Four different figures — authorised, issued, subscribed, and paid-up capital — all describe “share capital,” and all four routinely appear together on a company’s MCA master data, balance sheet, and Memorandum of Association. They are not interchangeable, and they are not usually equal to each other. This article explains what each term actually means and why the gaps between them exist.

The Four Terms, in the Order They Actually Apply

Think of these four figures as a funnel — each one is a subset of (or, in the case of authorised capital, a ceiling on) the one before it.

1. Authorised Capital (or Nominal Capital)

The maximum amount of share capital a company is permitted to issue, as stated in its Memorandum of Association. This is a ceiling, not a commitment — a company with ₹1 crore authorised capital has not raised ₹1 crore, and may never issue shares up to that full amount. Increasing authorised capital beyond what the Memorandum currently permits requires altering the Memorandum, which involves a shareholder resolution and, depending on the company’s articles, a filing with the Registrar.

2. Issued Capital

The portion of authorised capital that the company has actually offered for subscription to investors — the shares it has decided to put on offer, whether at incorporation or in a subsequent round. Issued capital can never exceed authorised capital; if a company wants to issue more shares than its current authorised capital permits, it must first increase the authorised capital.

3. Subscribed Capital

The portion of issued capital that investors have actually applied for and been allotted. In a straightforward incorporation or private placement where every share offered finds a taker, issued capital and subscribed capital are identical. In a public offer, though, it’s entirely possible for issued capital to exceed subscribed capital — the company offered more shares than were ultimately taken up.

4. Paid-up Capital

The amount actually received by the company against the shares allotted. Where shares are issued and fully paid for at the time of allotment (the norm for private companies), subscribed capital and paid-up capital are the same figure. Where shares are partly paid — an amount called up but not yet fully paid by the shareholder — paid-up capital is lower than subscribed capital, and the difference represents calls-in-arrears.

Why the Four Figures Usually Differ

For most closely-held private limited companies, issued, subscribed, and paid-up capital are typically identical to each other, since shares are issued only when investors are ready to take them up and pay in full immediately. It’s authorised capital that stands apart, deliberately set higher than current requirements to give the company headroom to issue more shares later — through further allotments, ESOP pools, or a funding round — without needing to amend the Memorandum each time.

A wider gap between all four figures shows up more often in:

  • Public companies raising capital through public offers, where subscription can fall short of the amount offered
  • Companies with partly-paid shares, where subscribed capital and paid-up capital diverge because calls have been made but not fully paid
  • Companies that have grown through multiple funding rounds without periodically “cleaning up” their authorised capital to match actual issued capital, leaving a large unused authorised ceiling

Worked Example

A company is incorporated with:

  • Authorised capital: ₹10,00,000 (10,00,000 equity shares of ₹1 each)
  • Issued capital: ₹5,00,000 (the company decides to offer only 5,00,000 shares at incorporation, keeping the remaining 5,00,000 in reserve for a future round)
  • Subscribed capital: ₹5,00,000 (all 5,00,000 offered shares are taken up by the two founders)
  • Paid-up capital: ₹5,00,000 (both founders pay for their shares in full at allotment)

Here, issued = subscribed = paid-up, but authorised capital sits at double that figure — headroom the company can use later without a fresh Memorandum amendment, as long as the next issuance stays within that ₹10,00,000 ceiling.

Where These Figures Appear

  • Memorandum of Association — states the authorised capital and its division into shares of a fixed nominal value.
  • MCA Company Master Data — displays both authorised capital and paid-up capital as separate line items; a large gap between the two is visible at a glance to anyone checking the company’s public record.
  • Balance Sheet — paid-up capital is what appears as “share capital” under equity in the financial statements; authorised capital is disclosed separately, typically in the notes to accounts.
  • Form SH-7 — filed whenever authorised capital is altered (increased, or reclassified between share types); see Form SH-7: Notice of Alteration of Share Capital.

Statutory Publication Requirement

Section 60 of the Companies Act, 2013 requires that wherever a company publishes its authorised capital in any notice, advertisement, official publication, business letter, bill head, or similar document, it must, with equal prominence, also state the subscribed and paid-up capital — preventing a company from advertising a large authorised capital figure to appear better-capitalised than it actually is, without also disclosing what has actually been paid in.

A Common Misreading

A frequently repeated mistake is treating authorised capital as a measure of the company’s financial strength or actual funds raised. It is neither — authorised capital is a ceiling set out in a constitutional document, not a statement of cash received, revenue, or net worth. A company with ₹1 crore authorised capital could have ₹1 lakh paid-up capital and be a small, early-stage business; conversely, a company can be well-funded through debt, retained earnings, or share premium without its authorised capital reflecting that at all. Paid-up capital, not authorised capital, is what actually sits on the balance sheet as contributed equity.

Key Takeaways

  • Authorised capital is a ceiling set in the Memorandum of Association; issued, subscribed, and paid-up capital are all subsets of that ceiling, in that order.
  • For most private companies these three subset figures are identical, since shares are typically issued, subscribed, and paid up in full simultaneously — it’s authorised capital that’s usually set deliberately higher to allow headroom for future issuances.
  • Section 60 requires equal-prominence disclosure of subscribed and paid-up capital wherever authorised capital is published — a safeguard against overstating financial strength.
  • Authorised capital is not a measure of funds actually raised; paid-up capital is the figure that reflects money the company has actually received against its shares.