Authorised capital
What Authorised capital means, where you will meet it and what it means for your business.
DefinitionAuthorised capital is the maximum value of shares a company is permitted to issue under its MOA, and the figure on which MCA fees and stamp duty at incorporation are calculated.
Authorised capital is a ceiling, not money you must put in. A company with ₹10 lakh authorised capital can issue shares up to that value over time; what it has actually issued and received is its paid-up capital. You set the figure in the MOA at incorporation, and it drives two costs: the MCA incorporation fee, which is nil up to ₹15 lakh, and stamp duty, which varies by state. Most startups begin with ₹1 lakh to 10 lakh and raise it before a funding round, because shares cannot be issued beyond the ceiling. Raising authorised capital needs an ordinary resolution, Form SH-7 and the extra fee on the increase. Setting it higher than you need at the start only costs money in some states, so keep it modest.