World Library  
Flag as Inappropriate
Email this Article

Share capital

Article Id: WHEBN0006232594
Reproduction Date:

Title: Share capital  
Author: World Heritage Encyclopedia
Language: English
Subject: Paid in capital, Authorised capital, Equity (finance), Companies Act 2006, Hospedia
Collection: Corporate Law, Finance
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Share capital

Share capital[1] (or capital stock in US English) refers to the portion of a company's equity that has been obtained by trading stock to a shareholder for cash.

In its strict sense, as used in accounting, share capital comprises the nominal values of all shares issued (that is, the sum of their par values, as printed on the share certificates). If the allocation price of shares is greater than their par value, e.g. as in a rights issue, the shares are said to be sold at a premium (called share premium, additional paid-in capital or paid-in capital in excess of par). Commonly, the share capital is the total of the aforementioned nominal share capital and the premium share capital.

Sometimes shares are allocated in exchange for non-cash, most commonly when company A acquires company B for shares. Here the share capital is increased to the par value of the new shares, and the merger reserve is increased to the balance of the price of company B.

Besides its meaning in accounting, described above, "share capital" may also be used to describe the number and types of shares that compose a company's share structure. For an example of the different meanings: a company might have an "outstanding share capital" of 500,000 shares (the "structure" usage); it has received for them a total of 2 million dollars, which in the balance sheet is the "share capital" (the accounting usage).

The legal aspects of share capital are mostly dealt with in a jurisdiction's corporate law system. An example of such an issue is that when a company allocates new shares, it must do so in a way that does not inequitably dilute existing shareholders.

Contents

  • Types of share capital 1
  • See also 2
  • References 3
  • External links 4

Types of share capital

  • Authorised share capital is also referred to, at times, as registered capital. It is the total of the share capital which a limited company is allowed (authorised) to issue. It presents the upper boundary for the actually issued share capital.
  • Issued share capital is the total of the share capital issued (allocated) to shareholders. This may be less or equal to the authorised capital.

Issued capital can be subdivided in another way, examining whether it has been paid for by investors:

  • 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 instalments.
  • 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 instalments ("calls-in-arrears") .

See also

References

  1. ^ Glossary on Trade Financing Terms - S
  2. ^ Assuming the company itself is not an "investor", yet is a "shareholder", in regard to its own shares.

External links

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 



Copyright © World Library Foundation. All rights reserved. eBooks from World Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.