Kinds of Share Capital of Company Schedule III of the Companies Act, 2013 requires a company to show:
(1) Authorised or Nominal Capital : According to Section 2(8) of the Companies Act, 2013, “Authorised capital or Nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of a company. It is stated in the Memorandum of Association and is the maximum amount that a company can arise as share capital. It is stated separately for each class of shares, i.e., preference shares and equity shares. It is the maximum amount of share capital under each class of shares which a company can issue for subscription. If a company has to issue more shares than authorised capital, it must increase the authorised or nominal capital first and thereafter issue shares for subscription.
Authorised share capital under each class (equity or preference) may be more or at the most equal to the issued share capital but cannot be less than the issued capital.
(2) Issued Capital: According to Section 2(50) of the Companies Act, 2013, “Issued capital” means such capital as the company issues from time to time for subscription. Thus, issued capital is a part of the 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.
(3) Subscribed Capital: According to Section 2(86) of the Companies Act, 2013, “Subscribed capital” means such part of the capital which is for the time being subscribed by the members of company. Thus subscribed capital is a part of issued capital which the company has issued for cash or for consideration other than cash. It includes shares issued for subscription and subscribed shares subscribed by signatories to the Memorandum of Association, shares subscribed by the directors as qualifying shares and shares allotted for consideration other than cash.
(4) Called up Capital: It is that part of subscribed capital which is called by the company to pay on shares allotted. It is not necessary for the company to call for the entire amount on shares subscribed for by shareholders. The amount which is not called on subscribed shares is called Uncalled Capital.
(5) Paid up Capital: It is that part of called up capital which actually paid by the shareholders. Therefore, it is known as Real Capital of the company. Whenever a particular amount is called and a shareholder fails to pay the amount fully or partially it is known as Unpaid Calls on Calls-in-Arrears.
Paid up Capital = Called up Capital – Calls in Arrears
(6) Reserve Capital: It is that part of uncalled capital which has been reserved by the company by passing a special resolution to be called only in the event of its liquidation. This capital cannot be called up during the existence of the company. It would be available only in the event of liquidation as an additional security to the creditors of the company.
