The correct answer is option 4- Reserve capital.
Reserve capital is available only for the creditors on winding up of the company.
A company may reserve a portion of its uncalled capital to be called only in the event of winding up of the company. Such uncalled amount is called ‘Reserve Capital’ of the company. It is available only for the creditors on the winding up of a company. It is not shown in the balance sheet of the company.
OTHER OPTIONS
- Subscribed Capital: It is that part of the issued capital which has been actually subscribed by the public. When the shares offered for public subscription are subscribed fully by the public the issued capital and subscribed capital would be the same. It may be noted that ultimately, the subscribed capital may be equal to or less than the issued capital. In case the number of shares subscribed is less than what is offered, the company allots only the number of shares for which subscription has been received. In case it is higher than what is offered, the allotment will be equal to the offer.
- Registered capital- Registered capital is the amount of share capital which a company is authorised to issue by its Memorandum of Association. The company cannot raise more than the amount of capital as specified in the Memorandum of Association. It is also called Nominal capital or authorised capital. It can be increased or decreased as per the procedure laid down in the Companies Act. It should be noted that the company need not issue the entire authorised capital for public subscription at a time. Depending upon its requirement, it may issue share capital but in any case, it should not be more than the amount of authorised capital.
- A Capital Reserve is a reserve created from capital profits—profits that arise from non-operational activities of a company. These profits are not distributable as dividends and are used for specific purposes like writing off capital losses or issuing bonus shares. Examples of capital profits: Profit on sale of fixed assets, Premium on issue of shares, Profit from revaluation of assets (if realized) etc.
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