Authorized share capital,
Definition of Authorized share capital:
Authorized share capital is the number of stock units (shares) that a company can issue as stated in its memorandum of association or its articles of incorporation. Authorized share capital is often not fully used by management in order to leave room for future issuance of additional stock in case the company needs to raise capital quickly. Another reason to keep shares in the company treasury is to retain a controlling interest in the business.
The maximum value of securities that a company can legally issue. This number is specified in the memorandum of association (or articles of incorporation in the US) when a company is incorporated, but can be changed later with shareholders approval.
Authorized share capital may be divided into (1) Issued capital: par value of the shares actually issued. (2) Paid up capital: money received from the shareholders in exchange for shares. (3) Uncalled capital: money remaining unpaid by the shareholders for the shares they have bought. Also called authorized capital, authorized stock, nominal capital, nominal share capital, or registered capital.
Depending on the jurisdiction, authorized share capital is sometimes also called "authorized stock," "authorized shares" or "authorized capital stock." In order to be fully understood, authorized share capital must be viewed in a context where it relates to paid-up capital, subscribed capital and issued capital. Although all these terms are interrelated, they are not synonyms.
How to use Authorized share capital in a sentence?
- Authorized share capital refers to all the shares issued for a company.
- Companies often hold back a portion of their authorized share capital for future financing needs.
- A company's authorized share capital will not increase without shareholder approval.
Meaning of Authorized share capital & Authorized share capital Definition