Share Capital – Meaning, Definition, Types, Examples Class 12

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Looking for what is share capital in the company its meaning, definition, and types with examples as per the syllabus of class 12 CBSE, ISC, and State Boards.

I have explained this topic in detail.

What is Share Capital (Class 12)

Share capital refers to the capital raised by the company through the issue of shares to the public in the form of equity and preference shares.

For example, if a person purchases few shares of Tata worth ₹ 10,000. These ₹ 10,000 is part of the share capital of the TATA company.

So as thousands of people purchase the shares of TATA. But the company does not maintain the separate account of each shareholder.

There is one consolidated Capital Account called the Share Capital Account.

Definition of Share Capital (Class 12)

What are the types of share capital (Class 12)

following are the various terms used as a suffix with share capital.

Authorized, Registered, or Nominal capital:-

Authorized capital is the amount that a company raises from the public by issuing shares. The authorized capital maximum limit is mentioned in the Memorandum of Association.

Issued Capital:-

Issued capital is the part of the authorized capital which is offered to the public for subscription. The remaining part of the Authorised capital is known as the ‘Unissued Capital’ Which can be issued later on.

Subscribed Capital:-

Subscribed capital is that part of issued capital that is actually subscribed (applied) by the public.

For example, If 10,000 shares of ₹ 10 each are offered to the public and the public applies for 8,000 shares, the subscribed capital will be ₹ 80,000.

Subscribed capital further can be classified as

  1. Subscribed and fully paid up
  2. Subscribed and not fully paid up

Subscribed and fully paid up:-

When the entire nominal (face) value of a share is called by the company and also paid up by the shareholder, It is said to be ‘Subscribed and fully paid-up capital.

For example, the company issues 1000 shares @ ₹ 10 each. all shares are fully subscribed and the company calls the full nominal value of all 1000 shares and shareholders paid in full.

In this case ₹ 10,000 is subscribed and fully paid-up capital.

Subscribed and not fully paid up:-

When the entire nominal(face) value of a share is called by the company but shareholders paid less. such share capital is called subscribed and not full paid-up.

For example, the company issues 1000 shares @ ₹ 10 each, and whole shares are subscribed by the public.

Again company called ₹ 10,000 share capital from the public. But the holders of 200 shares only paid ₹ 8 per share.

In the above case

800 shares @ ₹10 per share are fully paid up. Thus ₹ 80,00 is the subscribed and fully paid-up capital.

But,

200 share @ ₹ 10 per share only paid ₹ 8 per share. Thus, ₹ 1600 is the subscribed and not fully paid-up capital.

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Anurag Pathak
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