What does 'Authorised Share Capital' represent?

What does 'Authorised Share Capital' represent?

• A. The actual number of shares issued
• B. The minimum number of shares to be issued
• C. The maximum value of shares the company is allowed to sell
• D. The par value of the issued shares

Answer: (C)

Authorized Share Capital is the upper limit set in the company’s constitution on the total nominal value of shares the company may issue. It represents the maximum amount of share capital the company is allowed to raise by issuing shares. The company can issue shares up to that limit, and any unissued authorized shares can be issued later if the company increases the authorized capital. This is different from the actual number of shares issued (that’s the issued share capital) and from the par value per share (which is the nominal value of each share). To raise beyond the current limit, the company would need to amend its articles of association and obtain the necessary approvals.

Authorized Share Capital is the upper limit set in the company’s constitution on the total nominal value of shares the company may issue. It represents the maximum amount of share capital the company is allowed to raise by issuing shares. The company can issue shares up to that limit, and any unissued authorized shares can be issued later if the company increases the authorized capital. This is different from the actual number of shares issued (that’s the issued share capital) and from the par value per share (which is the nominal value of each share). To raise beyond the current limit, the company would need to amend its articles of association and obtain the necessary approvals.