October 23, 2026
Amend your certificate of incorporation. Under Section 242 of the Delaware General Corporation Law, the board adopts a resolution approving a certificate of amendment and declaring it advisable, the stockholders approve it, usually by written consent of a majority of the outstanding voting stock plus any class vote that Section 242(b)(2) or the charter requires, and the company files it with the Delaware Division of Corporations, where it takes effect on filing. In a priced round, the amended and restated certificate of incorporation does this as part of the closing. Before you file, check what the increase does to your Delaware franchise tax and whether any investor has a veto over it.
Key takeaways
The company's certificate of incorporation caps how many shares it can issue. Every issued share, every share reserved under the option pool and every share of common reserved for the conversion of preferred stock or the exercise of warrants has to fit under that cap. The default formation is 10,000,000 authorized shares of common stock with a 1,000,000-share option pool, which leaves room for two or three founders and early hires but not much more.
You will need an increase when a priced round creates preferred stock, which is a new class that has to be authorized and which converts into common that also has to be authorized; when investors ask for a larger option pool; when you do a stock split; and when you add a co-founder, make large grants or issue warrants and run out of unreserved common. A SAFE doesn't need authorized shares until it converts, and it converts in a priced round, where the new charter handles it. See How Many Shares and Certificate of Incorporation.
Section 242(b) of the DGCL sets the process. First, the board adopts a resolution setting out the amendment and declaring it advisable. Most startups do this by unanimous written board consent. See Startup Board Consent.
Second, the stockholders approve it. The amendment needs a majority of the outstanding stock entitled to vote, plus a majority of each class entitled to vote separately. Under Section 242(b)(2), the holders of a class get a separate class vote on an increase or decrease in that class's authorized shares, unless the certificate of incorporation opts out and lets a majority of all voting stock decide. Many venture charters include that opt-out for the common stock. At the seed stage, when only founders hold common stock, the founders' signatures usually satisfy both votes.
Third, an authorized officer signs the certificate of amendment and the company files it with the Delaware Division of Corporations, usually through its registered agent. The amendment takes effect when it is filed unless it states a later effective time. Don't issue shares or grant options that depend on the increase until the filing is complete.
Yes. Under Section 228, unless the certificate of incorporation says otherwise, stockholders can act without a meeting by written consent signed by holders of at least the number of votes that would be needed at a meeting where every share voted. For an amendment, that's a majority of the outstanding voting stock and any required class majority. If the consent isn't unanimous, the company must promptly notify the stockholders who didn't sign, and the certificate of amendment must say that it was approved by written consent under Section 228. Keep the signed consent and the notice in the minute book. See What Do Stockholders Need to Approve?
As of August 2026, the Division of Corporations' fee schedule lists $214 to file a one-page certificate of amendment or restated certificate of incorporation, plus $9 for each additional page and $50 for each certified copy, and notes that the fee varies when the amendment increases authorized stock. That's because Delaware charges a fee on the increase under Section 391: the difference between the fee computed on the total authorized stock after the increase and the fee computed on the total before it, with a $30 minimum. For stock with a par value, the tax is computed on the aggregate par value of the authorized shares, so a startup with a par value of $0.00001 per share usually owes little beyond the minimum. Confirm the total with the Division or your registered agent before filing. Expedited filing costs extra.
Delaware calculates annual franchise tax two ways and lets the company pay the lower amount. The authorized shares method charges $175 for up to 5,000 shares, $250 for 5,001 to 10,000 shares, and $85 for each additional 10,000 shares or part of 10,000. Delaware's notices use this method, which is why a startup with 10,000,000 authorized shares receives a bill for $85,165. The assumed par value capital method uses the company's gross assets and issued shares, has a $400 minimum, and usually produces a far lower number for a startup. Either way the annual report fee of $50 is separate, and both are due 1 March.
More authorized shares raise the tax under the authorized shares method and can raise it under the assumed par value capital method, because that calculation also multiplies by authorized shares. Most startups file their annual report using the assumed par value capital method. See Delaware Franchise Tax.
Sometimes the problem isn't the cap but the share count itself. A company formed with too few shares, say 1,000,000, can't easily grant meaningful numbers of options. A forward stock split subdivides each outstanding share into more shares before a round. Under Section 242(d)(1), if the company has only one class of stock outstanding and that class isn't divided into series, the board can approve a forward split and a proportionate increase in authorized shares without a stockholder vote, unless the certificate of incorporation requires one. The company still files a certificate of amendment. Once preferred stock exists, a split needs the full stockholder process.
Once you have preferred stock, look at the protective provisions in the certificate of incorporation. They almost always require a majority, or a higher percentage, of the preferred to approve any increase or decrease in the authorized shares of any class and any new class or series. Pool increases between rounds often need the same approval. See Protective Provisions.
Example. A company has 10,000,000 authorized shares of common stock: 8,000,000 issued to its founders and 1,000,000 reserved for the option pool, so 9,000,000 shares fully diluted and 1,000,000 unreserved. Its seed round will sell 3,000,000 shares of Series Seed preferred stock, and the investors require the pool to increase by 1,500,000 shares, to 2,500,000, before the round.
The common stock now has to cover 8,000,000 issued shares, the 2,500,000-share pool and 3,000,000 shares reserved for conversion of the preferred, a total of 13,500,000. The company authorizes 15,000,000 shares of common stock, leaving 1,500,000 unreserved, and 3,000,000 shares of preferred stock. The amended and restated certificate of incorporation in the round does this. The board approves it by written consent and declares it advisable, the founders, as holders of all the outstanding common stock, approve it by written consent under Section 228, and the company files it in Delaware before the closing. If any stockholder didn't sign, the company sends the notice under Section 228(e).
Fully diluted after the round is 13,500,000 shares: 8,000,000 common, 2,500,000 in the pool and 3,000,000 preferred. Authorized shares rise to 18,000,000, so the authorized shares method now produces $153,165 ($250 plus 1,799 additional blocks of 10,000 at $85). Under the assumed par value capital method, if the company reports gross assets of $2,000,000 and 11,000,000 issued shares, its assumed par value is $2,000,000 ÷ 11,000,000, about $0.181818 per share, its assumed par value capital is 18,000,000 × ($2,000,000 ÷ 11,000,000), about $3,272,727, and because Delaware rounds up to the next $1,000,000, the tax is 4 × $400 = $1,600. See Series Seed vs NVCA and Option Pool Shuffle.
No. Authorizing 100,000,000 shares at formation doesn't save you a filing later, and it produces an alarming franchise tax notice every year and a larger number in the assumed par value capital calculation. The 10,000,000 default is enough for the founders, a pool and early hires, and the first priced round is the natural time to increase it, because the new charter has to be filed anyway.
Go deeper with our Founder Guide: Seed Funding.
For more, see How Many Shares, Delaware Franchise Tax, What Does the Board Need to Approve? and Authorized, Outstanding and Fully Diluted Shares.
If you need more authorized shares before a round or a grant, contact us before you promise anyone the shares.
