What is (or was) The Authorised Share Capital?

The authorised share capital was abolished as part of the Companies Act 2006. However that’s not stopped us from being asked what this was. So here you go:

Before the Companies Act 2006 a limited company could be formed without allocating all of its shares. So a company could be formed with an authorised share capital of ten shares worth £1 each but with an issued share capital of one share worth £1, meaning that only one of the ten shares were issued to a shareholder, therefore leaving another nine shares available to be allocated. The authorised share capital detailed all of the shares in the company, both allocated and non-allocated.

Now when forming a company you simply choose how many shares to allot to each shareholder with nothing leftover. If you wish to add more shares post company formation you can file the “SH01: Return of allotment of shares” form.

This post was brought to you by Mathew Aitken at Companies Made Simple – The Simplest Company Formation Service

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