authorized share capital

Definition

Maximum value of securities that a firm can legally issue. This number is specified in the memorandum of association (or articles of incorporation in the US) when a firm is incorporated, but can be changed later with shareholders' approval. Authorized share capital may be divided into (1) Issued capital: par value of the shares actually issued. (2) Paid up capital: money received from the shareholders in exchange for shares. (3) Uncalled capital: money remaining unpaid by the shareholders for the shares they have bought. Also called authorized capital, authorized stock, nominal capital, nominal share capital, or registered capital.