Concepts of 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.
It is the part of authorized capital, actually issued to the public for subscription including the shares allotted to vendors and the signatories to the company’s memorandum.
Unissued Capital is the part of authorized capital, not offered for public subscription.
It is the part of issued capital, actually subscribed for by the public.
It is that part of the subscribed capital which has been called up on the shares. The company may decide to call the entire amount or part of the face value of the shares.
It is the portion of called up capital actually received from the shareholders.
Calls in arrears
It is the amount due from shareholders which remains unpaid in respect of allotment or any of the calls.
Paid-up capital =Called-up capital – Call-in-arrears.
The portion of subscribed capital that has not yet been called-up.
It is the portion of uncalled capital reserved by the company to be called only in the event of winding up of the company. It is available only for the creditors on winding up of the company.
These concepts can be expressed in terms of following equations
Authorized Share Capital=Issued Capital + Unissued Capital
Issued Capital =Subscribed Capital + Unsubscribed Capital
Subscribed Capital =Called-up Capital+ Uncalled Capital
Called-up Capital= Paid-up Capital+ Calls-in-Arrears (Unpaid capital)
Uncalled Capital= Unreserved Capital+ Reserved Capital