5.1 Meaning and types of share capital

5.1 MEANING AND TYPES OF SHARE CAPITAL.

Share capital refers to the total value of the shares issued by a company, representing the ownership interest of its shareholders. It is the capital raised by the company through the issuance of shares.

Types of share capital

1. Authorized share capital:

Authorized share capital, also known as authorized capital or nominal capital, represents the maximum value of shares that a company is authorized to issue as per its constitutional documents (e.g., memorandum of association). It sets the limit on the amount of capital that the company can raise from the issuance of shares.

2. Issued share capital:

Issued share capital refers to the portion of authorized share capital that has been issued by the company and allocated to shareholders. It represents the actual shares held by shareholders.

3. Subscribed share capital:

Subscribed share capital refers to the portion of the issued share capital that has been subscribed to or agreed to be taken up by shareholders. It represents the shares for which shareholders have made a commitment to purchase but may not have fully paid for yet.

4. Paid-up share capital:

Paid-up share capital refers to the portion of the subscribed share capital that shareholders have actually paid for. It represents the amount of money that shareholders have contributed to the company in exchange for their shares.