1. Introduction : The memorandum of association is considered to be an important and basic document in the construction of the company. The information about share capital of- the company is mentioned in the capital clause of Memorandom of Association. The primary information regarding the amount of authorised share capital and the number of shares into which it is divided is also stated in the capital clause of Memorandum of Association. However, the company issues share to public as per its requirement from its authorised capital. Out of this only a certain position of the capital becomes paid up. Taking into consideration all these aspects, share capital ci be divided as under:
2. Types of Share Capital: Following are the types of Share Capital.
(1) Authorised Share Capital : The amount of Share capital which is mentioned in the capital clause of company’s Memorandum of Association is called Authorised, Registered or Total Capital.
For. eg. :The authorised share capital of the company is divided into 20 lath shares of U00 each. It mean authorised Share Capital of the company is 20 crores. The company can issue less than the authorised capital but not more than that. If in future company requires more capital then authorised then there should be provision in Articles of Association regarding this. Moreover consent is essential in the shareholders meeting and resolution is to passed.
(2) Issued Capital : The company can issue share and collect share capital as and when it requires money, so the amount collected by issuing shares is termed as the Issued Capital. For eg. CoMpany ‘A’ whose authorised share capital is 20 crores which are divided into 20 lakh shares of 100 each. Out of its authorised capital issues 1 lakh shares only for subscription. So, the issued capital of the company is considered as one crore (1,00,000 shares x 100 ).
(3) Subscribed Share : The application received by a company for the issued Share and the capital received for the same is termed as the subscribed capital.
For eg. Company W with Authorised capital of Z 20 crores issue 1 lath shares of 100 each. Thus, its issued capital is considered as one crore. Out of this issued shares, company receives applications for 80,000 shares. Thus, its subscribed capital will be 80,00,000 shares (80,000 shares x 100).
(4) Called up Capital : When company calls for money in installments as per the face value of shares, it is known as called up capital. For eg. On issue of shares, company receives application for 80,000 shares of 100 each and company calls for 70 per share then 56,00,000 (80,000 share x 70 ) is said to be the called up capital.
(5) Paid up Capital: It is not necessary that the company receive all the amount of issued and called up capital. The amount received on called up capital from shareholder is known as paid up Share Capital. For. eg. In the above example, company had issued 80,000 shares of 100 each 70 is the called up amount on each share. Out of this 25 is available on 10,000 shares. The complete amount is available on the remaining shares.
Reserved Capital
When the management of a company feels that called up..capital is sufficient for business and in future there will be no requirement of such capital, special resolution is passed in the shareholders meeting to keep reserved capital. It is known as Reserved capital.
In case of winding up of a company, company can called such reserved capital from the shareholders.
3. Conclusion: From the above exaplanation, it can be clearly understood that both types of share and types of share capital are different matters. Ordinary equityshares, preference shares etc. are included in types of shares whereas authorised, issued, subscribed, called ip, paid up etc. are included in types of share capital. For each type of capital there are provisions in the cölTlpanies Act, Secretary has to follow that provisions.