[amp_mcq option1=”Issued capital” option2=”Called capital” option3=”Authorised capital” option4=”Paid-up capital” correct=”option3″]
The correct answer is: C. Authorised capital
The authorised capital is the maximum amount of capital that a company is allowed to raise. It is mentioned in the capital clause of the memorandum of association of a company. The authorised capital is divided into shares, which are the units of ownership in a company. The number of shares and their face value are also mentioned in the memorandum of association.
The issued capital is the number of shares that a company has actually issued to the public. The called capital is the amount of money that the company has called on the shareholders to pay for their shares. The paid-up capital is the amount of money that the shareholders have actually paid for their shares.
The authorised capital is always greater than or equal to the issued capital. The called capital is always greater than or equal to the paid-up capital. The authorised capital, issued capital, called capital, and paid-up capital are all important terms in company law.