Share Capital
- It means the capital elevated by the issue of shares. The Amount invested by the shareholders towards the face value of shares is collectively known as share capital. It can be divided into some Categories:
- Authorized Capital
- Paid-Up Capital
- Issued Capital
- Subscribed Capital
Authorized Capital
- The high amount of share capital a company is allowed to raise is called its authorized capital.
- But does’t limit the number of shares a company may issue, it does put a maximum on the total amount of money that can be raised by the sale of those shares.
Paid-Up Capital
- Paid-Up Capital is the amount of cash a company has been paid from shareholders in exchange for shares of its stock.
- Paid-up capital is created when a company sells its shares on the primary market, directly to investors.
- Paid-up capital is important because it’s capital that is not borrowed.
- A company that is fully paid-up has retailed all available shares and thus cannot increase its capital unless it uses money by taking on balance.
- Paid-up capital can never exceed authorized share capital. In other words, the authorized share capital represents the upward bound on possible paid-up capital.
Issued Capital
- An Issued capital refers to small value of that part of authorized capital which has been subscribed for by the signatories to the Memo of Association or allotted for cash or for consideration other than cash or allotted as bonus share.
Subscribed Capital
- When a company organizes to “go public” by issuing stock for the first time, investors can submit an application expressing their desire to participate.
- Subscribed share capital refers to the financial value of all the shares for which investors have expressed an interest.