Share capital

Generally ‘Capital’ means a particular amount of money used in business for the purpose of earning revenue. Share capital us that part of the capital of a company which is represented by the total nominal value of the shares which it has issued. In the context of the company law, this term is used in the following senses:

Nominal or Authorized Capital: It means the face value (face value is the amount stated on a share certificate) of the shares which a company is authorized to issue by its memorandum. E.g. A. Ltd has been incorporated with an authorised capital of USD 1000,000 divided into 100,000 shares of USD 10 each.

Issued Capital: It is that part of the Authorised capital which is issued to public for subscription and allotment, say 65,000 shares of USD 10 each.

Subscribed Capital: It is that part of the Issued capital which has been subscribed by the public, say 60,000 shares of USD 10 each.

Called-up Capital: It is that part of the subscribed capital which the directors have called up in order to carry on business of the company, say, USD 5 per shares has been called up, i.e., 60000x$ 5=$300,000.

Paid-up Capital: It is that part of the called up capital which is actually received in cash by the company, say $ 290000 (one shareholder holding 5000 shares failed to pay the call @ $ 2 per share)

Uncalled Capital:  It is that part of the subscribed capital which has not yet been called up by the directors. The difference between the subscribed capital and called up capital is represented by the uncalled capital.

Reserve Capital: A limited company may, by resolution, determine that any portion of its share capital which has not been already called-up shall not be capable of being called up, except in the event and for the purposes of the company being wound up.