Definitions for "Authorized capital"
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 authorized capital; its authorized 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 authorized capital. The authorized 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.
This is the maximum amount of capital that a company has been approved by its shareholders to issue. As and when required, this cap can be increased subject to shareholders' further approval.
See capital stock.