Practicing Success
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Nominal share capital is: |
That part of the authorised capital which is issued by the company. The amount of capital which is actually applied for by the prospective shareholders. The maximum amount of share capital which a company is authorised to issue. The amount actually paid by shareholders. |
The maximum amount of share capital which a company is authorised to issue. |
The correct answer is Option 3 - The maximum amount of share capital which a company is authorised to issue. Nominal capital is another name for the authorised capital. Authorised 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 or Registered capital. The authorised capital 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. |
