Paid-in capital, also known as paid-up capital, is the money raised by a company by selling shares of its stock directly to investors on the primary market, typically through an IPO (Initial Public Offering). The goal is to go from a private to a public company.
If a publicly traded company wants to raise additional funds after its initial public offering, it can issue additional shares on the primary market. This is referred to as FPO (Follow on Public Offer).
When investors trade a company’s stock, they do so on the secondary market. The company does not receive any additional paid-up capital in this case because the proceeds of those transactions go to the shareholders who sold their purchased stocks.
Authorized capital includes paid-up capital. The authorized capital of a company is the maximum amount of capital for which it can issue shares. Paid-up capital is the money that a company receives after issuing shares.