Authorised shares: what they are and how to increase them with CIPC

“We want to bring in a partner, but there are only 100 shares left to give them.”

We get a version of this in support most weeks. The company was registered with 1,000 authorised shares, the founders issued 900 to themselves on day one, and now a new shareholder needs a proper stake. The number in the way is the company’s authorised shares. It lives in the company’s founding document, and it can be changed. Here’s what it means, when to raise it, and exactly how to file the change with CIPC (the companies registrar).

What authorised shares are

Every company has two share numbers, and mixing them up causes most of the confusion.

Authorised shares are the maximum number of shares the company is allowed to issue. The figure is written into the company’s Memorandum of Incorporation (MOI), the document that sets out the company’s rules. Think of it as the size of the pool.

Issued shares are the shares actually handed to shareholders. These are the ones that carry ownership, votes and dividends. Think of it as how much of the pool has been used.

Unissued shares belong to nobody. They’re room to grow. A company authorised for 1,000 shares that has issued 100 has one owner holding 100%, and 900 shares in reserve.

Many companies registered on CIPC’s standard MOI (form CoR15.1A) start with 1,000 authorised shares. Companies registered through Govchain start with 10,000 unless you chose a different number. You’ll find your number on your Notice of Incorporation (CoR14.1), in your Govchain share register, and on screen at CIPC when you file the change.

CIPC only records the authorised number. It keeps no record of who holds the issued shares. That’s the job of your share register, which the company keeps itself.

When you need to increase them

You need more authorised shares when you want to issue more than the MOI allows. The usual triggers:

• A partner or investor is coming in and the unissued shares aren’t enough for the stake you agreed.
• Everything has already been issued. Founders often issue all 1,000 shares to themselves at registration, leaving nothing for anyone else.
• The percentages don’t work. 1,000 shares can’t be split three ways equally. A bigger, rounder number lets you carve out exact stakes.
• An employee share scheme needs a block of shares set aside.

Two things you don’t need an increase for. Moving shares between existing shareholders is a transfer, recorded in the share register, and CIPC isn’t involved. And if you have unissued shares to spare, just issue those.

The ceiling is real. Shares issued above the authorised number are invalid unless the board fixes the authorisation within 60 business days (Companies Act, section 38). Sort out the number first, then issue.

How many to increase to

The CIPC fee is the same whether you go to 2,000 or 2,000,000, so pick a number that will last.

• 10,000 or 100,000 suits most small companies. Easy to split into exact percentages, small enough to read.
• Round numbers make stakes obvious. 25% of 10,000 is 2,500.
• A bigger ceiling doesn’t dilute anyone. Only issued shares count for ownership.

CIPC asks for the new total for the share class, not the amount you’re adding. Going from 1,000 to 10,000? Type 10,000.

Before you file

Four checks that save a rejected filing.

1. The company must be active with CIPC. The online share-change service only works for companies “in business”. If annual returns are behind and the company is in deregistration, file the returns first. The free company health check shows where you stand.
2. The shares must be no par value. Every company registered since May 2011 is. Older companies with par value shares (a fixed value like R1 each) can’t increase them until they convert to no par value, which is a separate resolution and a board report.
3. The approving director’s contact details must be current with CIPC. CIPC sends a one-time PIN (OTP) to one director’s cellphone, using the number on its records. If it’s out of date, file a CoR39 to update the director’s details before you start.
4. Pass the resolution. Next section.

Step 1: pass the resolution

Increasing authorised shares amends the MOI. The Companies Act lets the board do this by resolution unless your MOI says otherwise (section 36), so read your MOI first. If it’s silent, a written board resolution is enough. If it reserves share changes for shareholders, you need a special resolution: at least 75% of the votes cast, or more if your MOI says so. When the directors and shareholders are the same people, sign both and move on.

The resolution should state the company name and registration number, the share class (usually ordinary no par value shares), the current authorised number, the new authorised number, and the date. Keep it with the company records. CIPC doesn’t ask you to upload it, but it can ask to see it later.

Step 2: file the change on CIPC eServices

Cost: R250. Time at the keyboard: about 20 minutes, plus however long the OTP takes to arrive.

1. Log in at eservices.cipc.co.za with your customer code. Click Transact, then Authorised Share Changes.
2. Enter the registration number in the 2010/012345/07 format and click Validate.
3. Check the company name and the current shares shown. Tick Agree and click Continue. If the number CIPC shows doesn’t match your records, stop and log an enquiry with CIPC before going further.
4. Click Edit Share next to the share class. Enter the date of your resolution and accept it. It can’t be a future date.
5. Select Increase as the action and type the new total. Click Validate, check it, then Update. The change appears under Current Drafts.
6. Click Continue and pick the director (or company secretary) who should receive the OTP. CIPC says allow up to 30 minutes for it to arrive.
7. Type in the OTP and click Validate.
8. The R250 fee lands in your cart. Pay from your customer code balance or by card.
9. CIPC emails a confirmation certificate to the address on the customer code. Every active director on CIPC’s records is also notified of the change.

Three things worth knowing:

• One fee covers everything you do in that session. Add a class and increase two others in one go and you still pay R250 once.
• No new MOI is needed when the only change is the number of shares. If you’re also changing the rights attached to shares or adopting a new MOI, do the whole thing by email to moiamendments@cipc.co.za with the resolution and the amended MOI, and pay once.
• The change takes effect when CIPC registers it, not on the date of your resolution. Don’t issue the new shares until the confirmation arrives.

Step 3: update your own records

CIPC now shows the higher ceiling. Nothing else has changed yet. The new shares still have to be issued and recorded, and that part is on you.

• Issue the shares by board resolution: who gets how many, and what they pay for them.
• Update the share register the same day. It’s the legal record of who owns the company. If you keep yours with Govchain, send us the CIPC confirmation and we’ll lift the authorised number so the register lets you issue against it.
• Issue share certificates to the new shareholders. Govchain generates them free.
• Update beneficial ownership with CIPC if anyone now holds 5% or more, or an existing holder’s percentage has moved. Govchain can file that too.

What it costs and how long it takes

Frequently asked, quickly answered

Does increasing authorised shares dilute existing shareholders?

No. Ownership is calculated on issued shares. Dilution only happens when new shares are actually issued to someone else.

Can I decrease authorised shares?

Yes, through the same service for the same fee. Don’t go below the number already issued.

Do I need to increase shares to add a shareholder?

Only if there aren’t enough unissued shares. With 1,000 authorised and 100 issued, you can issue another 900 without touching CIPC. Existing holders can also transfer shares.

What if the OTP never arrives?

Check the director’s cellphone number on CIPC’s records. If it’s wrong, file a CoR39 to fix it. If it’s right, log an enquiry on eServices and ask them to confirm what they have on file.

Do I need a lawyer or accountant?

Not for a plain increase on the standard MOI. If your MOI has custom share classes or rights, or you’re creating preference shares with special terms, get advice before you file.

Can a close corporation or non-profit do this?

No. Neither has shares. This is for profit companies only.

Rather have it done? Govchain can draft the resolution and file the increase with CIPC for you. Message us from your account and tell us the new number.