In relation to a company, Authorized Capital is the amount mentioned in the capital clause of the Memorandum of Association of the company. The authorized capital of a Company determines the number of shares a Company can issue to its shareholders. To the extent of the amount specified in a capital clause, the company can raise capital. If the company wants more capital then the capital clause has to be amended by the members by passing a special resolution at a general meeting. An increase in the authorized capital might as well be required for issuing new shares and/or infusing more capital into the Company.
A company may need to increase its authorised share capital before issuing new equity shares and increasing paid-up capital. Authorised share capital is the total value of shares a company can issue, while paid-up capital is the total value of shares the company has issued