Authorized capital is the ceiling up to which a company is authorised to issue share capital under its constitutional framework; paid-up capital is the amount shareholders have actually paid on shares issued. Increasing authorized capital does not by itself give founders more cash or change ownership—ownership changes when shares are actually issued or transferred.
Which capital decision are you actually making?
You need room to issue more shares
Check whether existing authorized capital is sufficient and what corporate approvals/filings are required before increasing the ceiling.
You need cash in the company
Authorized capital alone does nothing. Decide whether funds will come through share issuance, debt or another legitimate route and document it correctly.
You want to change founder ownership
Model the number/class of shares and resulting percentages. Raising the authorized ceiling alone does not dilute anyone.
You are comparing incorporation cost
Check current statutory fee/stamp-duty implications for the actual jurisdiction and filing rather than using an old generic calculator.
Keep four concepts separate
| Concept | Plain meaning | Does it put cash in bank? |
|---|---|---|
| Authorized capital | Maximum share-capital ceiling currently authorised | No. |
| Issued capital | Shares the company has actually issued | Only through the associated subscription/payment mechanics. |
| Subscribed capital | Part of issued capital shareholders have agreed to take | Depends on payment status. |
| Paid-up capital | Amount actually paid on shares | Represents paid shareholder capital, subject to proper records. |
Ownership is a percentage problem
If two founders each hold 5,000 equal shares, they are 50/50 regardless of whether the authorized ceiling is 10,000 shares or much larger. If the company later issues new shares to one founder or an investor, percentages can change. Model the post-issue cap table before approving an allotment.
Increase authorized capital only when the structure requires it
Increasing the ceiling can involve approvals, filings and fees. Do it when there is a real need—such as a planned issuance that exceeds the current limit—not because a consultant says a higher number makes the company look bigger.
Official sources
- Ministry of Corporate Affairs
- MCA incorporation FAQs — official incorporation and filing guidance.