed amended capital clause, explanation of the increase and the special resolution. The Companies Act definition of a special resolution ordinarily requires at least 21 days' notice specifying that intention, subject to the statutory all-members consent exception for shorter notice. Ensure the voting majority, quorum, proxies and minutes meet the Act and articles.

4. 04
   Pass and document the special resolution

   Section 85(1) provides for alteration through a special resolution. Record the precise existing capital, amount of increase, new authorised capital, number of shares and face value. Where share classes are involved, confirm the description and any separate rights analysis. A lawful sole-member decision should be recorded in the form appropriate to a single-member company.

5. 05
   File the special resolution under section 150

   Every special resolution must be filed with the registrar within 15 days of its passing, duly authenticated by a director or secretary. Use the current special-resolution filing (Form-26 under the Companies Regulations, 2024), and preserve its acknowledgement. This is a separate statutory filing from the notice of capital alteration.

6. 06
   Prepare and submit Form-7 Part II

   Section 85(4) requires notice to the registrar within 15 days of exercising the alteration power. Use current Form-7 Part II, not the form's parts for consolidation, subdivision or cancellation. Enter CUIN, company name, special-resolution date, existing nominal capital, increment, new capital, share counts and face values. The form also provides an agreement-obligation field for cases in which it is genuinely applicable.

7. 07
   Attach the revised documents and pay the correct fees

   Form-7 specifies amended memorandum and articles and applicable payment evidence as enclosures. Use SECP's authorised-share-capital enhancement calculator for the difference between the old and new ceilings, then check the operative Seventh Schedule and separate Form-7/Form-26 filing charges. Do not rely on a historical flat fee or a copied amount from another company.

8. 08
   Track eZfile examination and preserve the result

   Use the authorised signatory or registered intermediary account and the currently available SECP eZfile post-incorporation service. Upload the prescribed documents, make the payment through the offered channel and retain application identifiers. Respond to any registrar objection with the corrected document rather than treating submission as automatic acceptance. No fixed approval time is promised.

9. 09
   Update corporate records; handle allotment separately

   After acceptance, keep the amended memorandum, filing acknowledgements and resolutions with the company's minute books and corporate records. Update capital figures in later statutory returns. If the company then issues shares, comply separately with section 70, section 83, applicable further-issue rules and Form-3; the current Companies Regulations state a 45-day Form-3 filing period after allotment.

Official form: SECP Form-7 ↗; fees: SECP capital enhancement calculator ↗.

After the capital alteration: records and continuing obligations

The accepted alteration should be reflected in the company's maintained memorandum, subsequent corporate records and relevant statutory returns. Preserve the resolution, notices, updated capital clause, payment receipts, Form-26 and Form-7 acknowledgements, and any correspondence with the registrar. If the registrar identifies a discrepancy, correct the filed record through the appropriate official procedure.

A capital increase does not alter the issued share register or beneficial ownership by itself. Where additional shares are subsequently allotted, apply the separate law governing offers, allotments, consideration, class rights, share certificates or book-entry credit and Form-3. A new allotment may also affect UBO reporting, financial statements, withholding or stamp-duty analysis, depending on the transaction.

A company should not represent authorised capital as cash received, paid-up capital or regulatory net worth. In licensed businesses, distinguish the constitutional ceiling from paid-up capital, minimum equity, solvency and other prudential tests. A larger nominal ceiling is not evidence that those financial requirements have been satisfied.

For companies with registered documents or records held in different provincial locations, the Companies Act and SECP statutory filing route are federal; any documentary stamp-duty treatment and local instrument requirements should be checked for the relevant province and transaction. No province-specific charge is assumed here without an operative instrument.

Governing law, prescribed forms and official fee sources

The operative corporate route is governed principally by sections 85 and 150 of the Companies Act, 2017, regulation 30 and Form-7/Form-26 of the Companies Regulations, 2024, and the applicable Seventh Schedule. If new shares are actually issued, the separate provisions on allotments and further issue of shares also apply. The company's articles and any sectoral licence may impose additional conditions.

For accurate filing, use the current versions of the forms and SECP portal rather than relying on an old model form or a historic fee figure. The statutory 15-day periods for the alteration notice and special resolution are separate; neither is an estimated SECP processing period.

How Chambers can assist

Chambers can review the legal route, identify regulatory constraints, prepare or review the supporting corporate and legal documents, manage the prescribed submission and correspond with the competent authority where instructed. The scope of the engagement will be determined by the applicant’s particular circumstances.

For an initial enquiry, identify the proposed activity, applicant entity and current stage, and provide the available documents indicated above. Please avoid sending confidential or identity-sensitive records through an unencrypted first contact.