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Legal Terms – Authorized Capital
Authorized capital, also known as nominal capital, refers to the maximum amount of capital that a company is legally allowed to issue and have outstanding. The aggregate value of the shares that
A registered corporation is granted the authority to issue securities as a means to raise funds. The statement of capital and initial holdings, required for the registration of a company, must include the allowed capital, as well as the number and nominal value of the shares. This is in accordance with section 10 of the Companies Act 2006. As an illustration, a total capital of £120,000 can be allocated into 120,000 shares with a nominal value of £1 each. If the firm has issued 100,000 of these shares, its issued capital is £100,000. It also has the flexibility to issue further shares in the future without increasing its capital (see change of share capital). If the firm has received the entire nominal value of the shares issued, then its paid-up capital is equal to its issued capital. Uncalled capital refers to the situation where a corporation has not yet requested payment of the entire nominal value. Reserve capital refers to the portion of the uncalled capital that the firm has decided, through a special resolution, will only be called upon in the event of liquidation. According to section 763 of the Companies Act 2006, a public company is required to have a minimum authorized share capital of £50,000 or the equivalent amount in euros.
Authorized capital, also known as nominal capital, refers to the maximum amount of capital that a company is legally allowed to issue and have outstanding. The aggregate value of the shares that
A registered corporation is granted the authority to issue securities as a means to raise funds. The statement of capital and initial holdings, required for the registration of a company, must include the allowed capital, as well as the number and nominal value of the shares. This is in accordance with section 10 of the Companies Act 2006. As an illustration, a total capital of £120,000 can be allocated into 120,000 shares with a nominal value of £1 each. If the firm has issued 100,000 of these shares, its issued capital is £100,000. It also has the flexibility to issue further shares in the future without increasing its capital (see change of share capital). If the firm has received the entire nominal value of the shares issued, then its paid-up capital is equal to its issued capital. Uncalled capital refers to the situation where a corporation has not yet requested payment of the entire nominal value. Reserve capital refers to the portion of the uncalled capital that the firm has decided, through a special resolution, will only be called upon in the event of liquidation. According to section 763 of the Companies Act 2006, a public company is required to have a minimum authorized share capital of £50,000 or the equivalent amount in euros.
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