GlossaryStarting a BusinessCompliance & Legal
Authorised Capital
Definition
The maximum share capital a company is permitted to issue to its shareholders, as stated in its memorandum of association.
In plain language
Authorised capital is a ceiling, not money the company holds. It sets how much share capital the company may issue; the amount actually issued to shareholders and paid for is its paid-up capital, which can be anything up to that ceiling.
Because the limit is written into the company’s constitutional documents, issuing shares beyond it first requires the company to increase its authorised capital through the process company law sets out.
Example
A company might have a larger authorised capital than its paid-up capital, leaving room to issue more shares to new investors later without first changing the limit.