Form of Share Capital
The different forms of share capital of a company can be explained as follows:
1. Authorized Capital – It is also called Registered Capital or Nominal Capital. The authorized capital is mentioned in the capital clause of the company’s councilor memorandum. It is the maximum capital of a company. While determining this, both present and future needs of the company are kept in mind.
2. Issued Capital – It is that part of the authorized capital which is issued by the company for purchase by the public. In practice, the entire authorized capital is not issued at a time, but only a part of it is issued immediately and the remaining part is issued when required.
3. Subscribed Capital – The requested capital is that part of the issued capital, which is offered for the requested issue for collection by the public. There can be two situations of requested capital – (i) to be over-requested, or (ii) to be under-requested. When more number of purchase applications are received from the public than the number proposed by the company, then in such case the capital will be said to be over subscribed. If less number of purchase applications have come, then the capital will be said to be under subscribed.
4. Called-up Capital The company usually asks for the share capital in installments. Each shareholder pays for himself the value of the shares in these instalments. Installments are called calls. Therefore, the amount of money demanded by the company on the shares sold is called its called capital. For example, as much as the value of the share, the first installment is called the application money, the second installment is called the allotment money, the third installment is called the first call money. The subsequent installment is called the second call amount and the fifth installment is called the final call amount. Thus, on payment of all the installments, we can say that all the rupees of the shares have been recovered. Thus the amount of money demanded by the company is called called capital.
5. Uncalled up Capital – That part of the allocated capital which has not been asked, i.e. remains to be called, is called uncalled capital, e.g. only ₹ 75 has been called in the share of ₹ 100 face value, then the remaining ₹ 25 will be called Calls-in-arrears.
6. Paid up Capital It is that part of the called up capital which can be paid up by the shareholders. It is also possible that some shareholders may not be able to pay the full amount of the called capital. Hence this balance is called call amount. According to Section 2 (64) of the Companies Act, 2013, “paid-up share capital” means the sum of the amount received by way of payment on the shares issued and the amount deposited as paid in respect of the company.
7. Reserve Capital or Reserve Liability – Sometimes when companies feel that they no longer need money, they can decide by special resolution that all their ‘unsought capital’ (Uncalled-up Capital) A part thereof will not be demanded from the shareholders until the time of winding-up of the company comes. Therefore, that part of the unasked capital which is accumulated for a particular purpose is called accumulated capital.