Share capital is the money a company raises by issuing shares to its owners. Authorised capital is the ceiling stated in the MOA up to which shares can be issued; paid-up capital is what shareholders have actually subscribed and paid. India has no minimum capital requirement — a private limited company can be incorporated with any amount, commonly ₹1 lakh or less.
The distinction matters in practice. MCA fees and stamp duty at incorporation scale with authorised capital, so founders usually start modest and increase it later by ordinary resolution (filed in form SH-7) when a funding round or capitalisation needs headroom. Paid-up capital, on the other hand, drives classification: up to ₹10 crore paid-up capital (with turnover up to ₹100 crore) keeps you a small company (limits revised w.e.f. 1 December 2025), with lighter filings like MGT-7A and fewer board meeting requirements.
Every issue of shares after incorporation has paperwork: board and shareholder approvals, allotment in form PAS-3 within the prescribed time, stamped share certificates, and entries in the register of members. Money received for shares must come through banking channels, and private placements have their own strict procedure — taking cheques from acquaintances informally is how companies walk into section 42 penalties.
Common mistakes: showing money received from the promoter as share capital without actually allotting shares (it then sits as an unexplained credit, inviting income-tax scrutiny), and issuing shares above fair value without a valuation report. Also remember the subscription money for the first shares must hit the bank before INC-20A can be filed.
Reviewed to the law in force in FY 2026-27. General information, not advice — confirm the position for your facts before acting.