Authorized Capital

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Authorized Capital

 

the amount of capital specified in the charter or other agreement governing the establishment of capitalist enterprises, joint-stock companies, and various business associations as necessary to start up operations. The capital is raised through government appropriations, stock sales, and individual contributions (the last being extremely rare today). Authorized stock is also referred to as basic capital and share capital. In some countries (France, Federal Republic of Germany), enterprises and associations can be registered only if the amount of authorized capital conforms to certain legal requirements. In the USA and Great Britain, there are no such requirements.

The amount of authorized capital is much less than the amount of capital obtained through credits, investments, and bonds. Together with reserve capital, authorized capital constitutes the assets of an enterprise. Since the ratio of the authorized capital to the overall volume of economic activity is used in evaluating financial soundness, current high rates of inflation have led capitalist enterprises and banks to regularly increase the authorized capital by placing additional stock on the market.

E. D. ZOLOTARENKO

References in periodicals archive ?
"I hope that our stockholders understand how important it ?s to vote for the increase ?n authorized shares, not only to complete the settlement agreements, but also to ensure that the company can continue to fund its research and development and clinical programs well into the future."
Since the company presently does not have a sufficient number of authorized shares required to effectuate the stock split, the company's board has approved, and is recommending to its shareholders, an amendment to the company's Certificate of Incorporation increasing the number of authorized shares of common stock to 220M to handle the split and possible future capitalization needs.
Lpath Inc (OTCQB:LPTN), a provider of bioactive lipid-targeted therapeutics, announced on Thursday a 1-for-7 reverse split of the company's issued and outstanding Class A common stock and a corresponding decrease in the number of its authorized shares of Class A common stock.
WMIH expects to hold a special meeting of stockholders in October to obtain stockholder approval of the Proposed Amendment, which would effect the reverse stock split, proposed at a ratio of 1-for-12, reduce the total authorized shares of WMIH's common stock from 3,500,000,000 to 300,000,000 and increase the par value of each share of WMIH common stock from $0.00001 per share to $0.01 per share.
Pursuant to the laws of the State of Nevada, the company's state of incorporation, the company's Board of Directors has the authority to effect a reverse stock split without shareholder approval if the number of authorized shares of common stock and the number of outstanding shares of common stock are proportionally reduced.
At their special meeting, Meta shareholders also approved a proposal to increase the number of authorized shares of Meta common stock from 30 million to 90 million, for the purpose of facilitating a proposed three-for-one forward split of issued and outstanding shares of Meta common stock through a stock dividend.
The reverse stock split will not reduce the number of authorized shares of common stock, or preferred stock, or change the par values of Fibrocell common stock or preferred stock.

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