Share capital
Share capital or issued capital (UK English) or capital stock (US English) refers to the portion of a company's equity that has been obtained (or will be obtained) by trading stock to a shareholder for cash
In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...

 or an equivalent item of capital value. For example, a company can set aside share capital to exchange for computer servers instead of directly purchasing the servers from existing equity.

Share capital usually comprises the nominal values of all shares issued, less those repurchased
Treasury stock
A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market ....

 by the company. It includes both common stock
Common stock
Common stock is a form of corporate equity ownership, a type of security. It is called "common" to distinguish it from preferred stock. In the event of bankruptcy, common stock investors receive their funds after preferred stock holders, bondholders, creditors, etc...

 (ordinary shares) and preferred stock
Preferred stock
Preferred stock, also called preferred shares, preference shares, or simply preferreds, is a special equity security that has properties of both an equity and a debt instrument and is generally considered a hybrid instrument...

 (preference shares). If the market value of shares is greater than the their nominal value (value at par), the shares are said to be at a premium (called share premium, additional paid-in capital or paid-in capital in excess of par).

Types of Share Capital

  • Authorised Share Capital is also referred to, at times, as registered capital. This is the total of the share capital which a limited company is allowed (authorized
    Shares authorized
    Shares authorized is the maximum number of shares that a company can issue. This number is specified in the company's articles of association but can be changed by shareholders' approval...

    ) to issue to its shareholders. It presents the upper boundary for the actually issued share capital (hence also 'nominal capital').
  • Issued Share Capital is the total of the share capital issued to shareholders. This may be less than the authorized capital.
  • Subscribed Capital is the portion of the issued capital, which has been subscribed by all the investors including the public. This may be less than the issued share capital as there may be capital for which no applications have been received yet ('unsubscribed capital').
  • Called up Share Capital is the total amount of issued capital for which the shareholders are required to pay. This may be less than the subscribed capital as the company may ask shareholders to pay by installments.
  • Paid up Share Capital is the amount of share capital paid by the shareholders. This may be less than the called up capital as payments may be in arrears ('calls-in-arrears').

See also

  • Balance sheet
    Balance sheet
    In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...

  • Paid in capital
    Paid in capital
    Paid in capital refers to capital contributed to a corporation by investors through purchase of stock from the corporation . It includes share capital Paid in capital (Paid-in capital or Contributed capital) refers to capital contributed to a corporation by investors through purchase of stock...

  • Share premium account
  • Shareholders' equity

External links

  • Detailed breakdown from Companies House
    Companies House
    Companies House is the United Kingdom Registrar of Companies and is an Executive Agency of the United Kingdom Government Department for Business, Innovation and Skills . All forms of companies are incorporated and registered with Companies House and file specific details as required by the...

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.