Case AQ - Explain Share Capital and It 's various Types By - Amlan Dutta Look at the attached pic for better understanding .....the example presented therein with the following explanation will go a long way in mastering of concepts We basically have a firm XYZ Co LTD which has registered with the registrar of companies with 200 Rs authorised capital . However when it goes to the market , it finds itself attracting only 100 Rs subscription . Dissapointed it still issues issued capital for 80 Rs with 8 Shares of face value 10 Rs each It calls for just 8 rs for each share i.e called up capital i.e 8 shares x 8 rs = 64 rs So share holders have to pay just 8 rs for each share subscription However there are still people having 3 shares who default and don't pay So the firm ends up receiving just 5 shares money i.e 5 x 8 Rs = 40 Rs ...(i.e paid up capital ) For emergency provisions , the firm had decided to not call 2 Rs for each share of the issued capital ...i.e 8 x 2 = 16 Rs ...this is called uncalled capital which the firm utilises for emergency provisions Now read on to understand each share capital type in detail (1) Authorised capital It is also called the regsitered or the nominal capital ...when the firms register with the registrar of companies , they regsiter themselves with this autrhorised capoital i.e capital they would be seeking from the investors in terms of share capital Note, in our example , the company has regsitered with authorised capital 200 Rs worth face value 10 Rs ....i.e it means that they cannot seek more capital beyond it is authorised to Typically therefore firms get more capital authorised than their requirement ....here the firm requirement was just for 100 Rs ...but to avoid complications later on , it decides to regsiter with a authorised capital of 200 Rs (2) Subscribed Capital It reflects how much of the authorised share capital has been subscribed by the people . In our example the authorised share capital is 200 Rs . However since the company is not doing well , only 100 Rs has been subscribed by the public . Simply put subscription shows interest of the investor to invest in the company . Here when the company throws the subscription open , only 100 Rs ( 50 % subscription ) has happened for the shares which will be issued at later stage Had 40 share's been subscribed , it would be 40 x 10 = 400 ( 200 % subscription )--happens when company is doing good English meaning - ( You are authorised ( allowed to raise this money from the investors in terms of share capital ) (3) Issued Capital It is that amount of the subscribed capital that the firm decides to issue to the investors Here the firm decised to raise (issue) 80 Rs , releasing 8 stocks worth 10 Rs each face value ..now the investors will be called shareholders English meaning -( You are issuing ( requesting money and giving shares in return) (4 ) Called up Capital It is that amount of the issued capital that the company asks from the investors . It is not always that the company will ask for the entire issued capital . So , the partial amount (out of issued capital) so asked by the company from the shareholders out of the total value of shares is called-up capital.Here the company calls in for 8 rs out of face value of 10 Rs ....so called up capital is 8 x 8 = 64 Rs English meaning -( You are calling ( requesting for this money ) (5) Paid up Capital For the called up capital , the company doesn't receive all the money from shareholder at once . The paid up capital refers to the capital that the company receives out of the called up capital from the shareholders Here , 3 sharehgolders have defaulted , so we have paid up capital for the the 5 investors who have paid 8 rs each ----5 x 8 = 40 rs (English --- That part of the called up capital which has been paid by the subscribers upfront . (6) Un called Capital Un called capital is typicaly called by the firm during the times of liquidation etc ...however the principle here again is understanding that uncalled capital is the money that the firm has kept with the investors for calling at some later point of time ..here the company keeps 20 Rs of subscribed capital for such purposes English meaning - capital which is not called ( requested) All this capital are part of share capital , so when you hear some say authorised share capital etc , please don't get confused Please help me spread free knowledge , i dont need likes , just spread on the good work and understand the concepts from my hard work , Humble Regards , Amlan Dutta

• published: 27 Apr 2014
• views: 1827