| Authorized Capital | Paid-up Share Capital |
| The maximum value of the shares distributed to shareholders is termed Authorized Capital. | The sum paid to the company by its shareholders for its funding is termed as Paid-up Share Capital. |
| To raise it, MoA must alter it according to the manner outlined above. | It is done through a private placement or the issuance of shares. |
| This capital is not responsible for calculating the company’s or business’s net worth. | The quantity of paid-up capital is utilized to cover business expenses. Paid-up capital is utilized in the net worth calculation instead of permitted capital. Although the balance sheet mentions both authorized and paid-up capital, only Paid up Capital is used to calculate the firm’s net value. |
| A minimum amount of capital is required for all new firms, which is Rs 1 lakh for private limited companies and Rs 5 lakh for public limited companies. | Paid-up capital cannot be the same as authorized capital; it must be significantly lower or equal. |
| A Company cannot issue shares in excess of its authorized share capital. | A company’s paid-up capital can never exceed its authorized capital, although it can be equal to it at any time. |
Conclusion
A company’s capital structure is divided into two categories: Authorised share capital and paid-up share capital. The total amount of shares a business can issue to its shareholders is its authorized capital, whereas the total amount of shares it has actually issued to its shareholders is its paid-up capital.
The total amount of shares a business can issue to its shareholders is its authorized capital, whereas the total amount of shares it has actually issued to its shareholders is its paid-up capital.