What does Authorised Capital and Paid Capital mean?
What does Authorised Capital and Paid Capital mean In Company Law, the “Capital” is the share capital of a company
(a) Authorised Capital:
This is also known as Nominal Capital or Registered Capital, which is the maximum capital that can company can issue shares , This amount lays down the maximum limit beyond which the company cannot issue shares without altering the memorandum as provided by Section 61 of the Companies Act, 2013.
As per section 2(8), “authorised capital” or “nominal capital” means such capital as is authorized by the memorandum of a company to be the maximum
amount of share capital of the company.
According to Section 60 of the Act, if the amount of the authorised capital (nominal capital), of the company is stated in any notice, advertisement, official publication, business letter, bill head or letter paper, it shall also contain a statement in an equally prominent position and in equally conspicuous terms the amount of capital
which has been subscribed and the amount paid-up.
(b) Issued Capital:
As per section 2(50), “issued capital” means such capital as the company issues
from time to time for subscription. It is that part of the authorised or nominal capital which the company issues for the time being for public subscription and allotment. This is computed at the face or nominal value.
(c) Subscribed Capital:
According to Section 2(86), “subscribed capital” means such part of the capital which is for the time being subscribed by the members of a company. It is that portion of the issued capital at face value which has been subscribed for or taken up by the subscribers of shares in the company. It is clear that the entire issued capital may or may not be subscribed.
(d) Called up Capital:
As per section 2(15), “called-up capital” means such part of the capital, which
has been called for payment. It is that portion of the subscribed capital which has been called up or demanded on the shares by the company
(e) Paid-up Share Capital:
As per section 2(64), “paid-up share capital” or “share capital paid-up”
means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called.
Companies Amendment Act, 2015 have omitted the provision of minimum paid up the capital requirement for the Companies but the requirement of authorised share capital still exists, Since no minimum paid-up capital is prescribed company registration can be done Rs .100 as capital
In case of any help or assistance in the difference between Authorised Capital Vs Paid up capital in the process of company registration, contact Virtual auditor support team on 9962 260 333/044- 48560333 /mail us [email protected], our team will guide through the entire process and help you comply