Classification of Share Capital (from Accounting Point of View)
(I) Authorised Capital
(ii) Issued Capital; and
(iii) Subscribed Capital
for each class of Share Capital.
(i) Authorised or Nominal or Registered Capital
‘Authorised Capital’ or ‘Nominal Capital’ or ‘Registered Capital’ means such capital as is authorised by the Memorandum of a company to be the maximum amount of share capital of a company.
– Authorised Capital’ or ‘Nominal Capital’ or ‘Registered Capital’ is stated in the Memorandum of Association and is the maximum amount that a company can raise as share capital.
It is stated separately for each class or kind of shares, i.e., Preference Shares and Equity Shares and is the maximum amount of share capital under each class or kind of shares which a company can issue for subscription.
Authorised Share Capital under each class or kind (Equity or Preference) may be more or equal to the Issued Share Capital, but cannot be less than the Issued Capital.
Q. What is meant by authorised capital of a company? All India (C) 2014 (APYQs)
Ans. According to Section 2 (8) of the Companies Act, 2013, ‘authorised capital’ means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of a company.
(ii) Issued Capital
‘Issued Capital’ means such capital as the company issues from time to time for subscription.
Issued Capital is a part of Authorised Capital that is issued for subscription.
· It includes besides shares issued for subscription, shares allotted for consideration other than cash, shares subscribed by signatories to the Memorandum of Association and shares taken by directors as qualifying shares.
· It should be kept in mind that Issued Capital cannot exceed the company’s Authorised Share Capital.
Q. 1. What is meant by ‘issued capital’? Delhi 2019 (Arihant PYQs)
Ans. It means such capital as the company issues from time-to-time for subscription.
(iii) Subscribed Capital
‘Subscribed Capital’ means such part of the capital which is for the time being subscribed by the members of a company.
Subscribed Capital is a part of issued capital that company has issued for cash or cash Consideration other than cash . it includes share issued for subscription .
Subscribed Capital is classified or shown under the following two heads:
(a) Subscribed and fully paid-up
(b) Subscribed but not fully paid-up
(a) Subscribed and fully paid-up
When the company has called-up the total nominal (face) value of the share, and has also received it. Shown under the Head Subscribed And Fully Paid up .
For Example-: ABC Ltd. Issued 1,000 Shares of ₹ 10 Each . it has called up ₹ 10 per share And recived the Amount Called . it means the shares are ‘ subscribed and fully paid up .’
(b) Subscribed but not fully paid-up
Shares are classified, i.e., shown as ‘Subscribed but not fully paid-up’ in the Note to Accounts on Share Capital when: the company has called-up the total nominal (face) value of the share but has not received it, or the company has not called-up the total nominal (face) value of the share .
Calls-in-Arrears
Calls-in-Arrears means the amount not received by the company or not paid by shareholders against the amount called towards share capital.
For example-: BHL International Ltd. issued 1,50,000 Equity Shares of ₹ 10 each. All calls were made and received except final call of ₹ 2 per share on 10,000 Equity Shares.
Subscribed and fully paid-up:
1,40,000 Equity Shares of ₹ 10 each = ₹14,00,000
Subscribed but not fully paid-up: 10,000 Equity Shares of ₹ 10 each = ₹1,00,000
Less: Calls-in-Arrears (10,000) ₹ 2 = ₹ 20,000 80,000
Total = ₹14,80,000
-: At the place of ₹15.00,000 BHL International Ltd. Received ₹14,80,000 And ₹ 20,000 is call in Arrear .
Q . What is meant by ‘calls-in-arrears’? All India 2013 ( APYQs)
Ans. If shareholders make default in paying the
money due on allotment or any call, the money not so paid is called calls-in-arrears.
