Authorized capital, Paid-up Capital and Market Capital

Market capital

Market capitalization is just a fancy name for a straightforward concept: it is the market value of a company's outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding. For example, if ABC was trading at 20 per share and had a million shares outstanding, then the market capitalization would be 20 million (20 x 1 million shares). It's that simple.

Authorized capital

The authorised capital of a company (sometimes referred to as the authorised share capital or the nominal capital, particularly in the United States) is the maximum amount of share capital that the company is authorised by its constitutional documents to issue to shareholders. Part of the authorised capital can (and frequently does) remain unissued.

Paid-Up Capital

The total amount of shareholder capital that has been paid in full by shareholders.

Paid-up capital is essentially the portion of authorized stock that the company has issued and received payment for.

Relation between Authorized capital and Paid-up Capital

If company ABC has an authorized capital of 1000mn, and paid-up capital of 200mn, it is still allowed to issue a value of 800mn (1000mn-200mn=800mn).

How a Company increases its paid-up capital?

A company can increase its paid-up capital when it needs. Procedures are issuing right shares, issuing bonds and allotting stock dividend.