By
August 26, 2026
What Is the Difference Between Issued Shares and Authorised Share Capital?
Issued shares are shares that a UK limited company has actually allocated to its shareholders. Authorised share capital was the maximum value of shares that a company was permitted to issue under its constitution.
The key difference is that issued shares represent actual ownership, while authorised share capital represented a historic upper limit on how many shares a company could issue.
Authorised share capital was abolished for UK companies under the Companies Act 2006. Modern private limited companies therefore do not normally need to set a maximum amount of authorised capital.
Issued shares are shares that have been allotted to shareholders and form part of the company’s current share capital.
They determine:
For example, if a company has issued 100 identical ordinary shares and one person owns 60, that person owns 60% of the company’s issued shares.
Issued share capital is the total nominal value of the shares that the company has issued.
For example, if a company issues 100 ordinary shares with a nominal value of £1 each, its issued share capital is £100.
If it issues 1,000 shares with a nominal value of £0.01 each, its issued share capital is £10.
Issued share capital is not the same as the company’s market value. A company with issued share capital of £100 could have a business value that is much higher or lower.
Authorised share capital was the maximum nominal value of shares that a company was permitted to issue.
For example, a company could have:
The company could generally issue more shares up to its authorised limit, provided it followed the relevant approval and allotment procedures.
If the company wanted to issue shares above that limit, it would first need to increase its authorised share capital.
No. The Companies Act 2006 abolished the statutory concept of authorised share capital. Companies formed under the current system do not normally need to state a maximum number or total nominal value of shares they are permitted to issue.
The reform was intended to simplify company share-capital rules. Companies Act 2006 explanatory notes
A modern private company can therefore issue additional shares without first increasing an authorised share-capital limit. However, it must still comply with:
The abolition of authorised share capital does not give directors an unrestricted right to issue shares.
Companies formed under the old rules may still have an authorised share-capital provision in their memorandum or constitutional documents.
Under the transitional rules, an old authorised capital limit may continue to operate as a restriction in the company’s articles. This means a company formed before 1 October 2009 should check its constitution before issuing additional shares.
If an old restriction remains, the company may need to amend or remove it before exceeding the stated limit.
Professional advice may be appropriate where a company has historic constitutional documents or a complex share structure.
Suppose a company has issued 1,000 ordinary shares:
Their ownership percentages are:
These 1,000 shares are the company’s issued shares because they have been allocated to actual shareholders.
Under the modern rules, the company does not normally need a separate authorised capital figure. Its ability to issue more shares will depend on the applicable company-law approvals and restrictions.
The term “unissued shares” is sometimes used to describe shares that a company may be able to issue in the future.
Because modern UK companies do not usually have authorised share capital, there may not be a fixed pool of authorised but unissued shares.
Instead, a company creates and issues additional shares through the allotment process. The directors must have the necessary authority and must consider any rights held by existing shareholders.
Yes. A UK limited company can issue additional shares after incorporation.
Before doing so, the company should check:
The company must normally notify Companies House of an allotment within one month and provide an updated statement of capital.
Issuing additional shares can reduce an existing shareholder’s percentage ownership. This is known as dilution.
For example, a shareholder owns all 100 issued shares and therefore owns 100% of the company.
If the company issues another 100 shares to a new investor, there will be 200 issued shares. The original shareholder will still own 100 shares, but their ownership will fall to 50%.
Dilution can also affect:
The rules depend on the company’s circumstances, articles and existing share classes.
Directors of some private companies with only one class of shares may have statutory authority to allot additional shares unless the articles restrict that power. Other companies may require authority through their articles or a shareholder resolution.
Directors must also consider statutory or contractual pre-emption rights that may require new shares to be offered to existing shareholders first.
When a company issues additional shares, it must normally submit a return of allotment to Companies House within one month.
The filing should include an updated statement of capital showing information such as:
The company must also update its internal register of members and issue appropriate share certificates.
Understanding the difference helps company owners avoid confusing an historic share limit with the company’s actual ownership.
Issued shares show the company’s current ownership position. Authorised share capital, where it still appears in older company documents, may place a historic restriction on future share issues.
Company owners should focus on:
No. A newly formed UK company does not normally need to establish an authorised share-capital limit.
No. Issued shares have been allocated to shareholders. Authorised shares referred to shares that a company was permitted to issue under the former authorised capital system.
This was common under the old rules. A company could issue only part of its authorised share capital. Modern companies do not normally have an authorised capital figure.
The absence of authorised share capital does not mean directors have unlimited freedom to issue shares. The company must comply with its articles, allotment authority, pre-emption rights and other legal requirements.
No. Issued share capital is based on the nominal value of the shares, not the company’s commercial value.
An old restriction may be removed or amended by following the appropriate company procedure. The company should check its articles and obtain advice if necessary.
Issued shares are the shares a UK company has actually allocated to its shareholders. They represent real ownership and determine voting, dividend and capital rights.
Authorised share capital was the maximum amount of shares a company was allowed to issue. The Companies Act 2006 abolished this requirement, so modern UK companies do not normally have an authorised capital limit.
Companies formed under the previous system should check whether an old limit remains in their constitutional documents before issuing additional shares.
This article provides general information and does not constitute legal, tax or financial advice.
