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Applicability of Authorised capital

Sindhuja Sivaraman (Student) (115 Points)

08 February 2023

Hello everyone,

Is it possible that the company limited by shares having zero authorized and issued capital?

Please explain.

Thank you.

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2 Replies

Ayush (Executive ) (6760 Points)
Replied 08 February 2023

Yes, it is possible for a company limited by shares to have zero authorized and issued capital.

In some cases, a company may choose to have a zero authorized capital, which means that it is not authorized to issue any shares. In other cases, a company may have a small authorized capital but choose not to issue any shares, keeping the issued capital also at zero.

However, it's important to note that having zero authorized and issued capital may limit the company's ability to raise capital through the issuance of shares. It may also affect the company's ability to pay dividends to its shareholders, as there may be limited funds available for distribution.