The cascaded H-bridge (CHB) low-capacitance stat- ic compensator (LC-StatCom) has a limited operating range in the inductive region compared to a conventional StatCom due to the inherent large oscillations on the capacitor voltages. This lim- itation constitutes a great drawback of CHB LC-StatComs. This paper presents an effective hardware-free solution to overcome this drawback. The proposed solution is based on the injection of an optimal third harmonic circulating current to suitably shape the capacitor voltages aiming at avoiding overmodulation. Considering all the effects of the third harmonic circulating current, the paper proposes a reference design that guarantees a prescribed safe operating voltage limit, thus increasing the oper- ational range of the LC-StatCom. The proposed approach takes into account the inherent induced oscillation on the capacitor voltages. This approach has been verified by simulation and experimentally with a laboratory prototype, corroborating the excellent performance that agrees with the theoretical analysis.