Accountancy Part AAccounting for Shares

What is the nominal share capital?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → The maximum amount of share capital which a company is authorised to issue.

Nominal capital is another name for authorised capital, the ceiling fixed by the Memorandum of Association. The other options describe paid up, subscribed and issued capital, which all lie within that ceiling.

NCERT (2026-27 edition):
Test your Understanding – II

Extract from the NCERT textbook

NCERT (2026-27 edition):
Categories of Share Capital – “… 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.”