Short answer: Paid-up capital is the cash a company has actually collected from shareholders in return for its shares. It is the part of a company’s authorised capital that investors have subscribed to and fully paid for. The company does not have to repay this money, unlike a loan, and it appears as part of shareholders’ equity on the balance sheet.
Last reviewed: 15 November 2026
At a glance
| Term | What it means |
|---|---|
| Authorised capital | The maximum value of shares a company can legally issue, as set out in its Memorandum of Association |
| Paid-up capital | The cash actually received from shareholders for their shares |
| Shareholders’ equity | The section of the balance sheet where paid-up capital is recorded |
| Loan | Money the company borrows and must repay, unlike paid-up capital |
| Dividend | A return paid to shareholders out of the company’s earnings |
| Selling shares | Another way shareholders can earn a return, by selling their holding to someone else |
What does paid-up capital measure?
It measures money that has moved from investors to the company. When an investor subscribes to shares and pays the full amount for them, that payment counts toward paid-up capital. The figure is a record of what has been received, not what the shares are worth today.
Think of it as a running total of share money the company has in hand from its owners. A company’s paid-up capital changes only when shares are issued and paid for, so it does not rise or fall with the daily market price of those shares.
How is it different from authorised capital?
Authorised capital is the ceiling. It is the maximum value of shares a company can legally issue, and it is fixed in the company’s Memorandum of Association. Paid-up capital is the amount actually received, so it can never be higher than the authorised limit.
Hypothetical example (all figures invented for illustration): Suppose a company’s Memorandum of Association sets its authorised capital at Rs 10 lakh. It issues shares worth Rs 6 lakh, and investors pay the full Rs 6 lakh. Its paid-up capital is Rs 6 lakh, and the remaining Rs 4 lakh is room under the limit that the company has not yet received money for.
Where does it appear in the company’s accounts?
Paid-up capital is recorded on the balance sheet, the financial statement that lists what a company owns and owes at a given date. It sits within shareholders’ equity, which is the owners’ stake in the business. Reading the balance sheet, you can see how much of that equity came from share money paid in by shareholders.
Why does it matter that the money is not repaid?
A loan comes with a repayment obligation. Paid-up capital does not. The company can use the money it has received from shareholders for its business, and it is not required to pay that amount back to them on a fixed schedule.
This is the main difference between the two sources of funds. A loan adds to what the company owes. Paid-up capital is money that shareholders have put in as owners, and it does not become a debt.
How do shareholders earn a return?
Shareholders earn returns in two main ways. The first is through dividends, which are payments the company may make out of its earnings. The second is by selling their shares, where the return depends on the price the buyer pays.
Because the company does not repay paid-up capital, shareholders cannot simply ask for their money back from the company. Their route to cash is a dividend or a sale. Neither is guaranteed, and the price of shares can fall below what an investor paid.
What are the catches to watch for?
The first catch is that paid-up capital is a historical figure. It tells you how much money has been collected from shareholders over time, but it does not tell you the company’s current value or whether it is profitable. A large number on the balance sheet can sit alongside losses.
The second catch is that a higher paid-up capital does not mean a safer investment. It shows that owners have contributed more money, and nothing more. To judge a company, you would also need to look at its earnings, debts and other figures in its accounts.
The third catch is the gap between authorised and paid-up capital. A company with a high authorised limit may have a much lower paid-up figure, so the authorised number alone overstates the cash the company has received.
Frequently asked questions
Is paid-up capital the same as authorised capital?
No. Authorised capital is the maximum value of shares a company can legally issue, while paid-up capital is the amount actually received, which forms a subset of that limit.
Does a company have to repay paid-up capital?
No. Unlike a loan, paid-up capital is money the company does not have to repay.
How do shareholders get a return on paid-up capital?
Shareholders earn returns through dividends or by selling their shares.
Where is paid-up capital shown in a company’s accounts?
It is recorded on the balance sheet as part of shareholders’ equity.
Sources and last check
Facts in this article were checked against the sources below on 15 November 2026. Rules and figures can change; check the primary source before acting.
- dhan.co (broker education)
- kotakneo.com (broker education)
- upstox.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.