Paid-up Capital

Paid-up capital is the total amount of money a company has actually received from its shareholders in exchange for the shares it has issued and allotted. Defined under Section 2(64) of the Companies Act, 2013, it represents the real equity funding held in the business, as distinct from capital that is merely authorised on paper or subscribed but not yet paid in. Paid-up capital can equal the company's authorised capital but can never exceed it.

Legal basis

Section 2(64) covers the aggregate amount credited as paid-up on issued shares. The Companies (Amendment) Act, 2015 removed the earlier minimum paid-up capital requirement, effective 29 May 2015. Before that, a private company needed at least Rs 1 lakh and a public company Rs 5 lakh. Today a company can be incorporated with a nominal amount, and even Rs 1 of paid-up capital is legally valid.

How it relates to other capital

• Authorised capital (Section 2(8)) is the ceiling stated in the MoA.
• Subscribed capital (Section 2(86)) is the portion of issued capital that investors agree to take up.
• Paid-up capital is the amount investors have genuinely paid against those subscribed shares.

Where it matters

Paid-up capital fixes each member's shareholding percentage, dividend entitlement, and voting rights. It also drives classification: a small company under Section 2(85) must have paid-up capital not exceeding Rs 4 crore and turnover not exceeding Rs 40 crore (thresholds revised in September 2022). Fresh allotments that increase paid-up capital are reported to the MCA in Form PAS-3 (Return of Allotment).