Increase authorized share capital only after checking the proposed issue
An investor's payment amount is not enough to decide whether authorized capital must rise. You need the proposed number of shares and their nominal value. Starting with that calculation avoids paying for an unnecessary amendment or discovering a shortfall after everyone has signed investment terms.
Worked example: calculate the shortfall
Assume a single class with Rs 10 nominal shares. The company has Rs 1,000,000 authorized capital and 80,000 shares already issued. A proposed round adds 50,000 shares.
| Check | Calculation | Finding |
|---|---|---|
| Current issued nominal capital | 80,000 × Rs 10 | Rs 800,000 |
| Available headroom | Rs 1,000,000 − Rs 800,000 | Rs 200,000 |
| Proposed nominal issue | 50,000 × Rs 10 | Rs 500,000 |
| Shortfall | Rs 500,000 − Rs 200,000 | Rs 300,000 |
| Illustrative new ceiling | Rs 1,500,000 | Rs 200,000 headroom after the proposed issue |
Rs 1.5 million is an illustration, not a recommended standard capital figure. The owners should choose an amount that suits the planned issue and any credible later requirement. Record why they chose it. If the issue price is Rs 30 per share, the investor would pay Rs 1.5 million, but the nominal capital addition in this example remains Rs 500,000.
What is being approved?
Section 85 links capital alteration to authority in the articles and a special resolution; its notice period is 15 days. SECP publishes Form 7 for alteration in share capital. Check the current filing workflow and any accompanying resolution filing before scheduling the meeting.
Use the capital definitions guide if the memorandum, register and accounts disagree. Resolve that discrepancy before drafting an increase around an uncertain opening balance. An intended share split, cancellation or reduction requires its own analysis; do not use an increase template simply because the portal groups capital changes together.
Prepare a file that can be checked line by line
| Document or working | Specific check |
|---|---|
| Latest memorandum and articles | Current capital clause, share classes and authority to alter |
| Capital calculation | Existing ceiling, issued nominal capital, proposed addition and remaining capacity |
| Old/new clause comparison | Share count multiplied by nominal value equals the stated amount |
| Meeting and resolution papers | Proposed amount and wording agree with the comparison |
| Filing plan | Current Form 7 route, resolution filing, due dates and responsible person |
| Fee working and receipt | Dated official calculation for the actual change and filing mode |
Before signatures, ask a second person to compare every occurrence of the amount and share count. A resolution stating 150,000 shares while the amended clause states 1,500,000 shares is not a harmless formatting error. Record corrections in the draft, then circulate one clean final version.
Separate the increase from the investment
- Confirm the opening records and proposed nominal issue.
- Review the articles and settle the required meeting and resolution procedure.
- Prepare the amendment and submission pack with the same figures throughout.
- Submit through the applicable SECP process and retain the receipt, final documents and outcome.
- Check that the recorded ceiling matches the approved change, then complete the distinct share-issue process.
Do not describe the investor as an allotted shareholder merely because the authorized amount has changed. Keep a milestone list showing separately: ceiling changed, issue approved, subscription received, shares allotted, return submitted and records updated. Those events may have different dates and different supporting evidence.
Ask for a quote that explains the work
Request a breakdown of government charges, professional work and any separate allotment work. Have the preparer identify the source and date of the government fee calculation; this guide does not promise a fixed fee or processing time. If the round is cancelled after the ceiling rises, record that outcome instead of inventing an allotment to match the planned transaction.
For a wider company-records handover, use the handover checklist to assign ownership of approved documents and outstanding filings. The result should be a usable company file, not just a payment receipt.
I need a headroom calculation and a quote for an authorized-capital increase. Start with a short summary. Ask for the work scope, required documents and fee before proceeding. Do not send passwords, identity scans or bank statements in the first enquiry.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
- Companies Act 2017 — Pakistan Code consolidation updated 7 October 2022
- SECP Form 7 — notice of alteration in share capital
- SECP: Seventh Schedule fee publications
Questions people also ask
Does the increase dilute existing shareholders?
Changing the ceiling alone does not change the issued share count. A later allotment may change ownership percentages. Model that separately.
Is paid-up capital the right headroom deduction?
Use issued nominal capital for the ceiling comparison. Paid-up and issued amounts may differ where shares are not fully paid.
Can an investor payment be compared directly with the ceiling?
Separate nominal value from any premium first. The example shows why total subscription cash can mislead.
What confirms the task is finished?
Retain the filed documents and outcome, verify the recorded capital clause, and keep the later allotment as a separate task.
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