what is authorised share capital

Authorized share capital, also known as authorized capital, registered capital, or nominal capital, refers to the maximum amount of share capital that a company is authorized by its constitutional documents to issue to shareholders. This limit is established during the companys incorporation process and is specified in the companys governing documents, such as the memorandum of association or articles of incorporation. The authorized share capital can be changed with shareholders approval and is used to limit or control the ability of the directors to issue or allot new shares, which may have consequences in the control of a company or otherwise alter the balance of control between shareholders. It is important to note that part of the authorized capital can remain unissued, and the part that has been issued to shareholders is referred to as the issued share capital of the company. The authorized share capital is a fundamental concept in corporate law and plays a pivotal role in shaping a companys growth trajectory. It is essential for companies to adhere to the authorized share capital limit to ensure compliance with regulatory provisions and maintain transparency in their capitalization structure.