Quick Answer
Authorised capital, defined in Section 2(8) of the Companies Act, 2013, is the maximum share capital a company is permitted to issue according to its memorandum. In contrast, paid-up share capital, defined in Section 2(64), is the actual aggregate amount of money received by the company for its issued shares.
Confused between authorised capital and paid up capital in the process of your company registration, in this we will try and understand the difference between Authorised Capital and Paid Up Capital
(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.
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.
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
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 support@virtualauditor.in, our team will guide through the entire process and help you comply
Authorised capital, also known as nominal or registered capital, is the maximum amount of share capital that a company is allowed to issue according to its memorandum. This limit is set under Section 2(8) of the Companies Act, 2013, and cannot be exceeded without altering the company memorandum.
According to Section 2(64), paid-up share capital is the aggregate amount of money credited as paid-up, which is equivalent to the amount actually received for shares issued by the company. It includes amounts credited as paid-up but excludes other payments received in respect of such shares.
No. Following the Companies Amendment Act, 2015, the requirement for a minimum paid-up capital has been omitted. Consequently, company registration can now be completed with as little as Rs. 100 as capital, although the requirement to declare an authorised share capital still exists.
As defined in Section 2(50), issued capital refers to the portion of the authorised or nominal capital that a company offers for public subscription and allotment from time to time. This amount is computed at the face or nominal value of the shares being offered.
Section 60 of the Companies Act, 2013, requires that if a company mentions its authorised capital in any official publication, notice, advertisement, business letter, or bill head, it must also include a statement of the subscribed and paid-up capital in an equally prominent and conspicuous position.