What is the authorized capital in a Private Limited Company?

Authorized capital is the maximum amount of share capital a company is authorized to issue to shareholders as per its constitutional documents.

How does paid-up capital for Pvt Ltd differ from authorized capital?

Paid-up capital for Pvt Ltd companies is the actual amount of capital received from shareholders in exchange for shares, whereas authorized capital is the maximum limit set for issuing shares.

Is there a minimum paid-up capital requirement for Private Limited Companies in India?

No, after the Companies Amendment Act, 2015, there is no minimum paid-up capital requirement for Private Limited Companies.

Can a company issue shares beyond its authorized capital?

No, a company cannot issue shares beyond its authorized capital without increasing the authorized capital through legal procedures.

How can a company increase its authorized capital?

By passing a board resolution, obtaining shareholder approval, amending the MOA, and filing the necessary forms with the ROC.

What is the significance of paid-up capital for Pvt Ltd companies?

Paid-up capital represents the actual funds available for the company’s operations and can affect its creditworthiness and investment potential.

Does increasing paid-up capital affect compliance requirements?

Yes, any changes in paid-up capital must be reported to the ROC, and statutory registers must be updated accordingly.

Is authorized capital reflected in the company’s financial statements?

Authorized capital is disclosed in the notes to accounts but does not appear on the balance sheet. Paid-up capital appears under shareholders’ equity.

Can paid-up capital exceed authorized capital?

No, paid-up capital cannot exceed the authorized capital. If more capital is needed, the authorized capital must be increased first.

What fees are associated with increasing authorized capital?

Fees include ROC filing fees and stamp duty, which are calculated based on the amount of the increase in authorized capital. By focusing on the paid-up capital for Pvt Ltd companies and providing an authorized capital explanation, this guide aims to simplify the complexities of understanding registration capital and clarify the capital difference in registration. Making informed decisions in these areas is essential for the successful establishment and growth of a Private Limited Company.