Share Capital and Types of Shares-Vipin

8/6/2019 Share Capital and Types of Shares-Vipin

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SHARE CAPITALSHARE CAPITAL

AND TYPES OFAND TYPES OF

SHARESSHARES


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SHARE CAPITALSHARE CAPITAL

The capital of a company is called share capital.It is the

capital raised by the issue of shares.The share capital of

company is divided into small and equal units.Each unit

is called a share.A person who buys a share is called theshareholder or member of the company.Thus the

amounts invested by the shareholders towards the face

value of shares are collectively called share capital.The

share capital divided into following categories.


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CATEGORIESCATEGORIES

AUTHORISED CAPITAL

ISSUED CAPITAL

SUBSCRIBED CAPITAL

CALLED UP CAPITAL

PAID UP CAPITAL

RESERVE CAPITAL


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AUTHORISED CAPITALAUTHORISED CAPITAL

The capital with which a company is registered is called

the authorised capital.It is the amount mentioned in the

memorandum.It is the maximum amount of capital that a

company can issue.It is also called registered capital.


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ISSUED CAPITALISSUED CAPITAL

It is the part of the authorised capital which is issued to

the public.The remaining part of the authorised capital is

known as unissued capital which can be issued later on

or whenever there is need for additional capital.


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SUBSCRIBED CAPITALSUBSCRIBED CAPITAL

It is that portion of the issued capital which is subscribed

by the public.The balance of the issued capital is called

unsubscribed capital.


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CALLED UP CAPITALCALLED UP CAPITAL

It is the amount of the subscribed capital which the

directors have called up on the shareholders to pay.A

company may not requir the full amount at once on the

shares subscribed by shareholders.Therefore it may callup only such portion as it needs.The portion of issued

capital which as not yet been called up by the company

is called uncalled capital.


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PAID UP CAPITALPAID UP CAPITAL

It is that portion of the called up capital which has

actually been paid up by the shareholders.Any unpaid

balance on the called up capital is known as unpaid

capital or calls in arrears.


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RESERVE CAPITALRESERVE CAPITAL

A limited company by passing a special resolution may

set apart a portion of the uncalled capital as reserve

capital.Reserve capital is that portion of the uncalled

capital which is kept in reserve and which will be called

up only on winding up of the capital.


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TYPES OF SHARESTYPES OF SHARES

PREFERENCE SHARES

EQUITY SHARES


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PREFERENCE SHARESPREFERENCE SHARES

Preference shares are those which carry a

preferential right in respect of payment of

dividends and repayment of capital in the

event of winding up. The rate of dividend

on preference shares is fixed.


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TYPES OF PREFERENCE SHARESTYPES OF PREFERENCE SHARES

Cumulative preference shares: In case of cumulative preferenceshares,the arrears of dividend,if any,are carried forward and paid out of theprofits of the subsequent years

Non-Cumulative preference shares:In the case of non cumulativepreference shares the arrears of dividend do not accumulate . This meansthat if in any year company cannot pay the dividend in full due to

inadequacy of profit this shares do not get arrears of dividend out of profit ofsubsequent years.

Participating preference shares: In addition to a fixed rate of dividendthese shares have the right to participate in the surplus profit left afterpaying a reasonable rate of dividend on equity shares.

Non-Participating Preference Shares: these shares get only a fixed rateof dividend. These do not get share in the surplus profit.

Redeemable Preference Shares: These shares are repayble after theexpiry of the fixed period or at the portion of the company .

Convertible Preference shares: This shares are given in the right ofconvertion into equity shares with in a specified period or at a specified dateacording to terms of issue.


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EQUITY SHARESEQUITY SHARES

Equity shares are those which are not preference

shares.These shares do not carry any preferential right

in respect of dividend or repayment of capital.Dividend

on equity shares is paid after payment of the fixed rate of

dividend on preference shares.The rate of dividend on

equity shares is not fixed.It varies according to the

amount of profit the company earns.In the event of

winding up the equity capital is repaid last.However

equity shareholders full voting power.


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Share Capital and Types of Shares-Vipin

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