What is Authorised capital of a company and how is it different from paid up capital?

What is Authorised capital of a company and how is it different from paid up capital?

Information 01.09.2017   0 Comments   591  Add to Reading List

Authorized capital: Before a public company can sell a stock, it must specify a certain limit to the amount of share capital that it is authorized to raise. This limit is set forth in its constitutional documents and can only be changed with the approval of the shareholders.Paid up capital: A company does not usually issue the full amount of its authorized share capital. Instead, some will be held in reserve by the company for possible future use. The amount that is issued is called the paid-up capital and it will never exceed authorized share capital.Please note that both Authorized and Paid up capital refer to the book value of the shares.


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