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Get Started in Shares by Glen Arnold

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Authorised, issued and par values

When a company is created, the original shareholders will decide the number of shares to be authorised (the authorised capital). This is the maximum amount of share capital that the company can issue (unless shareholders subsequently vote to change the limit). In many cases, firms do not issue up to the amount specified.

For example, Green plc has authorised capital of £4m of ordinary shares. However, the company has not issued all the ordinary shares that its shareholders have given permission to be created. The issued ordinary share capital stands at only £2.5m, leaving £1.5m as authorised but unissued ordinary share capital. This allows the directors to issue the remaining £1.5m of capital without being required ...

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