{"id":32145,"date":"2021-06-24T17:54:57","date_gmt":"2021-06-24T12:24:57","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=32145"},"modified":"2021-10-26T16:42:39","modified_gmt":"2021-10-26T11:12:39","slug":"authorised-share-capital-for-company-registration","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/authorised-share-capital-for-company-registration\/","title":{"rendered":"An Outlook on Authorised Share Capital for Company Registration"},"content":{"rendered":"\n<p class=\"has-drop-cap\">While the Companies Act, 2015 has got rid of the prerequisite for minimum paid-up capital, the requirement for maintaining a basic authorised share capital is still intact. In this write-up, we shall look at the prerequisites regarding the authorised share capital for <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>company registration<\/strong><\/a> along with other crucial details. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/authorised-share-capital-for-company-registration\/#What_constitutes_the_Companys_Capital_Structure\" >What constitutes the Company\u2019s Capital Structure?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/authorised-share-capital-for-company-registration\/#Is_it_possible_for_issued_capital_to_surpass_the_authorised_capital\" >Is it possible for issued capital to surpass the\nauthorised capital?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/authorised-share-capital-for-company-registration\/#What_is_the_legal_way_of_raising_Authorised_Share_Capital\" >What is the legal way of raising Authorised Share Capital?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/authorised-share-capital-for-company-registration\/#How_Start-ups_in_India_Raise_Authorised_Capital\" >How Start-ups in India Raise Authorised Capital?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/authorised-share-capital-for-company-registration\/#Registration_Fees_regarding_the_Authorised_Share_Capital\" >Registration Fees regarding the Authorised Share Capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/authorised-share-capital-for-company-registration\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_constitutes_the_Companys_Capital_Structure\"><\/span>What constitutes the Company\u2019s Capital Structure?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>A company\u2019s capital structure can be bifurcated into two important categories: <\/strong><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Authorised Share Capital<\/h3>\n\n\n\n<p>Authorised share capital refers to the\nmax. portion of the capital for which the firm might issue shares to its\npromoters or shareholders. The authorised share capital is a part of its MOA\nunder the capital clause. This is generally sorted out before incorporation.\nBut, firms do have the alternative of procuring authorised share capital by the\nfollowing steps. <\/p>\n\n\n\n<p>For example, suppose a firm name ABC\nprivate limited holds an authorised share capital worth Rs 20 lakhs and has\nissues shares for Rs 15 lakhs. Similarly, in such a scenario, it can issue\nshares worth Rs 5 lakhs without raising or altering its initial authorised\nshare capital. But, once it surpasses INR 20 lakhs, it will have to escalate\nits authorised share capital before prior to the issuance of any more shares to\nits shareholders. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Paid-up Share Capital<\/h3>\n\n\n\n<p>Paid-up share capital denotes an amount\nfor which the firm issued shares to shareholders after they made the required\npayment to the firm. In addition to that, for any firm at any instance, the\npaid-up capital must either be less than or equivalent to its authorised share\ncapital. <\/p>\n\n\n\n<p>Moreover, the firm is not eligible to issue share shares beyond its authorised share capital limit. Furthermore, the paid-up capital must find its way to the company\u2019s account within 30 days of the shares\u2019 allotment. Owing to the advent of the <strong>Companies Amendment Act 2015<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Indian_company_law\"><strong>[1]<\/strong><\/a><\/sup>, the requirement for maintaining a minimum capital requirement for privately-held firms has been waived off. <\/p>\n\n\n\n<p>Likewise, the requirement for maintaining a paid-up\ncapital for the public company has been removed. Now such establishments can be\nset up with even INR1000 as paid-up capital. Moreover, to modify the mini.\npaid-up capital for an organization, the RoC must be updated, and the data related\nto the update becomes a part of the company\u2019s master data. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Subscribed Capital<\/h3>\n\n\n\n<p>Subscribed capital refers to a part of\nissued capital or the paid-up capital that the shareholders have assured to\ncontribute via payment. As a result of partial commitment, the shareholders are\nonly required to pay out the unpaid amount on the share subscribed. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_it_possible_for_issued_capital_to_surpass_the_authorised_capital\"><\/span>Is it possible for issued capital to surpass the\nauthorised capital? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before commencing a new company, either public or private, the promoters &amp; investors require to decide on the amount of authorised share capital. This is because the authorised share capital limit decides how many shares they will get against their investment. <\/p>\n\n\n\n<p>Similarly, the outstanding shares are\nthe shared that have already been issued to the shareholders. Henceforth, since\nthe authorised capital establishes the limit for the value of such shares, the\nissued or paid-up capital can never surpass the authorised share capital.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_legal_way_of_raising_Authorised_Share_Capital\"><\/span>What is the legal way of raising Authorised Share Capital?\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Ministry of Corporate Affairs, i.e. MCA charges a sum of Rs 5000 to allot a mini. authorised capital of Rs 100000 to a private company. For further augmentation of authorised capital, the shareholders are required to pay a supplementary fee as shown in the table below. <\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>S.No<\/strong>\n  <\/td><td>\n  <strong>Additional\n  Amount (INR) <\/strong>\n  <\/td><td>\n  <strong>Fees\n  Charged (INR<\/strong>\n  <\/td><\/tr><tr><td>\n  1\n  <\/td><td>\n  The\n  minimum share capital of INR 1 lakh&nbsp;\n  <\/td><td>\n  Five\n  thousand \n  <\/td><\/tr><tr><td>\n  2\n  <\/td><td>\n  Additional\n  1 lakh between INR 1 lakh and INR 5 lakhs\n  <\/td><td>\n  Four\n  thousand per lakh\n  <\/td><\/tr><tr><td>\n  3\n  <\/td><td>\n  Additional\n  1 lakh between INR5 lakhs and INR 50 lakhs\n  <\/td><td>\n  Three\n  thousand per lakh\n  <\/td><\/tr><tr><td>\n  4\n  <\/td><td>\n  Additional\n  1 lakh between INR50 lakhs and INR1 crore\n  <\/td><td>\n  One\n  thousand per lakh\n  <\/td><\/tr><tr><td>\n  5\n  <\/td><td>\n  Additional\n  1 lakh beyond INR1 crore\n  <\/td><td>\n  Seven\n  hundred and fifty per lakh\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Start-ups_in_India_Raise_Authorised_Capital\"><\/span>How Start-ups in India Raise Authorised Capital?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Most start-ups lack initial funding to\npropel further. Therefore, they fail to pay out a large sum to augment their authorised\nshare capital while the incorporation process. Therefore, most promoters are left\nwith no other option than paying the minimum required authorised share capital\nof INR 1 lakh. Hence, they kept the share\u2019s issuance threshold within the said\namount. Moreover, the leftover capital is invested in the form of either a\nshare premium or an unsecured loan. <\/p>\n\n\n\n<p>Further, this helps them minimize the\nrequirement of augmenting share capital during the initial phase of their\ncompany\u2019s lifecycle. But, once the company thrives &amp; seeks debt or equity,\nthey stretched out the share capital limit for additional shares\u2019 issuance. Therefore,\nmost start-ups opt to commence their operation with lower required share\ncapital for private firms, &amp; gradually, augment the limit as and when they\nstart seeking debt or equity funding.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Registration_Fees_regarding_the_Authorised_Share_Capital\"><\/span>Registration Fees regarding the Authorised Share Capital<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>S.No<\/strong>\n  <\/td><td>\n  <strong>Share\n  Capital<\/strong>\n  <\/td><td>\n  <strong>Fee\n  (INR)<\/strong>\n  <\/td><\/tr><tr><td>\n  1\n  <\/td><td>\n  One\n  Person Company and other small companies having share capital less than INR 10\n  lakhs\n  For\n  every additional 10,000 after the first 10,00,000 &amp; below 50,00,000\n  <\/td><td>\n  2000\n  &nbsp;\n  200\n  <\/td><\/tr><tr><td>\n  2\n  <\/td><td>\n  Additionally,\n  registering a company in view of nominal share capital below 1,00,000\n  <\/td><td>\n  500\n  <\/td><\/tr><tr><td>\n  3\n  <\/td><td>\n  For\n  registering or submitting any document:\n  Nominal\n  share capital &lt; INR 1 lakh\n  Capital\n  ranging between 10,00,00 and 50,00,00\n  If\n  the Capital lies between 5,00,000 and 25,00,000\n  Capital\n  lies between 25,00,000 and 1,00,00,000\n  Capital\n  surpassing 1,00,00,000\n  <\/td><td>\n  &nbsp;\n  200\n  \n  300\n  400\n  500\n  600\n  <\/td><\/tr><tr><td>\n  4\n  <\/td><td>\n  If\n  the company lacks any share capital:\n  Share\n  value as cited under AoA &amp; number of shares falls below 20\n  Number\n  of shares ranging between 20 and 200\n  <\/td><td>\n  2000\n  &nbsp;\n  5000\n  <\/td><\/tr><tr><td>\n  5\n  <\/td><td>\n  Fee-related\n  to registration or modification via the Registrar\n  <\/td><td>\n  200\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Authorised share capital is an important asset for the company because it decides how much amount of share can be issues to the stakeholders. It important to note down that the legality related to such a capital usually mentioned under the capital clause of MOA. It\u2019s a good idea to increase such a capital periodically since it helps in compensating liqudity crunch triggered by the financial crisis. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-to-increase-the-authorized-share-capital-of-a-company\/\">Procedure to increase the authorized share capital of a company\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While the Companies Act, 2015 has got rid of the prerequisite for minimum paid-up capital, the requirement for maintaining a basic authorised share capital is still intact. In this write-up, we shall look at the prerequisites regarding the authorised share capital for company registration along with other crucial details. What constitutes the Company\u2019s Capital Structure? [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":32148,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[1830],"acf":{"service_id":"1"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":6462,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/32145"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=32145"}],"version-history":[{"count":16,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/32145\/revisions"}],"predecessor-version":[{"id":37114,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/32145\/revisions\/37114"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/32148"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=32145"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=32145"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=32145"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}