Re: increase of authorised share capital
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 July 2014
increase of authorised share capital by roc without filling any fees and form after that other company merged in it. My question if i am an auditor of merged company i am liable for penalty or not
Ankur Garg
(Expert)
05 July 2014
I am unable to understand your query. How can ROC increase the Authorised share capital of the company on its own, without receiving any E-form or filing fees.
Please elaborate your query to unable us help you out.
Thanks
Please elaborate your query to unable us help you out.
Thanks
20 July 2025
Regarding your query on increase of authorized share capital by ROC without filing fees/form and the liability of the auditor of the merged company:
Key points to consider:
Increase of Authorized Share Capital
Under the Companies Act, any increase in authorized share capital must be approved by the shareholders and filed with the ROC using Form SH-7 along with the prescribed fee.
ROC increasing Authorized Capital without proper filing
Normally, ROC does not increase authorized share capital on its own without company application. If there was some clerical or procedural error at ROC, it does not absolve the company of compliance responsibility.
Merger and Auditor’s Liability
As the auditor of the merged company, your role is to audit financial statements and ensure compliance with applicable laws and accounting standards.
If the merged company’s authorized share capital was not properly increased (i.e., no Form SH-7 filed or fees paid), this is a statutory non-compliance.
The auditor should report such non-compliance in the audit report (qualified opinion or emphasis of matter).
However, liability for penalty under law primarily rests with the company and its directors, not with the auditor, unless the auditor has knowingly or willfully aided such non-compliance.
Due Diligence Responsibility of Auditor
As auditor, you should verify whether the proper approvals and filings were made during merger. If not, you must bring it to management and report it in your auditor’s report.
Summary:
You as auditor are not personally liable for penalty for failure of ROC or company to file increase of authorized capital.
Your responsibility is to report the non-compliance properly.
If you ignore or conceal such facts, then you may be held accountable professionally.
Key points to consider:
Increase of Authorized Share Capital
Under the Companies Act, any increase in authorized share capital must be approved by the shareholders and filed with the ROC using Form SH-7 along with the prescribed fee.
ROC increasing Authorized Capital without proper filing
Normally, ROC does not increase authorized share capital on its own without company application. If there was some clerical or procedural error at ROC, it does not absolve the company of compliance responsibility.
Merger and Auditor’s Liability
As the auditor of the merged company, your role is to audit financial statements and ensure compliance with applicable laws and accounting standards.
If the merged company’s authorized share capital was not properly increased (i.e., no Form SH-7 filed or fees paid), this is a statutory non-compliance.
The auditor should report such non-compliance in the audit report (qualified opinion or emphasis of matter).
However, liability for penalty under law primarily rests with the company and its directors, not with the auditor, unless the auditor has knowingly or willfully aided such non-compliance.
Due Diligence Responsibility of Auditor
As auditor, you should verify whether the proper approvals and filings were made during merger. If not, you must bring it to management and report it in your auditor’s report.
Summary:
You as auditor are not personally liable for penalty for failure of ROC or company to file increase of authorized capital.
Your responsibility is to report the non-compliance properly.
If you ignore or conceal such facts, then you may be held accountable professionally.
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