In a Private Limited Company, the authorized capital is the maximum amount of capital that the company is permitted to issue to shareholders. The authorized capital is typically specified in the company’s articles of association and is expressed in terms of the number of shares and their par value.
The authorized capital of a Private Limited Company serves as a limit on the amount of capital that the company can raise from shareholders. The company can only issue shares up to the authorized capital, and any additional capital must be approved by the shareholders and the Securities and Exchange Commission of Pakistan (SECP).
The authorized capital of a Private Limited Company is not the same as the issued capital, which is the amount of capital that the company has actually raised from shareholders. The issued capital is typically lower than the authorized capital, as the company may not have issued all of the shares that it is permitted to issue.
It’s worth noting that the authorized capital of a Private Limited Company may be increased or decreased by a resolution of the shareholders, subject to the approval of the SECP.