— Kishore V, SME and ACW at Edumarz
A company’s share capital can be classified into the following categories:
i) Authorised Capital:
This relates to the amount specified in the company’s memorandum of association’s clause.
This is the maximum amount that a business can raise from the public through the issuing of shares if it is registered and authorised to do so.
As a result, the amount is referred to as the company’s registered, nominal, or authorised capital.
(ii) Issued Capital:
The issued capital is the authorised capital that is available to the public for subscription, including shares offered to vendors for subscription other than cash.
(iii) Subscribed Capital:
This is the portion of the company’s issued capital that has been applied for and assigned by the public.
As a result, subscribed capital refers to the face value of allocated shares.
(iv) Called-up Capital:
Called-up capital refers to the portion of the company’s subscribed capital that is requisitioned from shareholders.
A shareholder is typically not required to pay the whole value of the shares he has subscribed for in one payment.
In most cases, he’ll have to pay it in instalments.
Uncalled capital is the balance of subscribed capital that has not been called up.
(v) Paid-up Capital:
Paid-up capital refers to the amount of called-up capital that has been paid by the shareholders, whereas calls-in-arrears refers to the amount still owed by the shareholders.
(vi) Reserve Capital:
A company may determine, by special resolution, that a part of its uncalled capital will not be called up during the company’s existence and will be available as extra security to its creditors in the event of liquidation.
Reserve capital refers to this type of uncalled capital.