ByWhat is Authorized Capital?
Authorized capital is the maximum amount of shares that a company can issue. It is the amount of money that the company is authorized to raise from investors. Authorized capital is usually stated in the company’s articles of association.
What is Paid-up Capital?
Paid-up capital is the amount of money that has been invested in a company by its shareholders. It is the amount of money that the company has actually received from investors. Paid-up capital is usually less than authorized capital because not all of the authorized shares are always issued.
Difference between Authorized Capital & Paid up Capital
The main difference between authorized capital and paid-up capital is that authorized capital is the maximum amount of shares that a company can issue, while paid-up capital is the amount of money that has been invested in the company by its shareholders.
Authorized Capital
- Authorized capital is the maximum amount of shares that a company can issue.
- It is the amount of money that the company is authorized to raise from investors.
- Authorized capital is usually stated in the company’s articles of association.
Paid-up Capital
- Paid-up capital is the amount of money that has been invested in a company by its shareholders.
- It is the amount of money that the company has actually received from investors.
- Paid-up capital is usually less than authorized capital because not all of the authorized shares are always issued.
Examples
- A company has an authorized capital of 100,000 shares.
- The company issues 50,000 shares to investors.
- The company’s paid-up capital is 50,000.
Conclusion
Authorized capital and paid-up capital are two important terms that are used in corporate finance. It is important to understand the difference between these two terms in order to make informed investment decisions.
