A company's share capital can be categorized in a sequence:
* Authorized Capital/ Registered Capital: This is the share capital amount that a company is permitted to issue according to its Memorandum of Association. The company cannot exceed the specified capital amount in its Memorandum of Association. Depending on its needs, it may issue share capital, but it should not exceed the authorized capital amount. It is also called nominal capital or registered capital.
* Issued Capital: This represents the portion of authorized capital that is actually made available to the public for subscription, including shares allotted to vendors and signatories of the company's memorandum. The authorized capital that has not been made available for public subscription is referred to as 'unissued capital.' Unissued capital may be offered for public subscription at a later date.
* Subscribed Capital: This is the portion of issued capital that has been subscribed to by the public. When all shares offered for public subscription are fully taken up by the public, the issued and subscribed capital will be the same. It's important to note that subscribed capital may ultimately be equal to or less than the issued capital. If the number of shares subscribed is less than what was offered, the company will only allot the number of shares for which subscriptions have been received. If it exceeds what was offered, the allotment will match the offer. In other words, over-subscription is not reflected in the books.
* Called-Up Capital: This represents the part of the subscribed capital that the company has called upon shareholders to pay. The company may choose to call up the entire amount or a portion of the face value of the shares.
* Paid-Up Capital: This is the portion of the called-up capital that has actually been received from shareholders. When all shareholders have paid the entire called-up amount, the called-up capital equals the paid-up capital. If any shareholder has not paid the amount on calls, this outstanding amount may be referred to as 'calls in arrears.' Therefore, paid-up capital equals called-up capital minus calls in arrears. |
