UK Accounting Glossary
The total value of shares that the company could issue, as distinct from the up and paid up share capital.
A former requirement of the now repealed section 2(5)(a) of the Companies Act 1985 under which, before 1 October 2009, a company with share capital was required to state in its memorandum the amount of capital that the company was authorised by its shareholders to issue together with the number and nominal value of the shares into which it was divided.
Authorised share capital was the number of stock units (shares) that a company was allowed to issue as stated in its memorandum of association or within its articles of incorporation.
The authorised share capital (or nominal share capital) can be described as the maximum amount of share capital that a company was authorised by its Constitution / Memorandum & Articles of Association to issue (allocate) to its shareholders. A proportion of the authorised share capital usually remained unissued.
There is no longer a requirement for a company to include its authorised share capital in its memorandum, and directors may now increase share capital simply by allotting new shares.
The Companies Act 2006 abolished the need for companies limited by shares to have an authorised share capital. This change took effect on 1 October 2009 and was subject to transitional rules for existing companies.
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Definitions for Authorised Share Capital are sourced/syndicated from:
This glossary post was last updated: 26th December 2018.