What is an Authorized Capital


You should know first what is an authorized share capital? It is a maximum amount of capital that a company can achieve through the issues of shares to the shareholders. This is a capital amount with which a company is registered with the registrar of the company. Authorized capital is the limit. The company has to raise their shares up to that limit and not beyond that. The company cannot issue share beyond their maximum capital amount to the shareholders.

Key facts about share capital in Singapore

In Singapore, there are some specific key facts about share. These are:

  • The minimum capital of the share should be S$1.
  • The private limited companies should have between 1-50 shareholders.
  • Singapore allows the private limited companies for 100% foreign and local shareholding.
  • In any kinds of major currency, the share can be issued.
  • Between the shareholders, the share can be easily transferred.

Requirements of share capital

If you want to start a new business, then the most important question will come into your mind that how much the share capital should be introduced? Actually, share capital is the money that has been invested by the shareholders in the company in exchange of shares. There is a difference between paid up capital and share capital.

Paid up share capital is the amount of money for which shares were issued to the shareholders. Paid up capital should be less than the authorized capital. It cannot be higher than the authorized share capital. Paid up capital is referred to the actual amount deposited in company’s pocket.

The different types of shares:

There are different kinds of shares such as:

1. Ordinary share:

These types of shares do not carry special rights and restrictions. Different classes of ordinary shares have different nominal values. These kinds of shares offer voting right. One vote per share is the system.

2. Non-voting ordinary share:

In the ordinary share, the voting right is restricted. If certain conditions are met, then they can vote. In the non-voting ordinary shares, there is no right for the shareholders to give their vote.

3. Preference shares:

These kinds of shares have the right to receive a fixed amount of dividend every year. The company can choose to issue dividends to the preferred shareholders. These kinds of shares are mainly nonvoting.

4. Alphabet share:

The company can easily choose to make different classes of shares such as Class A, Class B and with this; they can also offer privileges to the shareholders.

5. Management share:

Actually in management share, they offer extra voting rights.

6. Redeemable preference share:

These kinds of shares are a combination of preference share and redeemable share.

7. Deferred share:

A company can issue share that will not pay dividend until all the classes of shares received a minimum amount of dividend.

Requirements for being a shareholder:

There are some specific laws in Singapore. According to this particular law, the private limited company must have limited their shareholders in between 1 to 50. They cannot exceed their shareholders not more than 50. An individual should purchase shares of company in order to become a shareholder. Eventually, they will be the owner of the company after buying the share of the company. Shareholders have also some responsibilities.

Rights and responsibilities of a shareholder:

There are various rights that shareholders can have. These are:

1. Right to share profitability:

The common shareholders have the right to participate in the company’s profitability. In terms of profit generated by the company, shareholders also have the right to income distribution through the dividend payments.

2. Right to buy new shares:

If the company issue new shares in public, then the current shareholder has the right to buy it.

3. Right to vote:

The shareholders can give their vote in company’s general meetings. It is the biggest right that they have. According to regulation, one shareholder can cast one vote.

4. Rights to dividend:

They also have the right to receive dividend payment.

Apart from these rights, there are so many rights and responsibilities that a shareholder has. They also have the responsibility to pay full amount of shares. They can present their voice and decisions in the general meetings of the company. Shareholder can easily transfer their shares according to the company’s rules and regulations.

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