Authorised Capital Meaning Issued Share Capital. This means that if a company decides that it can issue up to a maximum of 100 million shares with a par value of 1 the authorised capital of the company would be 100 million.
Equity Share And Its Types Equity Finance Financial Management
The authorised capital or authorised share is the highest amount of capital that the companys shareholders are allowed to invest and hold a stake in.
. One lakh under the Companies Act 2013. The paid-up capital is the amount of the shares a company receives when the shareholders buy the issued shares. In terms of investing or immediate business finance decisions paid-up capital is generally more important.
Difference Between Authorized and Paid-up Capital Authorized capital is the maximum value of the shares that a company is legally authorized to issue to the shareholders. Prior to the Companies Act 2013 private limited companies were required to have a minimum paid-up capital of Rs. Authorised Share Capital Section 2 8 of the paid-up capital companies act 2013 defines that Authorised capital or nominal capital means such maximum amount of share capital of the company that is authorised by the MOA memorandum of association of a company.
Stamp duty is payable at the time of Company Incorporation and also at the time of increase in Authorized Capital. A Paid-up Share Capital is the amount of money received from the shareholders for the shares allotted to them. Paid up share capital can not be more than authorised share capital.
The amount that is issued is called the paid-up capital. Authorise Share Capital is the amount for which a Company can issue shares to the shareholders whereas. It is mentioned under the Capital Clause of the Memorandum of Association.
As per Section 2 8 of The Companies Act 2013 authorised capital is the maximum amount of capital that the company can issue to its subscribers for share capital. And it means the most significant amount of capital available to the company to raise the fund issuing shares. A Paid-up Share Capital should always be less than the Authorized Share Capital.
In other words the authorized share capital represents the upward bound on possible paid-up capital. Lets say a company has maximum number of Authorised Shares is 100000 and Face Value of 1 share is Rupees 10 so the Authorised Capital of this company is Rupees 10 Lakhs. Rate of stamp duty on Authorized Capital varies from state to state.
Stamp Duty is paid on the Authorized Share Capital of the Company. No company is capable of issuing more shares than the fixed limit. Stamp duty is not required to be paid on the increase of Paid Up Capital of the company.
What is meant by Authorised Capital. Thus stockholders had to invest Rs. Whereas paid-up capital is the amount that is actually paid by the shareholders to the company.
Under the Capital Clause of the Companys Memorandum of Association MOA the maximum permitted amount is stated. Paid-up capital will always be less than the authorised capital. This is the amount actually received by the company as a share capital.
However if that company intends to increase its paid-up capital up to RM250000 the company needs to increase its authorised capital from 100000 to 500000 before it can increase its paid-up capital. Authorised share capital paid-up share capital. Thus authorized capital is the capital of the company which can not be included in calculating the companys net worth.
Authorized Capital Maximum amount of share capital that can be issued by a company is known as Authorised Capital. Companies cannot call and receive share capital more than authorised share capital. To increase the authorised capital the company must follow the procedure led down by the Companies Act 2013.
Authorised capital is the maximum number of shares a company can issue multiplied by its par value or the nominal value of one share in the company. It is like official capital is a big circle and paid-up capital is a small circle within the big circle. 20 lakhs and shares issued up to an amount of Rs15 Lakhs to shareholders it means XYZ Pvt Ltd has issued the shares not in excess of the.
Paid-up capital can never exceed authorized share capital. It is important to divide the total capital earned from the share market into Authorized Issued Subscribed and Paid-up capital to measure the various attributes of a share. If a company has authorised capital of RM100000 then company can only increase its paid-up capital up to the maximum of RM100000 at any time.
Paid up share capital means share capital called by the company and payment paid by the shareholders. If XYZ Pvt Ltd has an authorised capital Rs. A companys paid-up capital is always less than its authorized share capital since it cannot issue shares beyond the limit of its authorized share capital.
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. Authorized Issued Subscribed and Paid-up capital are issues related to the reporting of shares.
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