The capital of ₹40,00,000 that the company is raising through IPO is…

Read the following case study, answer the question:

Raja Pvt Ltd. has been operating in the field of Oils and Food items for last 10 years. Established in South India, has started its operations in some parts of Gujarat as well. Looking at growing demand and production the company wants to raise its Capital through an IPO to expand its operations in North India as well. The company was started in the year 2009 with only 3 members and now had 5 members and 20,000 employees. It was decided to convert the company into Public Ltd. Company. The Memorandum of Association of the company provides for ₹60,00,000 of Capital out of which the company issues ₹40,00,000 of share capital (40,000 equity shares of ₹100 each). The shares were issued at a premium of ₹20 but the company was able to get subscription of only 38,000 shares. Amount is paybale as follows ₹10 on application, ₹50 on allotment and Two calls of ₹20 each. Premium amount is to be received on allotment. The company was able to receive all money on all the shares except on 200 shares on I^st call and 300 share final call was not received. The company forfeited the shares of those who did not pay I^st call.

The capital of ₹40,00,000 that the company is raising through IPO is ___________

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Issued Capital

The ₹40,00,000 (40,000 shares of ₹100) is the part of the authorised capital of ₹60,00,000 that the company offers to the public for subscription through the IPO. That part is the issued capital.

Why the other options are incorrect

Option (2) Paid up capital — Incorrect. Paid-up capital is the amount actually received from shareholders on the shares allotted; it is less than ₹40,00,000 here.
Option (3) Subscribed Capital — Incorrect. Only 38,000 shares were subscribed, so subscribed capital is ₹38,00,000, not the ₹40,00,000 offered.
Option (4) Called up Capital — Incorrect. Called-up capital is the part of subscribed capital that the company has demanded from shareholders.

NCERT (2026-27 edition):
Categories of Share Capital – “… Issued Capital: It is that part of the authorised capital which is actually issued to the public for subscription including the shares allotted to vendors and the signatories to the company’s memorandum.”