What is Authorized, Issued and Paid-Up Capital?
Before directly heading into definitions, first make clear that What are shares? and Why a company needs funding? When a new business starts operating, the most crucial time for it is the starting phase and handling the cashflow. Because 80% of startup fail just because of lack of investment. So, a business needs funding. It could come from savings, angel investment or venture capitalist. For investment, a company issue the shares which represent a part or ownership in the company. To hold the share of the company, a shareholder must pay for it in cash or in some kind of service a company needs. So that, the money can be used for some operation expenses. Now, heading into the definitions and learning more about capital, lets dive deeper into this. What is Authorized Capital? A company has to register its maximum amount of capital to the Registrar of Companies(RoC). It means upto that amount a comapany is authorized to raise the capital. That is why it is called Authorized Capit