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Share Capital

In: Business and Management

Submitted By komal
Words 1829
Pages 8
Share Capital
It is the amount of money contributed by the shareholders for the furtherance of objectives of the company for which it was created. * Equity / Preference Share * Par value * Number of Shares in each category * Total amount
TYPES OF SHARE CAPITAL * AUTHORISED CAPITAL * ISSUED CAPITAL * SUBSCRIBED CAPITAL * CALLED UP CAPITAL * PAID-UP CAPITAL
AUTHORISED CAPITAL * MAXIMUM amount of share capital that the company is authorised by its constitutional documents to issue to shareholders. * Part of the authorised capital can (and frequently does) remain unissued. * EXAMPLE: AS PER THE CONSTITUTIONAL DOCUMENT OF A NEW COMPANY ‘XYZ.LTD’
IT CAN ISSUE A TOTAL OF 10 LAKH SHARES OF RS 10 EACH FACE VALUE/PAR VALUE: IT IS THE FIXED DENOMINATION AT WHICH A COMPANY ISSUES ITS SHARES. THE FACE VALUE IS MENTIONED ON THE SHARE CERTIFICATE.
ISSUED CAPITAL * THE PART OF AUTHORISED CAPITAL WHICH IS OFFERED TO THE PUBLIC FOR SUBSCRITION * EXAMPLE : * OUT OF 10 LAKH SHARES, COMPANY ‘XYZ LTD.’ ISSUES 7 LAKH SHARES OF RS 10 EACH
SUBSCRIBED CAPITAL * PART OF ISSUED CAPITAL THAT IS APPLIED FOR BY PROSPECTIVE SHARE HOLDERS & ALLOTED BY THE COMPANY * UNSUBSCRIBED CAPITAL :BALANCE OF ISSUED CAPITAL NOT SUBSCRIBED BY THE PUBLIC * EXAMPLE :

SITUATION 1: UNDERSUBSCRIPTION
‘XYZ LTD.’ GETS PROSPECTS FOR 6 LAKH SHARES SITUATION 2: OVERSUBSCRIPTION
‘XYZ LTD’ GETS PROSPECTS FOR 8 LAKH SHARES * PREMIUM: IT IS THE AMOUNT PAID AT THE TIME OF PURCHASE OF SHARES MORE THAN THE FACE IT. * DISCOUNT: IT IS THE AMOUNT PAID AT THE TIME OF PURCHASE OF SHARES LESS THAN THE FACE VALUE OF IT. * OVERSUBSCRIPTION: A SITUATION IN WHICH THE INVESTORS APPLY FOR MORE SHARES THAN THE COMPANY ISSUES. * UNDERSUBSCRIPTION: A SITUATION IN WHICH A COMPANY GETS LESSER APPLICATION THAN THE…...

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