Divisions of share capital

Divisions of share capital

The share capital of a company is divided into the following categories:

(i) Authorised capital

It means such capital as is authorised by the memorandum of association. It is the maximum amount which can be raised as capital. It is also known as registered capital or nominal capital.

(ii) Issued capital

This represents that part of authorised capital which is offered for subscription.

(iii) Subscribed capital

It refers to that part of issued capital which has been applied for and also allotted by the company.

(iv) Called up capital

It refers to that part of subscribed capital which has been called up by the company for payment.

(v) Paid up capital

It is that part of called up capital which has been actually paid by the shareholders.

(vi) Reserve capital

The company can reserve a part of its subscribed capital to be called up only at the time of winding up. It is called reserve capital.