Increase in Authorized Capital Stock: SEC Requirements, Steps and MC No. 6, s. 2026
Updated: 2 days ago
Short answer: Get a majority vote of the board and the approval of stockholders owning at least two-thirds of the outstanding capital stock at a meeting called for the purpose. Before filing, at least 25% of the increase must be subscribed and 25% of that paid. The increase takes effect only when the SEC approves it and issues a certificate of filing (Section 37, Revised Corporation Code). For cash, most corporations now submit a notarized subscription contract instead of a special audit report (SEC MC No. 6, s. 2026).
What is authorized capital stock?
Authorized capital stock is the ceiling on the shares a corporation may issue. The articles of incorporation state it, together with the number of shares, their par value, and what each original subscriber subscribed and paid (Section 13(h), Revised Corporation Code (RCC), Republic Act (RA) No. 11232). Three figures matter:
Authorized capital stock: the maximum the articles allow.
Subscribed capital stock: the shares subscribers have agreed to take. Any contract to acquire unissued stock is a subscription (Section 59, RCC).
Paid-up capital: the part of the subscriptions actually paid.
No minimum capital stock is required unless a special law requires one (Section 12, RCC).
When do you need to increase authorized capital stock?
When the corporation will issue more shares than its unissued authorized capital stock can cover, for example to admit investors, convert stockholder advances or loans into equity, or declare a large stock dividend.
If enough unissued shares remain, no SEC-approved increase is needed. The board exercises the corporate powers (Section 22, RCC) and can issue them, but these rules still apply:
Pre-emptive right. Stockholders may subscribe in proportion to their holdings unless the articles deny the right. It does not cover shares issued under laws requiring public offerings or minimum public ownership, or shares issued in good faith, with the approval of two-thirds of the outstanding capital stock, for property needed for corporate purposes or in payment of a previously contracted debt (Section 38, RCC).
Consideration. No issue below par or the issued price, and none for promissory notes or future services. Non-cash consideration is valued by the board or stockholders, subject to SEC approval (Section 61, RCC), which the SEC handles as a confirmation of valuation (SEC checklist).
Tax and records. Documentary stamp tax (DST) applies to every original issue of shares (Section 174, National Internal Revenue Code (NIRC), as amended by RA No. 12214). Record the shares in the stock and transfer book (Section 73, RCC) and file an amended General Information Sheet (GIS) within seven days (General Instructions, 2026 GIS form).
Some businesses must also meet capital floors under special laws, such as lending companies (Section 5, RA No. 9474) and foreign-owned domestic market enterprises (Section 8, RA No. 7042, as amended). Reaching a floor may require an increase. See our guide to how much capital you need.
What does the Revised Corporation Code require to increase capital stock?
Section 37 of the RCC requires:
Board approval by a majority vote of the board of directors.
Stockholder approval by two-thirds of the outstanding capital stock at a stockholders' meeting duly called for the purpose. That means two-thirds of all outstanding shares, not of those present.
Written notice of the time, place and purpose of the meeting, sent to each stockholder's residence as shown in the corporate books and served personally, or through electronic means recognized in the bylaws or the SEC's rules.
A certificate of increase, signed by a majority of the directors and countersigned by the chairperson and secretary of the stockholders' meeting.
A treasurer's sworn statement, by the treasurer in office at filing, that at least 25% of the increase has been subscribed and at least 25% of the amount subscribed has been paid in actual cash, or that property worth 25% of the subscription has been transferred to the corporation. The SEC will not accept the certificate without it.
Prior SEC approval, plus Philippine Competition Commission approval where appropriate. Apply within six months from the board and stockholder approvals; the period may be extended for justifiable reasons.
For an increase of ₱4,000,000, at least ₱1,000,000 must be subscribed and at least ₱250,000 of it paid. Non-voting shares vote on an increase or decrease of capital stock and on amendments to the articles (Section 6, RCC), so count them.
Section 37 and Section 15. An increase also amends the capital clause of the articles. Section 15 lets most amendments pass by a board majority plus the vote or written assent of two-thirds of the outstanding capital stock, and makes them effective on SEC approval or six months after filing without SEC action for a cause not attributable to the corporation. Section 15 applies unless the Code provides otherwise, and Section 37 does: it requires a meeting, and the capital stock is deemed increased only after the SEC approves it and issues its certificate of filing. See how to amend your articles of incorporation.
If the increase creates shares with preferences superior to outstanding shares, dissenting stockholders may have an appraisal right (Section 80(a), RCC). A decrease needs the same approvals, and the SEC will not approve one that prejudices corporate creditors (Section 37, RCC).
How do you increase authorized capital stock, step by step?
Plan the numbers: the new authorized capital stock, classes, par value, subscribers and mode of payment. If foreign equity will exceed 40%, the SEC requires compliance with Foreign Investments Act registration (SEC checklist). See the 40% foreign ownership rule.
Board meeting: approve the increase and the amended articles by majority vote (Section 37, RCC).
Call the stockholders' meeting with a notice stating the purpose. Send it at least 21 days before a regular meeting, or at least one week before a special meeting, unless the bylaws or other rules set a different period (Section 49, RCC). Hold it at the principal office, or in the same city or municipality if that is not practicable. A defective call is cured if all stockholders are present or represented and none objects at the start (Section 50, RCC), and each stockholder may waive notice, expressly or by attending without objecting (Section 49). See valid board and stockholders' meetings.
Approve by two-thirds of the outstanding capital stock (Sections 6 and 37, RCC).
Settle pre-emptive rights through waivers, unless the articles deny the right or an exception applies (Section 38, RCC).
Collect subscriptions and payments meeting the 25% and 25% minimums (Section 37, RCC).
Prepare the documents listed in the next section.
File with the SEC within six months from the approvals (Section 37, RCC), and pay the assessed fees.
Receive the certificate of filing. Only then is the capital stock increased (Section 37, RCC).
After approval: keep the certificate of increase on file at the corporation's office (Section 37, RCC); record the shares in the stock and transfer book (Section 73, RCC); pay the DST; file an amended GIS within seven days (General Instructions, 2026 GIS form); and declare any change in beneficial owners in HARBOR within seven calendar days (SEC MC No. 15, s. 2025). Issue stock certificates only to subscribers who have paid in full (Section 63, RCC). See corporate books and records.
Where to file. Amendment applications generally go through the SEC's eAMEND portal. But SEC MC No. 3, s. 2026, which sets the eAMEND processing rules, leaves increases and decreases of capital stock out of its coverage (Section 29), and the paperless lane under SEC MC No. 21, s. 2026 covers only selected amendments. Confirm the current filing channel for an increase with the SEC's Company Registration and Monitoring Department (CRMD) before you file.
What are the SEC requirements for an increase in authorized capital stock?
The SEC's checklist lists:
Certificate of increase of capital stock, signed by a majority of the directors and certified by the chairperson and corporate secretary of the stockholders' meeting.
Treasurer's affidavit on the amount subscribed and paid.
Certified list of stockholders as of the meeting date, with nationality and subscribed and paid-up capital.
Amended articles of incorporation.
Notarized secretary's certificate that no intra-corporate dispute is pending.
Notarized directors' certificate, signed by a majority of the directors and the corporate secretary, on the amendment, the votes, and the date and place of the meeting.
Notarized secretary's certificate that non-subscribing stockholders waived their pre-emptive rights, or the two-thirds stockholder resolution approving an issue for property or previously incurred debt.
Foreign Investments Act compliance if foreign equity rises above 40%.
SEC monitoring clearance, or another applicable SEC or agency clearance.
Endorsements from other government agencies, if applicable.
Add the documents for the kind of payment, discussed below.
What is a certificate of increase of capital stock?
It is the corporation's own certificate under Section 37, not the SEC's approval. It states that Section 37 was complied with; the amount of the increase; the capital actually subscribed, with each subscriber's name, nationality and address, subscription, and payment in cash or property, or the shares allotted to each stockholder if the increase is for a stock dividend; any bonded indebtedness; the stock represented at the meeting; and the vote. Copies are kept at the corporation's office, filed with the SEC and attached to the original articles. The SEC's approval comes as a certificate of filing (Section 37, RCC).
What changed under SEC Memorandum Circular No. 6, series of 2026?
The SEC issued MC No. 6, s. 2026, "Expanding the Coverage of Subscription Contract," on January 22, 2026. It was published on January 24, 2026, and took effect immediately upon completion of its publication. It repeals the relevant provisions of SEC MC No. 11, s. 2016.
Before: under SEC MC No. 6, s. 2012, as amended by SEC MC No. 11, s. 2016, a corporation increasing its capital stock by cash could submit a notarized subscription contract instead of a special audit report, except where the payments on the subscription to the increase exceeded ₱50 million.
Now: the ₱50 million threshold is gone. A corporation increasing its authorized capital stock by way of cash submits a notarized subscription contract, whatever the amount, unless it falls under the exceptions below.
What must a subscription contract under SEC MC No. 6, s. 2026 contain?
Execution by the subscriber or subscribers, the president and the treasurer.
Notarization.
The number of additional shares subscribed to and paid for.
If the president or the treasurer is unavailable, submit a board resolution authorizing a director or officer to sign on their behalf (SEC MC No. 6, s. 2026). Keep the figures consistent with the treasurer's affidavit and the certificate of increase.
Who still needs a special audit report for the SEC?
A special audit report is an independent certified public accountant's report verifying the payment (SEC list of additional requirements). For cash increases, MC No. 6, s. 2026 still requires one from:
listed companies;
public companies as defined under the Securities Regulation Code;
companies that offer or sell securities to the public; and
companies with secondary licenses regulated by the SEC, such as lending and financing companies.
The SEC may also require one in other cases to prevent fraud in obtaining its approval (SEC MC No. 6, s. 2026). The circular covers cash only. A conversion of advances or liabilities still needs an independent CPA report on the amounts converted (SEC list of additional requirements).
What if the increase is paid with property, advances or a stock dividend?
The 25% payment may be property instead of cash (Section 37, RCC). Allowed consideration also includes previously incurred debts of the corporation and amounts transferred from unrestricted retained earnings to stated capital, and non-cash values are subject to SEC approval (Section 61, RCC). Directors and officers who consent to an issue below par or for overvalued property, or who know of the shortfall and do not object in writing, are solidarily liable with the stockholder for the difference (Section 64, RCC). See duties and liabilities of directors.
The SEC's list of additional requirements includes:
Advances or liabilities converted to equity: the latest audited financial statements, if they show the advances; an independent CPA report verifying them; and a deed of assignment by the subscribing creditor.
Land, buildings or condominium units: a property schedule certified by the company accountant, certified copies of titles and tax declarations, the BIR zonal value or a licensed appraiser's report, and a deed of assignment.
Shares of another corporation: a schedule, the investee's audited financial statements, a deed of assignment, the investee's secretary's certificate and a copy of the stock certificate.
Stock dividends: a certified list of stockholders entitled, the audited financial statements and a reconciliation of retained earnings (SEC MC No. 11, s. 2008).
Vehicles, equipment, intangibles and other property have their own lists.
A stock dividend is declared by the board out of unrestricted retained earnings and needs the approval of two-thirds of the outstanding capital stock at a meeting called for the purpose (Section 42, RCC). If the unissued shares cannot cover it, increase the capital stock as well; the certificate of increase then shows the shares allotted to each stockholder (Section 37, RCC).
How much are the SEC fees and documentary stamp tax on an increase?
SEC filing fee: 1/5 of 1% of the increase in capital stock or the subscription price of the subscribed capital stock, whichever is higher, but not less than ₱3,000. For no-par shares, the increase is computed at ₱100 per share, or the issue value of the subscribed stock if higher (SEC MC No. 3, s. 2017).
Legal research fee: 1% of the filing fee, but not less than ₱10 (SEC MC No. 3, s. 2017).
On a ₱10 million increase subscribed at par, that is ₱20,000 plus ₱200. The SEC assesses the final amount.
DST is 0.75% of the par value of the shares issued. For no-par shares, it is based on the actual consideration, and for stock dividends, on the actual value represented by each share (Section 174, NIRC, as amended by RA No. 12214, the Capital Markets Efficiency Promotion Act). Before that law took effect in 2025, the rate was ₱2 on each ₱200 of par value. Report it on BIR Form 2000. The Supreme Court has quoted with approval the rule that the tax covers the entire subscription, whether fully paid or not, and accrues when the shares are issued, meaning when the stockholder acquires and may exercise attributes of ownership (Jaka Investments Corporation v. CIR, G.R. No. 147629, July 28, 2010, quoting RMC No. 47-97). The BIR's reckoning rule for new corporations (RMC No. 56-2019) does not address increases, so confirm with the BIR the accrual date for shares issued from an increase.
How should deposits for future stock subscription be treated while the increase is pending?
Payments received before the SEC approves the increase are often booked as deposits for future stock subscription. Under SEC Financial Reporting Bulletin (FRB) No. 6, as revised in 2013 and 2017 and compiled as of January 6, 2022, a deposit may be shown in equity, apart from outstanding capital stock, only if all of these exist at the end of the reporting period:
the unissued authorized capital stock is insufficient to cover the shares in the contract;
the board has approved the proposed increase;
the stockholders have approved it; and
the application for approval of the increase has been presented for filing or filed with the SEC.
If any element is missing, the deposit does not qualify for equity presentation. To deter abuse, the SEC expects approval within one year from the date the application was presented through the CRMD (FRB No. 6). A deposit without a subscription agreement is not subject to DST, because no subscription exists yet (CIR v. First Express Pawnshop Company, Inc., G.R. Nos. 172045-46, June 16, 2009).
How do you increase paid-up capital?
Collect unpaid subscriptions, due on the date in the subscription contract or on call by the board (Section 66, RCC).
Issue unissued shares for cash or property (Sections 22, 38 and 61, RCC).
Increase the authorized capital stock and collect at least the 25% minimum (Section 37, RCC).
Capitalize unrestricted retained earnings through a stock dividend (Sections 42 and 61, RCC).
How does a One Person Corporation increase its capital stock?
The single stockholder acts through a written resolution, signed and dated, recorded in the minutes book; the date of recording counts as the date of the meeting (Sections 127 and 128, RCC). The SEC's checklist for an OPC increase lists the certificate of increase, the subscription contract, the treasurer's affidavit, the resolution and the Form for Appointment of Officers, plus the documents for the kind of payment. A single stockholder who is also the treasurer posts a bond pegged to the authorized capital stock, so an increase can raise it (SEC MC No. 10, s. 2026; SEC MC No. 7, s. 2019). See our OPC compliance guide.
Frequently asked questions
Can stockholders approve an increase by written assent instead of a meeting?
No. Written assent works for ordinary amendments under Section 15, but Section 37 requires approval at a stockholders' meeting duly called for the purpose. An OPC acts by written resolution (Section 128, RCC).
Is the increase effective once the stockholders approve it?
No. The capital stock is deemed increased only after the SEC approves the increase and issues its certificate of filing (Section 37, RCC).
Is there a deadline to file with the SEC?
Yes. File within six months from the board and stockholder approvals, unless the SEC extends the period for justifiable reasons (Section 37, RCC).
Do we need a special audit report for a cash increase above ₱50 million?
Only if the corporation is listed, public, offers securities to the public or holds an SEC secondary license, or if the SEC requires one to prevent fraud (SEC MC No. 6, s. 2026).
Must the 25% payment be in cash?
No. It may be cash, or property worth at least 25% of the subscription transferred to the corporation (Section 37, RCC).
Can the board issue unissued shares without SEC approval?
Yes, within the authorized capital stock. Pre-emptive rights, SEC approval of non-cash valuations, DST and GIS updates still apply (Sections 38 and 61, RCC; Section 174, NIRC). Sales of existing shares between stockholders are transfers instead; see how to transfer shares.
Sources
Republic Act No. 11232 (Revised Corporation Code), Sections 6, 12, 13(h), 15, 22, 37, 38, 42, 49, 50, 59, 61, 63, 64, 66, 73, 80, 127 and 128
National Internal Revenue Code of 1997, Section 174, as amended by Republic Act No. 12214 (Capital Markets Efficiency Promotion Act)
Revenue Memorandum Circular No. 47-97, as quoted in Jaka Investments Corporation v. Commissioner of Internal Revenue
Revenue Memorandum Circular No. 56-2019
Republic Act No. 9474 (Lending Company Regulation Act of 2007), Section 5
Republic Act No. 7042 (Foreign Investments Act of 1991), Section 8, as amended by Republic Act No. 11647
SEC Memorandum Circular No. 6, Series of 2026 (Expanding the Coverage of Subscription Contract)
SEC Memorandum Circular No. 6, Series of 2012, and SEC Memorandum Circular No. 11, Series of 2016
SEC Memorandum Circular No. 3, Series of 2026 (eAMEND processing rules)
SEC Memorandum Circular No. 21, Series of 2026 (paperless filing for select amendments)
SEC Memorandum Circular No. 3, Series of 2017 (Consolidated Schedule of Fees and Charges)
SEC Memorandum Circular No. 15, Series of 2025 (beneficial ownership)
SEC Memorandum Circular No. 10, Series of 2026, and SEC Memorandum Circular No. 7, Series of 2019
SEC Memorandum Circular No. 11, Series of 2008
SEC Financial Reporting Bulletin No. 6 (Deposits for Future Subscriptions), as revised
SEC checklist for increase of authorized capital stock, and SEC list of additional requirements by kind of payment
General Instructions, 2026 GIS form
Commissioner of Internal Revenue v. First Express Pawnshop Company, Inc., G.R. Nos. 172045-46, June 16, 2009
Jaka Investments Corporation v. Commissioner of Internal Revenue, G.R. No. 147629, July 28, 2010
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This article is general information as of its publication date, not legal advice, and does not create a lawyer-client relationship. For advice on your situation, consult a lawyer.
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