What are the classification of capital?

The four major types of capital include working capital, debt, equity, and trading capital .

What is issued called up and paid-up capital?

The difference between called-up share capital and paid-up share capital is that investors have already paid in full for paid-up capital . Called-up capital has not yet been completely paid, though payment has been requested by the issuing entity.

What is paid-up capital vs authorised capital vs issued capital?

Authorised Capital is the maximum worth of shares a company can issue. Paid-up Capital is the actual worth of shares a company receives . The net worth of a company is not determined by its authorised capital. The paid up capital is the net worth of the company.

What are the 4 types of capital structure?

The types of capital structure are equity share capital, debt, preference share capital, and vendor finance . In addition, it ensures accurate funds utilization for business. The right capital structure level decreases the overall capital cost to the highest level. Also, it increases the public entity's valuation.

What are the 5 types of capital?

The Five Capitals Our natural capital (as the basis of all life) Human capital (skills and aptitudes) Social capital (institutions and communities) Built capital (everything from our cities to manufactured goods) Financial capital (the means of transferring resources between capitals) Jun 21, 2020

Can paid-up capital be more than issued capital?

It is the amount of money for which shares of the Company were issued to the shareholders and payment was made by the shareholders. At any point of time, paid-up capital will be less than or equal to authorised share capital and the Company cannot issue shares beyond the authorised share capital of the Company.

What is the difference between capital and issued capital?

Share capital is the total of all funds raised by a company through the sale of equity to investors. Issued share capital is the value of shares actually held by investors .

Can the paid-up capital of a company be higher than its issued capital?

Authorised capital refers to the maximum amount of shares the company is allowed to sell. The paid-up capital can be equal to or less than this authorised capital but never more than it . The companies need to apply to raise an authorised capital.

What are the 6 types of capital?

Six capitals. The International Integrated Reporting Council (IIRC) identifies six categories of capital which help an organisation create value: financial, manufactured, intellectual, human, social and relationship, and natural .

What are three types of capital?

Bourdieu's capital theory argues that different capitals owned by individuals can determine their positions in the social stratification structure, and further influence the pattern of social behaviors. More specifically, there are three forms of capital, namely economic, social, and cultural capital .

What are the two categories of capital?

Economic or financial capital entails monetary funds and investments like equity, debt, or real estate. Human capital and social capital augment the purely economic rationale behind capital and together better explain how business and economic growth really work.

Classification of Capital: Issued Capital, Paid Up Capital etc. (2024)

The word ‘Capital’ has different meanings in different professions and contexts. If a company is limited by shares, then the term capital means share capital. Let us see the various classifications of capital like nominal capital. paid up capital etc.

Capital

In simple words, the total contributions made by people to the common stock of the company is the capital of the company. Further, a share is the proportion of the capital to which each member has entitlement. Remember, a share is not an amount of money. It is an interest including different rights in the contract.

In this article, we will look at five ways in which the term capital is used in Company Law: nominal capital, issued capital, subscribed capital, called up capital and paid up capital.

Nominal or Authorized or Registered Capital

Section 2(8) of the Companies Act, 2013, defines Nominal Capital as the amount of capital that the Memorandum of the company authorizes as the share capital of the company. Hence, it is the registered amount authorized that can be raised by issuing shares.

The company also pays stamp duty in this amount. Typically, you can calculate nominal capital by taking into consideration the working and reserve capital needs of the company.

Issued Capital

Issued capital is a part of the Authorized capital, offered by the company for the subscription. This includes the allotment of shares. Section 2(50) of the Companies Act, 2013, offers this definition. Further, it is mandatory for companies to disclose its issued capital in the balance sheet (Schedule III of the Act).

Subscribed Capital

Section 2(86) of the Companies Act, 2013, defines Subscribed capital as the part of the capital being subscribed by the members of the company. It is the number of shares that the public takes.

Further, if the company states Authorized Capital in any communication like notice, advertisem*nt, official/business letter, etc., then it has to also specify subscribed and paid up capital in equally conspicuous characters.

Also, Section 60 of the Act specifies that defaulters in this regard, the company and all officers who default, will be fined around Rs. 10,000 and Rs. 5,000 respectively.

Called up Capital

According to Section 2(15) of the Companies Act, 2013, Called up Capital is the part of the capital which the company calls for payment. This is the total amount that the company calls-up on the issued shares.

Paid Up capital

Paid up capital is the part of called up capital actually paid or credited by shareholders on the issued shares. Mathematically, Paid up capital = Called up capital – Calls in Arrears.

Paid up capital represents the money that the company has not borrowed. Also, it is the total amount of money that the company receives from shareholders in exchange for shares of stock.

LearnSection 8 Company here in detail.

Solved Example onClassification of Capital

Q1. The public subscribes for 10,000 shares of a company of Rs. 100 each. The company calls up Rs. 50 per share but receives the payment only from 9,000 subscribers. Calculate:

Subscribed capital
Called up capital
Paid up Capital

Answer:

Since the subscription is for 10,000 shares at Rs. 100 per share, the subscribed capital is: 10,000 x 100 = Rs. 100,000.

Further, the company calls up Rs. 50 per share. Hence, the called up capital is: 10,000 x 50 = Rs. 50,000.

However, only 9,000 subscribers pay. This means that 1,000 subscribers default. Hence,

Arrears = 1,000 x 50 = Rs. 5,000.

Therefore, the paid up capital is:

Called up capital – Arrears = 50,000 – 5,000 = Rs. 45,000.