What is Authorized Capital in a Private Limited Company?

A Private Limited Company after its incorporation decides the amount of authorized capital for the company and the value of shares that they will receive in return for their investment in the company. It is the maximum value of shares that a company can allot to its shareholders. The Authorized Capital is different from the Paid-Up Capital, and the authorized capital will always be more than the paid-up capital.

Charges for Authorized Capital

The allotment of the basic authorized capital of 1 Lakh by the Ministry of Corporate Affairs(MCA) needs a fee of Rs.5,000/-, and if the Private Limited Company needs to add up additional capital, then the fee varies based on the amount of the additional share of capital. The fees are as follows:

  • For each additional Lakh of capital, it is Rs. 4,000/- and this is applicable from 1lakh to 5Lakhs.
  • For each additional Lakh of capital ranging from 5 Lakh to 50 Lakh, the fee is R. 3,000/-
  • For an additional share of capital from Rs. 50 lakh to Rs. 1crore the fee is Rs. 1,000/- per lakh.
  • Beyond 1 crore the fee is Rs. 750/- per lakh of authorized capital.

There are some promoters who wish to issue shares that are equal to the value of investment in the Company, in such cases, there is a significant fee which is payable to the Ministry of Corporate Affairs for increasing the authorized capital of the company.

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