Authorized Capital Stock (ACS) refers to the maximum number of shares a corporation in the Philippines is legally allowed to issue or offer to investors. It is stated in the company’s Articles of Incorporation (AOI) and represents its total capacity to raise equity capital. The declared amount must also be registered with the Securities and Exchange Commission (SEC).
Why It Matters:
Authorized Capital Stock defines a company’s financial scope and flexibility for future growth. A higher Authorized Capital Stock (ACS) indicates greater potential for business expansion. It also enables the company to issue new shares more quickly when raising funds or attracting investors. Furthermore, it also ensures compliance with the Revised Corporation Code (RCC).
Key Requirements at Incorporation:
- At least 25% of the ACS must be subscribed.
- At least 25% of the subscribed amount must be paid up.
- The paid-up capital must not be less than ₱5,000.
Related Terms:
| Term | Definition |
|---|---|
| Subscribed Capital | The portion of the ACS investors have committed to buy. |
| Paid-Up Capital | The portion of the subscribed capital that has been paid in cash or assets. |
Increasing ACS:
To raise the Authorized Capital Stock, a corporation must secure board approval, obtain consent from stockholders representing at least two-thirds of the outstanding capital, amend its AOI, and receive SEC approval.