# Audit of Share Capital

## Existence, Completeness & Valuation - Audit Procedures

### Opening Balance Verification

Tally period-end share capital balance to previous year's financial statements.
If there is no change during the year, obtain written confirmation from Company Secretary.

### If Change During the Year

Verify that paid-up capital at period-end is within limits of authorised capital.
Obtain certified copies of resolutions passed at meetings of the Board of Directors.

### Fresh Issue During the Year - Check Compliance With:

Companies Act, 2013 provisions regarding:
Return of Allotment
Minimum Subscription
Minimum application money
No shares issued at discount (other than sweat equity)
SEBI regulations and guidelines (for listed companies)
Whether shares are issued for cash or for consideration other than cash

### MCA Forms to be Verified

Obtain and verify copies of forms filed with Ministry of Corporate Affairs:

Form	Purpose
Form SH-7	Notice to Registrar for alteration of share capital
Form PAS-3	Company making allotment of shares
Form FC-GPR	FDI by Non-Resident Shareholder

### Fee & Stamp Duty

In case of increase in share capital, verify whether company has accurately calculated fee and stamp duty payable to MCA.

Worked example

### Example 1

Example - Authorised vs Paid-up: Company has authorised capital of Rs. 50 lakhs and paid-up capital of Rs. 45 lakhs. During year, it issues additional shares of Rs. 10 lakhs. Auditor must check that company first increased its authorised capital (via Form SH-7) before allotment, since paid-up (Rs. 55 lakhs) would otherwise exceed authorised (Rs. 50 lakhs).

### Example 2

Example - PAS-3 verification: ABC Ltd allotted 10,000 equity shares on 15th March 2026. Form PAS-3 must be filed within 30 days of allotment. Auditor verifies the form was filed timely (by 14th April 2026) and contents match the allotment register.

⚠️ Common exam mistakes

Not verifying that paid-up capital remains within authorised capital after a fresh issue
Skipping verification of MCA filings (SH-7, PAS-3) and assuming Board resolutions are sufficient
Forgetting to obtain written confirmation from Company Secretary when there is 'no change' during the year
Not checking SEBI compliance for listed companies in addition to Companies Act compliance

Reference:

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Audit of Share Capital - Existence, Completeness & Valuation

Worked example

⚠️ Common exam mistakes