Consider the following facts about the categories of Share Capital.

A. Nominal Capital is that part of Authorised Capital which is actually issued to the public
B. Issued Capital is a part of Registered Capital
C. Subscribed Capital can be further categorised into fully paid-up and not fully paid up
D. Reserve Capital is a profit of capital nature
E. Called up Capital is that part of subscribed Capital which company has asked the shareholders to pay

Choose the correct answer from the options given below:

B, C and E only

The correct answer is Option (2) → B, C and E only

A. Nominal Capital is that part of Authorised Capital which is actually issued to the public- This statement is incorrect. Nominal capital is another name for the autjorised 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.

B. Issued Capital is a part of Registered Capital: This statement is correct. Issued capital 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. The authorised capital which is not offered for public subscription is known as ‘unissued capital’. Unissued capital may be offered for public subscription at a later date.

C. Subscribed Capital can be further categorized into fully paid-up and not fully paid up: This statement is correct. Subscribed capital 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 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. In other words, the fact of over subscription is not reflected in the books.

D. Reserve Capital is a profit of capital nature - This statement is incorrect. A company may set aside a portion of its uncalled capital, which would only be called upon in the event of the company's liquidation or winding up. This uncalled amount is referred to as the company's 'Reserve Capital' and is exclusively reserved for the satisfaction of creditors during the liquidation process.

E. Called up Capital is that part of subscribed Capital which the company has asked the shareholders to pay: This statement is correct. Called up capital is that part of the subscribed capital which has been called up on the shares, i.e., what the company has asked the shareholders to pay. The company may decide to call the entire amount or part of the face value of the shares, For example, if the face value (also called nominal value) of a share allotted is Rs. 10 and the company has called up only Rs. 7 per share, in that scenario, the called up capital is Rs. 7 per share. The remaining Rs. 3 may be collected from its shareholders as and when needed.