Authorized vs. Issued vs. Paid-Up Capital
Understanding the structure of company share capital is crucial for compliance, liability, and fundraising in Nepal.
Authorized Capital
The maximum limit of capital a company is legally allowed to issue to shareholders, as stated in the MoA.
Issued Capital
The portion of authorized capital that the company has actually offered and issued to shareholders.
Paid-Up Capital
The actual money received from shareholders in exchange for shares. This enters the company bank account.
Understanding Share Capital
The share capital of a private limited company is the lifeblood of the business. It funds operations, expenses, and new ventures. Shareholders are entitled to profits (dividends) and voting rights based on their capital contribution.
However, “Capital” isn’t a single number. It is broken down into three distinct legal concepts.
Let’s assume “ABC Tech Pvt. Ltd.” is registered in Nepal.
- The company sets a ceiling of Rs. 10 Lakhs in its MoA (Authorized).
- It decides to offer Rs. 5 Lakhs worth of shares to investors immediately (Issued).
- The investors have currently transferred Rs. 4 Lakhs to the bank (Paid-Up).
Quick Comparison
| Feature | Authorized Capital | Issued Capital | Paid-Up Capital |
|---|---|---|---|
| Definition | Maximum capital limit allowed. | Shares offered to public/investors. | Amount actually paid by investors. |
| Document | Stated in MoA & AoA. | Board Resolution / Return of Allotment. | Bank Voucher / Audit Report. |
| Flexibility | Can be increased by amending MoA. | Cannot exceed Authorized Capital. | Cannot exceed Issued Capital. |
Crucial Compliance Rule
Can Paid-Up Capital be more than Authorized Capital?
NO. Under no circumstances can the Issued or Paid-Up capital exceed the Authorized Capital. If you receive more investment than your Authorized limit, you must first file to Increase Authorized Capital at the OCR and pay the respective revenue (Rajaswa) before you can legally accept that money as share capital.