Authorized Capital
Authorized Capital is the maximum amount of share capital a company is allowed to issue to investors.
Authorized capital is the limit set by a company on how much money it can raise by issuing shares. This limit is defined in the company’s Memorandum of Association (MOA).
Key points:
A company cannot issue shares beyond this limit
It can issue less than the authorized capital
The limit can be increased or decreased with proper approval
Authorized capital is different from the actual money raised, which depends on how many shares the company issues.
Example:
If a company has authorized capital of ₹25 lakh, it can issue shares up to ₹25 lakh, but it may choose to raise only ₹15 lakh.