Authorized Capital

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Related to authorized shares: authorized capital, Outstanding shares, Issued shares

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 ?
In the meantime, the board is exploring possible alternatives specific to the over-issuance, including without limitation, increasing the number of authorized shares and/or a reverse split, any of which would require a majority vote of the shareholders.
The company had previously increased its authorized shares to 500 Million in anticipation of certain pending acquisitions that may have required issuance of stock, after the negotiations of these acquisitions the stock will not be required as the acquisitions will be funded from cash flow.
Global which would increase the number of authorized shares of Class A Common Stock from 7 million to 28 million, Class B Common Stock from 2.
as its auditors, the adoption of a Stock Option Award Plan authorizing the grant of options to purchase 150 million shares of the company's common stock, and an approval to an amendment to the company's certificate of incorporation to increase the number of authorized shares of common stock from 1,950,000,000 to 5,000,000,000.
Allergan's Board of Directors believes that the proposed increase in the number of authorized shares of common stock will enhance Allergan's flexibility in connection with a stock split or other corporate purposes.
Family Room Entertainment Corporation filed a preliminary proxy on July 19, 2006, which set a date for a special meeting on August 29, 2006, for shareholders to vote on a proposal to increase the authorized shares from 200 million to 2 billion shares.
With this first round of the share buy back plan, it will reduce the company's authorized shares to 142 million.

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