Accounting for Share Capital

Authorized capital is the maximum amount of share capital a company is authorized to issue by its Memorandum of Association. It is also called Nominal or Registered capital.

According to Section 43 of The Companies Act, 2013, an equity share is a share which is not a preference share, it means shares which do not enjoy any preferential right in the payment of dividend or repayment of capital, are termed as equity shares.

Shares can be issued to public, at par or at premium, but issue of shares at discount has been prohibited by Companies Act Section 53, except in case of Sweat Equity Shares.

Shareholders can make all the money due on due date, before due date or after due date or not at all. There can be calls-in-arrears or calls-in-advance.

Subscription of shares can be more than the number of shares offered or less than that. The situation can be over- subscription or under-subscription.

When company issues shares for a price that is more than its face value, shares are said to be issued at premium. Premium collected can be used only for particulars as prescribed by Companies Act.

Forfeiture means cancellation of shares due to non-payment of allotment money or call money, by the shareholders and retaining the amount already paid in respect those shares.

Sometimes, company purchases assets and makes the payment to the vendor, in the form of fully paid shares of the company. These shares can also be issued either at par....