Meaning and types of Share Capital

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 Meaning of Share Capital-

 A company's share capital is the money it raises by issuing common or preferred stock.
With additional public offerings, a company's share capital or equity financing may change over time.

Depending on the context, the term "share capital" can mean a variety of things.
Accountants have a much narrower definition, and it governs the balance sheets of publicly traded companies.
It refers to the total amount raised by the company through share sales. 

Types of Shares Capital-

(i) Nominal or Registered or Authorised Capital- The amount of capital with which the company intends to be registered is called registered capital. It is the maximum amount which the company is authorised to raise by way of public subscription. There is no legal limit on the extent of the amount of authorised capital.

(ii) Issued Capital- That part of the authorised capital which is offered to the public for subscription is called issued capital. 

(iii) Subscribed Capital- That part of the issued capital for which applications are received from the public is called the subscribed capital. The quantum of issue, whether through a right or public issue, shall not exceed the amount specified in the prospectus/letter of offer. Retention of over-subscription is not allowed under any circumstances.

(iv) Called-up Capital- The amount on the shares which is actually demanded by the company to be paid is known as called-up capital. In other words, it is that portion of the subscribed capital which has been called up by the company.

(v) Paid-up Capital- The part of the called up capital which is offered and is actually paid by the members is known as paid-up capital. The sum which is still to be paid is known as calls in arrears.

(vi) Reserve Capital- A company may determine by a special resolution 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 of winding up of the company. Such type of share capital is known as reserve capital.


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