5.1 Meaning and types of share capital

Share capital is the amount that purchasers of shares have agreed to contribute to the Company in return of its shares. This is the amount of capital raised or to be raised by issue of shares by the company.

TYPES OF SHARE CAPITAL

Authorized Share Capital, 1000,000

It is also known as nominal / registered capital

Every company limited by shares or guarantee and having a share capital is required to have a nominal capital with which it is to be registered

This is the maximum amount of share capital which is stated in the memorandum of association and which the Company is authorised to issue in its lifetime unless it alters provisions of the capital clause.

Issued Capital,900,000

It is the nominal value of the shares which have been taken up or offered to public for subscription. It can either be equal to or less than the authorized capital but cannot exceed it

Subscribed Capital

It is that part of issued capital which has been taken up by the public. The entire issued capital may be subscribed by the public or it may be less where not all of the issued capital is taken up

Called up Capital

It is that part of the subscribed capital which has been called on the unpaid shares

Uncalled Capital

It is that part of the subscribed capital which has not been called up by the Company. It includes part of the capital which company through a board resolution decides not to call until during winding up of the company.

Fluctuating capital is a type of capital account which changes/fluctuates every time there is addition in capital or when capital is withdrawn. Interest on capital, profit, salary, commission all appears on the credit side and interest on drawings, drawings appears on the debit side.