What are the Different Types of Share Capital?

What are the Different Types of Share Capital?

Following are the different types of share capital:

• Authorized  Share Capital
• Issued Share Capital
• Subscribed Capital
• Called-Up Capital
• Paid-Up Capital

1. Authorized  Share Capital

The total capital that a corporation accepts from its investors by issuing shares that are listed in the firm's official documents is known as authorised share capital. Because a corporation is registered with this capital, it is also known as Registered Capital or "nominal capital."

 The ceiling of Authorized Capital is set by the Capital Clause in the Memorandum of Association, according to Section 2(8) of the Companies Act, 2013. The firm has the authority to take the necessary actions to expand the limit of authorised capital in order to issue more shares, but it is not permitted to issue shares that exceed the limit of authorised capital in any case.

 2. Issued Share Capital

The portion of Authorized Share Capital that is issued to the public for subscription is known as Issued Share Capital. Issuance, allocation, or allotment are the terms used to describe the act of issuing shares. To put it another way, Issued Share Capital is the subset of Authorized Share Capital. A subscriber becomes a shareholder after the allotment of shares..

3. Subscribed Capital

The portion of issued capital that has been sold to the public is known as subscribed capital. It is not necessary for the issued Capital to be fully subscribed by the general public. It is the portion of the issued capital for which the corporation has received an application. Let's look at an example to help you understand - If a corporation issues 16000 shares of one hundred rupees each and the public only applies for 12000, the issued capital is Rs 16 lakh and the subscribed capital is Rs 12 lakh. The total number of outstanding and treasury shares is equal to the number of issued shares.

4. Called-Up Capital

Called up Capital is the part of the Subscribed Capital, which includes the amount paid by the shareholder. The company does not receive the entire amount of Capital at once. It calls upon the part of subscribed Capital when needed in installments. The remaining part of the Subscribed Capital is called Uncalled Capital.

5. Paid-Up Capital

Paid-up Capital is the portion of Called-up Capital that is paid by the shareholder. The shareholder does not have to pay the sum requested by the corporation. The shareholder may pay half of the called-up Capital, referred to as Reserved Capital, to the company. As the name implies, a reserve is a sum of money held in the company's treasury. This will come in handy if the company needs to be wound up.

The Companies Amendment Act of 2015 clarified that the Company does not need to have a minimum paid-up capital requirement. That means that a corporation can be formed with as little as Rs.1000 in paid-up capital at the moment. At any time, the paid-up capital must be less than or equal to the authorised share capital, and the Company is not permitted to issue shares in excess of the authorised share capital.

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