Authorized Share Capital for Private Limited Company Registration in India

Author: Gaurav Bansal
by Gaurav Bansal
Posted: Oct 10, 2017

Authorized share capital is the maximum amount of share capital that a company can issue to its shareholders. There is no standard amount of the authorized share capital for business entities. Thus, the amount of authorized share capital varies from company to company. Further, the amount of the authorized share capital can be increased or decreased anytime with the prior approval of the shareholder.

For instance, if the authorized share capital of the Private Limited Company is 20 Lakhs it can issue up to only 20 Lakhs shares to its shareholders. However, a company can alter the amount of its authorized share capital by taking a prior approval of its shareholders. In order to increase the amount of the authorized share capital the prescribed amount of fees is required to be paid by the company. As the amount of the authorized share capital increases the amount of MCA fees also increases. The MCA fees to be paid by the companies is as follows-

  1. For Each Lakh of additional share Capital, INR 1 Lakh to INR 5 Lakhs; Charges per lakh of Authorized Capital is INR 4000/-
  2. For each lakh of additional share Capital, INR 5 Lakhs to INR 50 Lakhs; Charges per lakh of authorized Capital is INR 3000/-.
  3. For each lakh of additional share Capital, INR 50 Lakhs to INR 1 Crore; Charges per lakh of Authorized Capital is INR 10000/-.
  4. For each lakh of additional share Capital, Above INR 1 Crore; Charges per lakh of authorized Capital is INR 750/-.

Many small business entities try to limit the amount of their authorized share capital up to the minimum amount of Rs 1 Lakhs in order to save the extra cost of MCA fees. However, the large-scale enterprises keep the amount of their authorized share capital generally high in order to prevent the repeated interference of the government organization in their workings.

Further, in order to use certain prescribed words in their names, the companies are required to have an amount of minimum share capital as prescribed by the ministry of corporate affairs. The amount prescribed by the ministry of corporate affairs in this regards is as follows-

  1. 5 lakhs – For the words Hindustan, India, Bharat within the name (with or without bracket).
  2. 10 lakhs – For the words Enterprise, Products, Business and Manufacturing
  3. 50 lakhs – For the words International, Global, Universal, Continental, Intercontinental, Asiatic, Asia used within the name (with or without bracket).
  4. 50 lakhs – Hindustan, India, Bharat, being the first word of the name
  5. 1 Crore – International, Global, Universal, Continental, Intercontinental, Asiatic, Asia as first word, and the word Industry and Udhyog anywhere in the name.
  6. 5 crore —The word ‘Corporation’ anywhere in the name.

Difference between authorized share capital, issued capital and paid up capital

  • Authorized share capital- It the maximum amount of share capital that a company is empowered to issue to its shareholders.
  • Issued share capital- It is the part of authorized share capital that is actually issued by the company to its shareholders.
  • Paid up share capital- It is the part of the issued capital that has been paid up by the shareholders.
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Author: Gaurav Bansal

Gaurav Bansal

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Member since: Feb 16, 2016
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