Types of Capital

Dharmesh Patel E-12

Types of Capital

•Authorized Capital

•Issued capital

•Subscribed capital

•Called-up capital

•Paid-up capital

Authorized Capital

• Authorized capital is the maximum capital that a company is authorized to raise

• It is the sum mentioned in the capital clause of Memorandum of Association

• This limit cannot be exceeded unless the Memo. of Association is altered

Issued Capital

• Issued capital means that part of the authorized capital, which has been offered for subscription to members

• Includes shares allotted to members for consideration

Subscribed Capital

• Subscribed capital means that part of the issued capital at nominal or face value which has been subscribed or taken up by purchaser of shares in the company and which has been allotted

Called up Capital

• Called up capital is a part of subscribed capital which has been called up by the company for payment

• For example, if 10,000 shares of Rs. 100 each have been subscribed by the public and of which Rs. 50 per share has been called up

• The subscribed capital of the Company works out to Rs. 1,00,000 of which the called up capital of the Company is Rs. 50,0000

Paid up Capital

• Paid Up capital refers to that part of the called up capital which has been actually paid by the shareholders

• Some of the shareholders might have defaulted in paying the called up money

• Such defaulted amount is called as arrears

• From the called up capital, calls in arrears is deducted to obtain the paid up capital