What Is Authorised Capital And Issued Capital

By getting entity registered with for example 20 million authorized capital it does not mean that entity has issued 20 million worth of shares.

What is authorised capital and issued capital. Authorized share capital is the maximum extent of funding that can be raised through issue of shares. Issued shares mainly comprise of ordinary shares and preference shares. How is paid up capital different from authorised capital. The authorised share capital capital was abolished when the companies act 2006 came into force.

Moreover the abolition of authorised capital gave investors the opportunity to focus solely on a company s issued capital. As the name suggest it is the maximum capital entity is authorized to raise. The initial authorised capital of the company is mentioned in the memorandum of association of the company and is usually rs. The issued capital represents that part of an authorized capital which a company is authorized to sell through the shares.

The part of the authorised share capital that is offered to be bought and sold to the public. There was no longer a share capital waiting to be issued. In order to be fully understood authorized share capital must be viewed in a context where it relates to paid up capital subscribed capital and issued capital. The authorised capital of a company is the maximum amount of share capital for which shares can be issued by a company.

Although all these terms are. Difference between authorized and issued paid up share capital. This is because a company could be incorporated with an authorised capital of 1 million divided into 1 million shares each with par value of 1 but only issued 2 shares. The maximum amount of share capital that a company is registered to issue.

Authorised share capital also refers to as maximum registered or normal capital. It is laid out in the company s charter documents. A company can either sell all its shares or a portion of it depending on the need for finance. Neither paid up capital nor issued share capital are measures of the company s current wealth or value.

At this time any share capital that was not issued to a shareholder was deemed to be superfluous and ceased to exist. Authorised capital is a concept that used to exist but abolished on 30th january 2006.