What’s the difference between Authorized and Paid Up Share Capital:


Let’s clarify the concepts of authorized share capital and paid up share capital.


For those who don’t know authorized share capital is the amount of share capital a company can raise. If the maximum authorized share capital of a company is $100,000 then the company can only issue or allocate (eg by private sale) $100,000 worth of shares (eg 100,000 shares of one US Dollar each or 10,000 shares of Ten US dollars each or say 1,000,000 shares of say 10 cents each, etc). If the maximum authorized share capital is $US1,000,000 (1 Mill USD) then a company can issue and sell $1,000,000 worth of shares (eg 1,000,000 shares of one US Dollar each or 100,000 shares of ten USDollars each etc or ten million shares of 10 cents each).


It is obviously in many clients’ interests to have a higher authorized share capital (we usually recommend one million dollars authorized share capital as standard) as it means you can raise (or sell shares to the value of) of a higher amount eg up to one million USD (instead of just 100,000) as-of-right (and without having to come back to the registry later to amend the Memo and Articles which carries a cost).


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