The invested amount in a company that enables the firm’s functioning and activities is referred to as capital. When we talk about the company’s capital, we may also mean the “share capital”. A company is obliged to sate the amount of the capital during the process of initial registration, providing details of the number and the type of shares.
The different aspects of the share capital are denoted using the following terms:
1. The registered, nominal or authorized capital is the amount raised by the company by issuing shares.
2. Issue capital is the part of the authorized capital, offered for subscription to members. In addition, the shares presented to shareholders for consideration are included.
3. Subscribed capital is the part of the issue capital at the face or nominal value which has been subscribed or taken up by the person who has purchased the shares.
4. Called up capital represents the gross amount of shares issued. It is a called up capital subscribed by the shareholders on capital account.
5. Paid up capital represents the total amount that is actually added to the company`s called up share capital.
If shares are limited, a company can alter its capital in the following ways:
- It san issue new shares and in this way, the company will increase the amount of shares to a volume that is deemed expedient.
- Divide and consolidate any or all of its share capital. For example, the existing shares can be transformed into shares of larger volume.
- Execute a share conversion into stock for the shares paid in full and then again convert the stock into shares of a desired denomination.
- Make a subdivision of shares to even smaller amount.
- Cancel these of the shares that have not been taken as agreed and thus, diminish the amount of share capital.
These alterations can be done by passing a company’s general meeting resolution which does not require the court’s confirmation.
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