Authorised capital, also called nominal or registered capital, is the maximum amount of share capital that a company is legally permitted to issue to shareholders, as specified in its Memorandum of Association (MoA) — the founding document filed with the Registrar of Companies. It represents an upper limit on fundraising through equity issuance and can be increased only through a formal resolution passed at a General Meeting of shareholders and subsequent amendment of the MoA, with necessary filings to the Ministry of Corporate Affairs. The authorised capital is typically set higher than the current paid-up capital to provide headroom for future capital raises without requiring shareholder approval each time. For investors, the gap between authorised capital and current paid-up capital indicates the company's remaining capacity to issue new shares — a large gap provides flexibility for future equity fundraising but also signals potential dilution risk if the management decides to issue shares up to the authorised limit. Under the Companies Act, 2013, authorised capital attracts a government stamp duty at the time of incorporation and each subsequent increase.
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