From an accounting point of view, the share capital of a company is classified into different categories.

Authorised Capital is the amount of share capital which a company is authorised to issue by its Memorandum of Association. It is also called Nominal or Registered Capital. The company cannot raise more than the amount of capital as specified in the Memorandum of Association. The authorised capital can be increased or decreased as per the procedure laid down in the Companies Act.

The company need not issue the entire authorised capital for public subscription at a time. Depending upon its requirement, it may issue share capital, but in any case, it should not be more than the amount of authorised capital.

Shares refer to the units into which the total share capital of a company is divided. A share is a fractional part of the share capital and forms the basis of ownership interest in a company. As per the Companies Act, a company can issue two types of shares: preference shares and equity shares (also called ordinary shares).

The amount of authorised capital, together with the number of shares in which it is divided, is stated in the Memorandum of Association. The classes of shares, along with their respective rights and obligations, are prescribed by the Articles of Association of the company.