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Question
Explain the following term/concept.
Authorised capital
Solution
(a) This is the amount of capital stated in the capital clause of the Memorandum of Association. It is also known as "Nominal Capital" or "Registered Capital”.
(b) The company is entitled to raise finance by the issue of shares only up to the amount of authorised capital. However, the company can increase the amount of authorized capital by altering the Memorandum suitably.
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