Paid-Up Capital vs Authorised Capital in Malaysia: What Changed Under the Companies Act 2016

By Axecta Management Services, Kuala Lumpur · Last verified: 29 October 2026

The short version: two terms, one of which has gone

People still ask for a company’s “paid-up capital vs authorised capital” because bank forms, tender documents, older constitutions and even some online advice still use both. Only one of them is a live concept for a Malaysian company incorporated or operating under the Companies Act 2016.

• Paid-up capital is the amount shareholders have actually paid to the company for the shares allotted to them. It is a fact about money received.
• Authorised capital (also called nominal or registered capital) was the maximum amount of share capital a company was permitted to issue, fixed in its memorandum and tied to a par value per share. A company that wanted to issue beyond that ceiling first had to increase it by resolution and a filing.

The Companies Act 2016.pdf) came into operation on 31 January 2017 and moved to a no-par regime. Section 74 provides that shares have no par or nominal value. We searched the full text of the Act as published on the SSM website and found no provision that fixes an authorised-capital ceiling for a local company, which is consistent with SSM’s explanation of the reform. The practical consequence is that a Sdn Bhd issues shares when its directors and members decide to, at a price the board justifies, without first raising a ceiling.

Definitions side by side

How the old and new regimes differ

Under the old regime a share had a par value such as RM1, the memorandum stated an authorised figure such as RM100,000, and any amount received above par was booked to a share premium account. Directors could not allot beyond the authorised figure.

Under the current Act:

• Shares have no par value (section 74).
• The company’s share capital is simply what it has received for the shares it has issued.
• There is no authorised-capital ceiling to raise before an issue. The checks that remain are about authority (section 75 requires prior approval by resolution of the company before directors allot shares, with listed exceptions), pre-emption (section 85, subject to the constitution) and filings (sections 76, 77 and 78).
• A company must have at least one share if it is limited by shares (section 9(c)), and SSM has explained that at least one issued ordinary share must remain in any conversion exercise.

SSM’s own FAQ explains the thinking: a nominal value is only relevant at the point of issue, the real value of a share moves with the company’s circumstances, and a nominal value on its own gives shareholders no protection because their rights attach to the shares they hold. See SSM’s FAQ on shares and the no par value regime (Part N).

What happened to share premium and capital redemption reserves

Section 618 is the transitional rule. In summary, for a share issued before section 74 took effect, the “amount paid” excludes any premium. On commencement, any credit in the share premium account and the capital redemption reserve became part of the company’s share capital. The Act gave companies 24 months from commencement to use the share premium credit for specified purposes, such as writing off preliminary expenses or paying up bonus shares. That window has long closed, so for any company still carrying a separate “share premium” line in 2026, the question for your accountant is whether the accounts and registers have been properly aligned with the Act.

A worked example (illustrative)

The figures below are made up to show the arithmetic.

1. At incorporation, three founders subscribe for 100,000 ordinary shares and pay RM1.00 per share. Share capital is RM100,000, issued and paid up.
2. Eighteen months later an investor subscribes for 50,000 new ordinary shares at RM3.00 per share, paying RM150,000 in cash.
3. After the issue the company has 150,000 shares and share capital of RM250,000.

Under the old regime the second step would have needed the authorised capital to be large enough and the RM2.00 per share above par would have been recorded as share premium. Under the current regime there is nothing to raise first: the directors, with the required approval, allot the shares, the register is updated, and the return of allotment is lodged. The price (RM3.00) is a commercial judgement, which SSM says the board should base on the company’s financial performance and prospects, and act in the company’s best interest.

Where you will still meet “authorised capital”

• Bank and supplier forms. Many forms were written for the old Act. If a field asks for authorised capital, answer in line with your records: state that the company has no authorised capital under the Companies Act 2016 and give the issued and paid-up figures. Ask your company secretary to confirm the wording.
• Foreign companies registered in Malaysia. SSM’s Companies Act page still lists a notice of increase in the share capital of a foreign company (section 567(3)), which is a different filing for a different type of entity.
• Old constitutions. A memorandum and articles adopted under the previous law may still refer to authorised capital or par value. These are read in line with the transitional rules, but they should be tidied up at the next opportunity, ideally when you adopt a new constitution.
• Licensing and sector rules. Some regulators set a minimum capital in terms of shareholders’ funds or paid-up capital. That is a regulator’s rule, not an authorised-capital concept. See how much capital a Sdn Bhd needs.

Why paid-up capital still matters

Even though authorised capital has gone, the paid-up figure is used in several places.

For tax

LHDN’s rate page and PR 8/2025 (published 22 December 2025) tests the paid-up ordinary share capital at the beginning of the basis period against RM2.5 million for the small company rates, and applies the same capital test to several other reliefs. It is also the reference point for some related-company tests. The full conditions are in share capital and the small company tax rate.

For SSM records

SSM has directed a clean-up of shareholder and share-capital records. Practice Directive 11/2026 (14 July 2026, revised 5 August 2026) says the aim is for the Registry to hold current information that accurately reflects issued and paid-up capital. It applies to local companies whose members hold more than one type of share and to all foreign companies. See the checklist below.

For banks and counterparties

Banks, landlords and tender evaluators look at paid-up capital as a rough indicator of commitment. It is a signal, not a guarantee, and your balance sheet is the better indicator of financial strength. How paid-up capital differs from cash is covered in separating personal and business finances.

Common mistakes

• Quoting “authorised capital” on a form as if it still existed. This invites follow-up questions and can confuse a counterparty. State issued and paid-up capital instead.
• Confusing paid-up capital with bank balance. A company can have RM100,000 of paid-up capital and a very different cash balance. Capital is a record of what was subscribed, not a live balance.
• Treating a shareholder loan as paid-up capital. A loan is repayable, share capital is not. Mislabelling affects the tax tests and the balance sheet. See how to increase paid-up capital.
• Allotting shares without the section 75 approval. The Act says an issue in contravention of section 75 is void and the consideration is recoverable.
• Forgetting the filing. The return of allotment is due within 14 days of the allotment (section 78) and the register must be updated within the same period (section 77).

Checklist: is your share-capital record clean?

What this means for different types of owner

• Sdn Bhd with local shareholders. There is no ceiling to manage. Plan the amount around cash needs and the small company tax test, and keep the registers current.
• Foreign-owned company. The paid-up figure may be driven by a sector regulator or by an immigration or licensing practice rather than the Act. Confirm with the relevant authority. Foreign ownership also feeds the 20% foreign-shareholding test in PR 8/2025 from YA 2024.
• Sole proprietor thinking of incorporating. A sole proprietorship has no share capital at all. When you move to a company, you choose an initial share issue and may record the business assets you transfer as consideration. See sole proprietorship vs Sdn Bhd.

How Axecta helps

Axecta’s incorporation and company secretarial teams set up the initial share structure, prepare allotment resolutions, lodge returns with SSM and reconcile the register of members to the accounts. If you are unsure whether your records reflect the no-par regime, we can review the register, the SSM record and your constitution together.

Next steps

1. Pull your latest company profile from SSM and your register of members, and compare the number of shares and amounts paid.
2. Check whether your company falls under SSM Practice Directive 11/2026 (more than one type of share) and whether an update lodgement is required before you can use other share-related services.
3. Replace “authorised capital” on your standard bank and customer forms with issued and paid-up capital.
4. Note your paid-up ordinary share capital at the start of the current basis period for the tax test.
5. Read the no-par value shares guide if you hold pre-2017 documents.

Frequently asked questions