A company may need to increase its authorised share capital before issuing new equity shares and increasing paid-up capital. Authorised share capital is the total value of shares a company can issue, while paid-up capital is the total value of shares the company has issued. Paid-up capital can never exceed authorised capital. Hence, if a company having an authorised capital of Rs.10 lakhs and paid-up capital of Rs.10 lakhs would like to induct new shareholders, it can do so either by: .

  1. Increasing authorised share capital and issuing new shares. (or)
  2. Transferring shares from existing shareholders to the new shareholders.

In most cases, new shares are issued and authorised capital is increased.

Get in touch with a Spoton Advisor for assistance with increasing authorised share capital...