Presentation Overview  Meaning of Share Capital of a company  Types of Share Capital of a company

Share Capital Meaning of Share Capital of a company

Capital refers to the amount invested in the company so that it can carry on its activities. In a company capital refers to "share capital". Share Capital is the capital raised by the company by the issue of shares. Share Capital can be raised by the company either at the time of it's formation or later on for the purpose of meeting requirements of it's expansion.

Share Capital
Share Capital means the capital raised by a company by the issue of shares. The capital of the company is divided into shares. That is why it is called Share Capital. Section 2(46) defines a share as a share in the share capital of the company and includes stock except where the distinction between stock and share is expressed or implied.

Share Capital Features of Share Capital:

( Share capital is owned capital of the company ( Share capital remains with the company ( Dependable source of finance ( Expansion of business ( Share capital can be altered ( Opportunity to participate ( Benefit of bonus shares ( Benefit of limited liability

Authorised Capital Issued Capital Unissued Capital Subscribed Capital UnUn-Subscribed Capital Called Up Capital UnUn-Called Capital PaidPaid-Up Capital UnUn-Paid \Calls In Arrears

Authorised Capital
It is the maximum amount which the company raise by issuing the shares and on which the stamp duty and registration fee is paid. This amount is usually fixed by the company keeping in view the present as well as its future needs for finance. This limit is cannot be exceeded unless the Memorandum of Association is altered in accordance with the provisions of Sec. 94 of the Companies Act, 1956. Authorized capital is also known as nominal capital or registered capital. This capital is divided into shares of fixed denomination.

Authorised Capital
Authorized capital is the maximum amount of capital which a company is authorized to raise from the public by the issue of shares. It is called authorized capital, because it is the capital which a company is authorized to raise from the public. It is also called registered capital, because it is the capital with which a company is registered. It is also called nominal capital, because it is the total nominal value of the shares which a company can issue.

Authorised Capital
Example for Authorized Capital: A company wants to sell 1,00,000 shares of Rs. 10/- each, so the total 10/amount collected by the company is Rs. 10,00,000/10,00,000/i.e. 1,00,000 shares x 10 each = 10,00,000

Issued Capital
E

A company need not issue the entire authorized capital to the public for subscription. Usually, a company issues only a part of the authorized capital to the public for subscription. That part of the authorized capital which is issued or offered to the public for subscription is called issued capital. Issued capital means that part of the authorized capital which has been offered for subscription to members. It is the capital proposed by the company to be raised from the market. The term Issued Capital not only includes the shares offered to public for subscription,but also to the Vendors,Promoters,Employees for consideration other than cash.

Issued Capital
E

The issued share capital of a company is the total nominal value of the shares of a company which have been issued to shareholders. These shares, represent the capital invested by the shareholders in the company. The issued share capital may be less than the authorized share capital, the latter being the total value of the shares that are available for issue by the company.

Issued Capital
Example for Issued Capital: A company has issued 80,000 shares of Rs. 10/- each so the 10/issued capital is Rs. 8,00,000/8,00,000/i.e. 80,000 shares x 10 each = 8,00,000

UnUn-Issued Capital


It is that part of the authorized capital of a company,which is not issued to the public for subscription.

Subscribed Capital

There is no guarantee that the entire issued capital will be subscribed or taken up by the public. It may be subscribed in full or in part. That part of the issued capital which is subscribed or taken up by the public is called subscribed capital. It is the amount of money that the prospective shareholders actually agree to invest in return for their shares. The subscribed capital can quite often be less than the authorized capital. This simply means that the company has actually issued (or sold) only a part of its shares to the shareholders, whereby the remaining shares are not issued yet.

Subscribed Capital
Example for Subscribed Capital: A company has issued 80,000 shares out of which 70,000 shares are being bought by the general public, so the subscribed capital is Rs. 7,00,000/- That 7,00,000/is 70,000 shares of Rs. 10/- each. 10/ i.e. 70,000 shares x 10 each = 7,00,000

UnUn-Subscribed Capital

The balance of the Issued Capital i.e, Shares issued to the public,which is not subscribed by the public.

CalledCalled-Up Capital
Generally,a company doesnt need the entire face value of the shares subscribed by the public immediately.So,it calls or demands only a part of the nominal value of the shares subscribed by the public immediately & collects the balance later,as & when necessary,by making further calls. It is that part of the subscribed capital which had been called up or demanded by the company for payment.

CalledCalled-Up Capital
Example for Called-up Capital: CalledA company has issued 80,000 shares out of which 70,000 shares are subscribed by the general public. If the face value of a share is Rs. 10/- but the 10/company requires only Rs. 2/- at present, it may call 2/only Rs. 2/- now and the balance Rs.8/- at a later 2/Rs.8/date. Rs. 2/- is the called up share capital and Rs. 8/2/8/is the uncalled share capital. i.e. 70,000 shares x 2 each = 1,40,000 => Called-up Called70,000 shares x 8 each = 5,60,000 => Uncalled-up Uncalled-

UnUn-Called Capital
x

The balance of the subscribed capital i.e, the remaining part of the nominal value of the shares subscribed,which is not calledcalledup or demanded by the company.

Paid Up Capital

It is that part of subscribed capital which is called-up by the company calledtowards the payment of the shares & paidpaid-up by the subscribers. In most cases that simply means that the shareholder has paid some cash into the company. Usually, only when the shares are paid-up, the shareholder paidreceives the right to get profits from the company.

Paid Up Capital
Example for Paid-up Capital: PaidThe called-up capital of a company is 80,000 calledshares of Rs. 8/- each on the first call. The face 8/value being Rs. 10/- each. The second call was 10/80,000 shares of Rs. 2/- each. The shareholders 2/failed to pay the amount on the second call. So the calls-in-arrears were Rs. 160000/calls-in160000/i.e. 80,000 shares x 8 each = 640000 => Paid-up Paid80,000 shares x 2 each = 160000 => UnpaidUnpaidup

UnUn-paid Capital or Calls-InCalls-InArrears

The balance of the called-up calledcapital,which has not been paid by the shareholders. It is that part of the subscribed capital,which is called up by the company but not paid by the shareholders.

Reserve Capital or Reserve Liability



The part if the uncalled capital which is reserved till the winding up of the campany is called Reserve Capital.

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