Paid-up capital is the amount of money a company actually receives from its shareholders in exchange for shares it issues. Specifically, it is the real money invested by shareholders that forms part of the company’s share capital. In short, it is the capital a company already holds, not the maximum it can raise.
The rules vary by company type. For private and public limited companies, there is no mandatory minimum paid-up capital requirement after the Companies (Amendment) Act, 2015, removed earlier limits. However, LLPs never had a concept of paid-up share capital in the first place because partners contribute capital directly instead of subscribing to shares.
In this guide, we cover the meaning of paid-up capital, its formula and components, and how it differs from authorized capital. Additionally, we explain the minimum paid-up capital requirements for each company type and how to manage them when you register a company. If you’re specifically planning OPC company registration in India, the absence of a minimum paid-up capital requirement makes it easier to get started with minimal upfront investment.
Key Takeaways
- Paid-up capital is the actual money shareholders pay to a company in exchange for shares, not the total capital it can raise.
- Indian companies no longer have a mandatory minimum paid-up capital under the Companies Act, 2013.
- Paid-up capital is always a part of share capital and cannot exceed authorized capital.
- Companies calculate paid-up capital based on shares issued and the amount paid per share.
- Paid-up capital plays a key role in financial credibility, investor trust, and business valuation.
- Companies can increase paid-up capital through share issuance and reduce it only through an NCLT-approved process under Section 66.
- You can verify a company’s paid-up capital online through the MCA master data portal.
- Paid-up capital does not include share premium and is recorded separately in financial statements.
Paid-Up Capital Formula (With Example)
You can calculate paid-up capital in two ways, depending on whether shareholders have paid in full.
- When shares are fully paid, use this formula:
Paid-up Capital = Number of Shares Issued × Face Value per Share
For example, if XYZ Pvt Ltd issues 50,000 equity shares with a face value of ₹10 each and shareholders pay the full amount, its paid-up capital is 50,000 × ₹10 = ₹5,00,000.
- When shares are only partly paid, use this version instead:
Paid-up Capital = Called-up Capital − Calls in Arrears
For example, if shareholders have paid only ₹7 of the ₹10 face value on each share, the paid-up capital is 50,000 × ₹7 = ₹3,50,000. The unpaid ₹3 per share is called “calls in arrears.”
Does Share Premium Count as Paid-Up Capital?
No, it does not. Under Section 2(64) of the Companies Act, 2013, paid-up share capital includes only the amount credited as paid-up on the face value of shares. Therefore, if a company issues shares above their face value, the premium does not count as paid-up capital. Instead, it is credited to a separate Securities Premium Account under Section 52.
For example, if a ₹10 share is issued at ₹15, only the ₹10 face value is paid-up capital, while the ₹5 premium is recorded separately.
Types of Share Capital: Where Paid-Up Capital Fits
Paid-up capital is one part of a company’s overall share capital structure. To understand its position, it is helpful to see how share capital moves from the maximum amount a company can issue to the amount shareholders have actually paid.
Refer to the table below to see how paid-up capital relates to other forms of share capital:
| Type of Share Capital | Meaning |
| Authorized Capital (Section 2(8)) | The maximum share capital a company can issue, as stated in its Memorandum of Association (MoA). |
| Issued Capital (Section 2(50)) | The portion of authorized capital offered to investors. |
| Subscribed Capital (Section 2(86)) | The portion of issued capital that investors agree to purchase. |
| Called-Up Capital (Section 2(15)) | The portion of subscribed capital that the company has requested shareholders to pay. |
| Paid-Up Capital (Section 2(64)) | The portion of called-up capital that shareholders have actually paid. |
Is Paid-Up Capital the Same as Share Capital?
No. Share capital is a broad term that refers to the total capital a company raises through shares. Paid-up capital is only the portion of share capital that shareholders have already paid for. As a result, paid-up capital forms part of a company’s share capital, not the other way around.
Why Having Adequate Paid-Up Capital Matters?
Paid-up capital strengthens a company’s financial foundation and improves its credibility in the market. To understand its importance clearly, it helps to see how it impacts financial stability, business trust, and future growth:
- Reflects actual shareholder investment, which improves credibility with banks, investors, and business partners.
- Strengthens the company’s capital base and supports long-term financial stability.
- Improves creditworthiness when applying for loans or external funding.
- Builds investor confidence by demonstrating strong financial commitment from shareholders.
- Supports business expansion by signaling financial readiness for future growth.
Overall, maintaining adequate paid-up capital helps a company build financial credibility and supports sustainable long-term growth.
Authorized Capital vs Paid-Up Capital: Key Differences
Authorized capital is the maximum amount a company can raise through shares. Paid-up capital is the portion of share capital that shareholders have subscribed to and paid for. The table below compares them across every key aspect:
| Basis | Authorized Capital | Paid-Up Capital |
| Meaning | The maximum share capital a company can issue | The capital shareholders have actually paid for issued shares |
| Legal definition | Section 2(8) | Section 2(64) |
| Where it appears | Capital clause of the MOA, and as a note in the financial statements | Shareholders’ equity in the main balance sheet |
| Usable funds | No, it is only a limit, not actual money | Yes, it is real money available for operations |
| How to change it | Increase by altering the MOA and filing Form SH-7 with the ROC under Section 61 | Increase by issuing more shares; reduce under Section 66 with NCLT approval |
| Relationship | Always equal to or greater than paid-up capital | Always equal to or less than authorized capital |
Suppose a company has an authorized capital of ₹20 lakh but has issued and received payment for shares worth only ₹5 lakh. In that case, its paid-up capital is ₹5 lakh. The remaining ₹15 lakh stays available for future fundraising, without any need to change the MOA.
Minimum Paid-Up Capital for Different Company Types
A common question is how much paid-up capital a company needs. For most company types in India, the answer is none. Since the Companies (Amendment) Act, 2015, there is no statutory minimum for paid-up capital.
The table below shows the position for each type:
| Company Type | Minimum Paid-Up Capital |
| Private limited company | No minimum. The 2015 Amendment removed it, so you can start with a nominal amount. |
| Public limited company | No minimum. The earlier ₹5 lakh requirement was removed in 2015, and there is no maximum either. |
| One Person Company (OPC) | No minimum. The ₹50 lakh cap that once forced conversion was removed in 2021. |
| Small company | No minimum to register. It is a category, not a requirement. |
| LLP | Not applicable. An LLP has capital contribution, not paid-up share capital, and no minimum. |
Small Company: A Maximum, Not a Minimum
A “small company” is not about a minimum capital. Instead, it is a category that unlocks lighter compliance. Under Section 2(85), effective 1 December 2025, a private company qualifies as a small company if its paid-up share capital does not exceed ₹10 crore and its turnover does not cross ₹100 crore. Both conditions must be met.
However, certain companies cannot be classified as small companies, even if they meet these limits. These exclusions include holding companies, subsidiary companies, Section 8 companies, and companies governed by any special Act. As a result, eligibility depends on both financial thresholds and statutory exclusions under the Act.
This threshold was raised from the earlier ₹4 crore and ₹40 crore limits. However, public companies, holding and subsidiary companies, Section 8 companies, and companies governed by a special Act cannot be small companies.
How to Increase Paid-Up Capital in Indian Companies?
A company increases its paid-up capital by issuing new shares and receiving payment from shareholders. However, the increase must stay within the authorized capital limit. If required, the company must first increase its authorized capital before issuing additional shares.
Step 1: Check Authorized Capital
The company must ensure that its authorized capital is sufficient for the proposed increase in paid-up capital. If it is not, the company must amend its MoA and file Form SH-7 with the Registrar of Companies (ROC).
Step 2: Obtain Internal Approvals
The board of directors approves the issuance of new shares. After that, shareholders approve the proposal through an Extraordinary General Meeting (EGM), wherever required under the Companies Act, 2013.
Step 3: Issue Shares and Receive Payment
The company issues new shares through methods such as rights issue, private placement, preferential allotment, or bonus issue, depending on its requirements.
The company then receives the share application money and completes the allotment process. Once the shares are allotted and payment is received, the paid-up capital increases accordingly.
Step 4: File ROC Forms
The company files Form PAS-3 (Return of Allotment) with the Registrar of Companies to report the increase in share capital. In some cases, it also files Form MGT-14 depending on the resolution passed.
The entire process to increase paid-up capital usually takes 7 to 20 working days.
Reduction of Paid-Up Capital
A company reduces its paid-up capital when it cancels, extinguishes, or restructures its share capital. As a result, the company’s share capital account decreases and reflects lower shareholder equity in the balance sheet.
A company cannot reduce its paid-up capital freely. Instead, it must follow a National Company Law Tribunal (NCLT)-approved statutory process under Section 66 of the Companies Act, 2013.
When Can a Company Reduce Paid-Up Capital?
A company may reduce its paid-up capital in the following situations:
- To write off accumulated losses
- To return excess capital to shareholders
- When it no longer requires surplus capital for operations
- To restructure or reorganize its capital base
- To adjust overvalued assets or liabilities
What is the Procedure for Reducing the Paid-Up Capital?
A company must follow a structured legal process approved by the NCLT:
1. Board Approval: The board of directors approves the proposal for the reduction of share capital.
2. Shareholder Approval: Shareholders pass a special resolution in an EGM.
3. NCLT Application: The company files an application with the NCLT for approval under Section 66.
4. Creditor Protection: The company prepares a list of creditors and settles objections. In some cases, the NCLT may also direct publication of notices to protect creditor interests.
5. Final Order and ROC Filing: After NCLT approval, the company files the order with the ROC to complete the process.
Reduction of paid-up capital requires strict regulatory approval and cannot be completed through internal company decisions alone. Therefore, companies must ensure proper legal compliance, creditor settlement, and NCLT approval before altering their share capital structure.
How to Check a Company’s Paid-Up Capital?
You can check a company’s paid-up capital online through the Ministry of Corporate Affairs (MCA) portal. This information is publicly available for all registered companies in India and reflects the latest ROC filings.
1. Visit the MCA Portal: Go to the official MCA website and open the “MCA Services” section. After that, select “View Company/LLP Master Data.”
2. Enter Company Details: Search for the company using one of the following:
- Company name
- Corporate Identity Number (CIN)
3. View Company Master Data: Select the company from the search results. The master data page will display key financial details, including:
- Authorized capital
- Paid-up capital
4. Verify Capital Information: Check the displayed capital values to view the company’s current paid-up capital. This information reflects filings submitted to the ROC, including Form PAS-3 for share allotments.
Legal Framework Governing Paid-up Capital
Paid-up capital is a fundamental aspect of a company’s financial structure, playing a critical role in ensuring legal compliance and fostering investor confidence. Under the Companies Act, 2013, the provisions governing paid-up capital are outlined to maintain transparency, protect shareholder interests, and ensure corporate flexibility. The legal framework by which the Paid-up Capital is governed is as follows:
Companies Act Provisions
The Companies Act, 2013, outlines several provisions related to paid-up capital for a private limited company. Section 3 specifies formation requirements, including capital structuring and minimum shareholder participation. The law mandates specific disclosure obligations regarding capital structure in various statutory filings.
Companies must follow established procedures for capital modification, including shareholder approvals and regulatory notifications. The Act also contains detailed regulations concerning shareholder rights related to their capital contributions, protecting investor interests while enabling corporate flexibility.
Compliance Requirements for Private Limited Companies
To maintain good standing, companies must fulfill four key compliance obligations:
- Documentation Management: Maintain comprehensive records of share issuance, including board resolutions, share certificates, allotment forms, and capital receipts.
- Financial Reporting: Accurately disclose paid-up capital in financial statements, balance sheets, and annual filings with the Registrar of Companies.
- Change Notifications: Promptly inform regulatory authorities about any alterations to capital structure through prescribed forms within mandated timeframes.
- Procedural Adherence: Follow legally established processes for capital modification, including obtaining necessary shareholder approvals and maintaining proper meeting minutes.
Need help with paid-up capital, company setup, or ROC compliance? RegisterKaro provides expert assistance for smooth filings, capital structuring, and compliance support so you can focus on growth without legal hassles. Contact us today for paid-up capital and company compliance support in India.
