Reserve capital is......

The correct answer is Option (3) → Part of the subscribed capital decided not to be called up except in the event of winding up

A company may decide, by special resolution, that part of its uncalled subscribed capital will be called only if the company is wound up. That part is reserve capital, kept back as security for the creditors.

Option (1) A kind of capital reserve — Incorrect. A capital reserve is built from capital profits (for example, profit on reissue of forfeited shares); reserve capital is uncalled share capital, not a profit.

Option (2) Part of called up capital — Incorrect. Reserve capital is by definition not called up during the life of the company.

Option (4) Part of capital not yet issued — Incorrect. Capital not yet issued is unissued capital; reserve capital has been issued and subscribed, only not called.