What do you mean by authorized capital?

What do you mean by authorized capital?

Authorized share capital—also known as “authorized stock,” “authorized shares,” or “authorized capital stock”—refers to the maximum number of shares a company is legally allowed to issue or offer based on its corporate charter. A company’s authorized share capital will not increase without shareholder approval.

What is authorized capital with example?

For Example: Suppose a firm has an authorized capital of Rs 50,00,000, then it can issue shares worth up to Rs 50,00,000 to its shareholders and cannot issue anything beyond it.

What is included in authorized capital?

Authorized Share Capital is the maximum amount of share capital that a company is authorized to raise. 1 This limit is outlined in its constitutional documents and can only be changed with the approval of the shareholders.

What is the authorized capital of a company?

The authorised capital of a company is the maximum amount of share capital for which shares can be issued by a company. The initial authorised capital of the Company is mentioned in the Memorandum of Association of the Company and is usually Rs. 1 lakh.

How is authorized capital decided?

The Authorised capital is mentioned in the Memorandum of Association of the Company under the heading of “Capital Clause”. It is even decided prior to incorporation of the Company. The Authorised capital can be increased at any time in future by following necessary steps as required by law.

What is minimum authorized capital?

It is the maximum value of the shares issued to the shareholders. The amount paid by the shareholders to the company for the company’s financing. All new companies must authorize a minimum amount of capital, which is Rs 1 lakh for Pvt Ltd Companies and Rs 5 lakh for Public Limited Companies.

What is the difference between paid up and authorized capital?

Authorized capital is the maximum value of the shares that a company is legally authorized to issue to the shareholders. Whereas, paid-up capital is the amount that is actually paid by the shareholders to the company. On the other hand, a company is not authorized to issue shares beyond the authorized share capital.

Can authorized capital be increased?

The authorised capital is the maximum amount of capital for which the Company can issue shares to the shareholders. A company may take the necessary steps required to increase the authorised capital limit in order to issue more shares, but it cannot issue shares exceeding the authorised capital limit in any case.

What happens to paid up capital?

Paid-up capital represents money that is not borrowed. A company that is fully paid-up has sold all available shares and thus cannot increase its capital unless it borrows money by taking on debt. A company could, however, receive authorization to sell more shares.

How can I increase my paid up capital?

For increasing the paid-up share capital of a company, new shares must be issued and allocated at a Board Meeting with the consent of all the Members of Board of the company. The return of distribution should be conveyed to the concerned Registrar of Companies of the Companies Act, 2013.

Can paid up capital be withdrawn?

Once the money is injected into your company as paid-up capital, the money no longer belongs to you but to the company. You will be able to use it only for valid business needs of the company. You cannot withdraw it for non-company expenses.

What is the minimum paid up capital?

With the Companies Amendment Act 2015, there is no minimum requirement of paid-up capital of the Company. That means now Company can be formed with even Rs. 1,000 as paid-up capital.

What is authorized share capital?

“Authorized share capital” is the broadest term used to describe a company’s capital. It comprises every single share of every category that the company could issue if it needed or wanted to.

What is the number of shares authorized?

“Authorized shares” refers to the number of shares the corporation is allowed to issue under its certificate or articles of incorporation. 10 to 15 million is a commonly used range (we set 10 million as default for the Cooley GO Docs Incorporation Package). “Issued…

What is the definition of registered capital?

Registered capital. Is the amount of money that can be put into a Limited or Unlimited company in the form of shares. The term Nominal capital is also sometimes used. For Public companies this is known as Authorised capital.

What is an authorized share?

Authorized Shares. Authorized shares, (also known as authorized stock or authorized capital stock), are defined as the maximum number of shares that a company is legally allowed to issue to investors, as per its own determinations. The maximum number is established in a company’s legal formation documents, known as the articles of incorporation.