Authorised capital (also called registered capital) is the maximum value of shares a company is legally permitted to issue, as specified in its Memorandum of Association (MoA). It is a ceiling on capital issuance, not an amount the company has raised or intends to raise.
Authorised Capital ≥ Paid-up Capital (always)
A company cannot issue more shares than its authorised capital allows. To do so, it must pass a shareholder resolution and file an increase with the Registrar of Companies — a routine step before any significant funding round.
Authorised vs [paid-up capital](/glossary/paid-up-capital)
| | Authorised | Paid-up | |---|---|---| | Definition | Legal maximum | Actually issued | | Significance | Headroom for future issuance | Current share count | | Set in | Memorandum of Association | Shareholder resolutions |
Why it matters for unlisted shares
A company with authorised capital far above paid-up capital has headroom to issue new shares without shareholder approval on capital structure. A company near its authorised limit must hold an EGM before raising — a process that takes time.
Example: A company with ₹50 crore authorised capital and ₹7 crore paid-up capital can issue up to ₹43 crore more at face value without changing its MoA.