Types of capital, Business Law and Ethics

Types of Capital:

A company's capital at any given moment may consist of:

a)      NOMINAL OR AUTHORISED CAPITAL

This is the capital that is stated in the memorandum of association pursuant to S.5 (4) a) of the Act. It is called "nominal capital" because it is calculated on the basis of the "nominal" or book value of the shares into which it is divided. It is 'authorised' because once the memorandum of association is registered, the company can take immediate steps to raise the capital from the public without applying for a permit or license to collect the money.

b)      ISSUED CAPITAL

The issued capital is that portion of the nominal capital which is constituted by the nominal value of the shares which have been issued by the company. It is also known as the "subscribed capital" or "allotted capital". It may be less than, or equal to, the nominal capital but cannot exceed it.

c)      PAID-UP CAPITAL

The paid-up capital is constituted by the aggregate of the amount of money that is paid-up on each share issued by the company. It may be equal to or fewer than, the issued capital but cannot exceed it.

d)      CALLED-UP CAPITAL

A company's called-up capital is constituted by the amount due is respect of calls made by the directors on issued shares.

e)      UNCALLED CAPITAL

The uncalled capital is the amount not called up on shares which a company has issued. It is the nominal capital minus the called up and the paid-up capital.

Posted Date: 1/12/2013 3:01:15 AM | Location : United States







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