Answer Posted / ujjwal
The amount of equity capital, measured at par value, that a
company is allowed to raise by issuing shares, as set out
in its memorandum of association. A company does not
necessarily issue shares to the limit of its authorised
capital; its authorised capital might be $10 million and
its paid-up capital $5 million. On the other hand, by
issuing shares at a premium, a company can raise
considerably more cash than its authorised capital. The
authorised capital may be increased by the vote of a
general meeting of the company's shareholders, provided
this is permitted by the articles of association.
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