Q: Define Capital and what are the types of capital ?

 Ans: Capital is the money to run the business.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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Authorised Capital: If a company has 100000 shares and the face value of each share is Rs 10, the total capital which is also authorised capital is Rs 10 lakhs and the company can not issue the shares more than Rs 10 lakhs and the authorised capital of the company is Rs 10 lakhs.

The ROC will not permit to issue shares more than authorised capital.

The Authorised Capital will be mentioned in the Memorandum of Association. 

Suppose a company would not like to issue all shares for future investment and would like to issue 60,000 shares , the issued capital will be Rs 6 lakhs i.e., 60 percent of the authorised capital. 

The company does not issue all shares because the unnecessary funds collected from public will be the wastage of company. The issued capital can not be more than authorised capital or registered capital.

If the company offers or issues shares of capital of Rs 6 lakhs but the shares bought were of Rs 5 lakhs because only buyers of Rs 5 lakhs were interested to buy the shares, the subscribed capital is Rs 5 lakhs.

Suppose the company told the subscribers or buyers to pay Rs 3 lakhs for the shares of Rs 5 lakhs and the next installment of Rs 2 lakhs will be paid by the subscribers after six months when the company needs that money.  So ,Rs 3 lakhs will be the called up capital.

Paid up capital: It is not necessary that subscribers agree to pay the called up capital demanded by the company, and let us suppose that out of Rs 3 lakhs, the subscribers or buyers agree to pay Rs 2.5 lakhs to the company, the paid up capital will be Rs 2.5 lakhs. If the subscribers agreed to pay Rs 3 lakhs, the paid up capital will be Rs 3 lakhs.

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