Question

What is the authorised capital?

What is meant by ‘authorised capital’?

Answer 1

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.

Answer 2

Authorised share capital is the maximum amount of capital that a company can raise as share capital. It is stated in the Memorandum of Association. This is subcategorized into equity shares and Preference shares. Issued capital is part of authorised capital that is issued for subscription, shares allotted for consideration other than cash, shares subscribed by signatories to Memorandum of Association, and shares were taken by Directors as qualifying shares.