Granthara01.01.03Authorised, issued, subscribed and paid-up capital0%

01.01.03 · Authorised, issued, subscribed and paid-up capital

Bharat Foods Ltd has one crore shares. It is also allowed to have two crore. Both statements are true at the same time, and the gap between them is where a lot of beginner confusion lives.

How many shares does a company actually have?

There are four answers. Only one of them is the number that matters to you.

Part 01 · Ownership, Not Tickers
  1. 01.01.01 What a share of a company is
  2. 01.01.02 Ownership vs lending: equity vs debt
  3. 01.01.03 Authorised, issued, subscribed and paid-up capital
  4. 01.01.04 Why price alone tells you nothing about size
  5. 01.01.05 Market capitalisation
  6. 01.01.06 What a shareholder is entitled to
  7. 01.01.07 What a shareholder is not entitled to
  8. 01.01.08 Limited liability
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Learn

A ceiling, not a count

When a company is registered it names the largest amount of share capital it is ever allowed to issue. That is its authorised capital — a ceiling written into its own constitution.

Bharat Foods set that ceiling at two crore shares. It has never come close to it. A ceiling is not a count of anything; it is permission to go that far.

Raising the ceiling is possible, but the shareholders have to vote for it. That is deliberate. The people who already own the company get a say before more of it can be created.

Authorised capital tells you what a company may do. It tells you nothing about what it has done.

Learn

What was actually sold

Of that ceiling, Bharat Foods has issued one crore shares — put them out into the world in exchange for money. Investors agreed to take all one crore, so the subscribed number is also one crore.

Those two are often equal, and when they are, nobody mentions the difference. They come apart when an issue is not fully taken up: a company offers shares and buyers do not want all of them.

1 croreshares issued, subscribed and paid up — the number that is really out therecount it

Finally, paid-up capital is the money the company has actually received. Each Bharat Foods share has a face value of ₹10, and every one is fully paid, so the paid-up capital is ₹10 crore.

Face value is not price

That ₹10 is a legal bookkeeping figure fixed when the share was created. The market price is ₹500. The two numbers are unrelated, and the ₹500 is the one you pay.

See it

Four numbers, one inside the next

They are not four separate pools of shares. Each sits inside the one above it.

When an issue is fully taken up and fully paid — the ordinary case for a listed company — the bottom three are the same number.

Try it

Bharat Foods is authorised for 2 crore shares and has issued 1 crore. How many shares exist?

So when anyone tells you a company's share count, they mean the issued and paid-up number. For Bharat Foods that is one crore, and you own ten of them.

Before you read this, which was true?

Remember

Only issued shares exist. The authorised figure is a ceiling the company may never reach, and face value is bookkeeping — not what you pay.

Everything this chapter has told you, in order

  1. 01.01.01A share is a small unit of ownership in a real business. Buy one, and your money now rides on how that business performs.
  2. 01.01.02A lender is promised a fixed return and paid first. An owner is promised nothing and paid last, and keeps whatever is left.
  3. 01.01.03Only issued shares exist. The authorised figure is a ceiling the company may never reach, and face value is bookkeeping — not what you pay.
Next
01.01.04 — Why price alone tells you nothing about size

You now know Bharat Foods has one crore shares at ₹500. Neither number, on its own, tells you how big the company is.