{"id":77,"date":"2020-12-10T11:16:32","date_gmt":"2020-12-10T11:16:32","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=77"},"modified":"2020-12-10T12:34:20","modified_gmt":"2020-12-10T12:34:20","slug":"different-types-of-share-capital","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/","title":{"rendered":"What are the Different Types of Share Capital: A Detailed Guide"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Every company, whether <strong><a href=\"https:\/\/swaritadvisors.com\/private-limited-company-registration\" class=\"text-primary\">Private limited<\/a><\/strong> or Public limited, needs to have a share capital. Further, the term \u201cShare Capital\u201d denotes the amount contributed by the members of the company to carry out its operations. Also, it shall be relevant to note that a company can alter, modify, increase, or reduce its share capital, subject to certain conditions. Further, there are different types of share capital in a company, and each one provides its own set of rights.<\/p>\n\n\n\n<p>In this blog, we will discuss the\nconcept and different types of share capital available under the provisions of\nthe Companies Act 2013.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a37576028bac\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a37576028bac\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Concept_of_Share\" title=\"Concept of Share\">Concept of Share<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Concept_of_Share_Capital\" title=\"Concept of Share Capital\">Concept of Share Capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Different_Types_of_Share_Capital\" title=\"Different Types of Share Capital\">Different Types of Share Capital<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Authorised_Capital\" title=\"Authorised Capital\">Authorised Capital<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Formula_For_Calculating_Authorised_Capital\" title=\"Formula For Calculating Authorised Capital\">Formula For Calculating Authorised Capital<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Issued_Capital\" title=\"Issued Capital\">Issued Capital<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Formula_For_Calculating_Issued_Capital\" title=\"Formula For Calculating Issued Capital\">Formula For Calculating Issued Capital<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Subscribed_Capital\" title=\"Subscribed Capital\">Subscribed Capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Called_up_Capital\" title=\"Called up Capital\">Called up Capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Paid-up_Capital\" title=\"Paid-up Capital\">Paid-up Capital<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Formula_For_Calculating_Paid-up_Capital\" title=\"Formula For Calculating Paid-up Capital\">Formula For Calculating Paid-up Capital<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Uncalled_Capital\" title=\"Uncalled Capital\">Uncalled Capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Reserve_Capital\" title=\"Reserve Capital\">Reserve Capital<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Example_of_Different_Types_of_Share_Capital\" title=\"Example of Different Types of Share\nCapital\">Example of Different Types of Share\nCapital<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Question\" title=\"Question\">Question<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Solution\" title=\"Solution\">Solution<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/swaritadvisors.com\/blog\/different-types-of-share-capital\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Share\"><\/span>Concept of Share<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 2 (84) of the Companies Act 2013\ndefines the term \u201cShare\u201d. According to this section, Share means a part of the\nshare capital of a company that includes stock as well. That means the share is\njust the part of securities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Share_Capital\"><\/span>Concept of Share Capital<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A company being an artificial person has\nthe separate legal existence of its own. That means it needs funds to carry out\nits working and operations. The term \u201cShare Capital\u201d means the amount\ncontributed by the members of the company in the form of issuance of shares. <\/p>\n\n\n\n<p>Further, it shall be relevant to state that whenever people voluntarily contribute funds in a company, they automatically become the owners or the members of the company. Keeping this thing into consideration, the amount raised by the company is known as Share Capital, and the people contributing are known as Shareholders. <\/p>\n\n\n\n<p>Also, it shall be taken into\nconsideration that, in the case of companies, both \u201cShare Capital\u201d and\n\u201cCapital\u201d are synonymous to each other.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Different_Types_of_Share_Capital\"><\/span>Different Types of Share Capital<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the provisions of the Companies Act 2013, the different types of share capital are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Different-Types-of-Share-Capital-heading-1-1.png\" alt=\"Types of Share Capital\" class=\"wp-image-81\" width=\"478\" height=\"478\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Different-Types-of-Share-Capital-heading-1-1.png 1000w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Different-Types-of-Share-Capital-heading-1-1-150x150.png 150w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Different-Types-of-Share-Capital-heading-1-1-300x300.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Different-Types-of-Share-Capital-heading-1-1-768x768.png 768w\" sizes=\"(max-width: 478px) 100vw, 478px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Authorised_Capital\"><\/span>Authorised Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201cAuthorised Share Capital\u201d\nmeans the amount of capital written in the MOA or Memorandum of Association of\nthe company. Thus, it is the amount authorised to be raised by the issuance of\nshares. Besides this, a company needs to pay the stamp duty on this amount as\nwell.<\/p>\n\n\n\n<p>Further, the other names for Authorised Capital are Nominal Capital and Registered Capital. Also, section 2 (8) of the <strong>Companies Act 2013<sup><a href=\"https:\/\/www.mca.gov.in\/Ministry\/pdf\/CompaniesAct2013.pdf\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/strong> defines the term \u201cNominal Capital\u201d, as the amount of capital mentioned in company\u2019s MOA.<\/p>\n\n\n\n<p>Moreover, one can calculate the Authorised Capital by taking into consideration the Reserve Capital and Working Capital needs of the company.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Formula_For_Calculating_Authorised_Capital\"><\/span>Formula For Calculating Authorised Capital<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Authorised Capital = Issued Share\nCapital + Unissued Share Capital.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issued_Capital\"><\/span>Issued Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The\nterm \u201cIssued Capital\u201d means a portion of the Authorised Capital that is offered\nby the company to the general public for subscription. It includes the process\nof Allotment of Shares. Further, section 2 (50) of the Companies Act 2013\ndefines the term \u201cIssued Capital\u201d. <\/p>\n\n\n\n<p>Also,\nit shall be considerate to note that it is mandatory for every company to\ndisclose the amount of Issued Capital in its Balance Sheet, in accordance with\nthe Schedule III of the Act.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Formula_For_Calculating_Issued_Capital\"><\/span>Formula For Calculating Issued Capital<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Issued Capital =\nSubscribed Capital + Unsubscribed Capital.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Subscribed_Capital\"><\/span>Subscribed Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The\nterm \u201cSubscribed Capital\u201d is defined under section 2 (86) of the Companies Act\n2013, as the amount of capital that has been successfully subscribed by the\nmembers of the company. That means it is the total number of shares that the\ngeneral public takes.<\/p>\n\n\n\n<p>However,\nif in case a company has mentioned its Authorised Capital by any mode of communication,\nsuch as Advertisement, Notice, Official Letter, or Business Letter, etc., then\nin that case, it must mention its paid up and subscribed capital in equal\nconspicuous characters.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Called_up_Capital\"><\/span>Called up Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As\nper section 2 (15) of the Companies Act 2013, the term \u201cCalled up Capital\u201d\nmeans the part of the capital that the company calls for payment. That means it\nis the total amount that a company calls-up on the shares issued.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Paid-up_Capital\"><\/span>Paid-up Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201cPaid-up Capital\u201d means the portion of capital that is actually credited or paid by the shareholders on the shares issued. That means it\u2019s the amount of capital that the company receives back from its shareholders in exchange for the stock or shares issued.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Formula_For_Calculating_Paid-up_Capital\"><\/span>Formula For Calculating Paid-up Capital<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Paid up Capital = Called up Capital \u2013\nCalls in Arrear<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Uncalled_Capital\"><\/span>Uncalled Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201cUncalled Capital\u201d is just opposite\nto the \u201cCalled up Capital\u201d. It means the portion of share capital that has\nremained unpaid by the shareholders. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reserve_Capital\"><\/span>Reserve Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201cReserve Capital\u201d\nmeans the uncalled capital that is although owned by the company but can be\nused only at the time of dissolution of the business. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Example_of_Different_Types_of_Share_Capital\"><\/span>Example of Different Types of Share\nCapital<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Question\"><\/span>Question<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Suppose ABC Pvt Ltd. is registered with an Authorised Capital of Rs 1, 00, 00,000, which is further divided into shares of Rs. 10 each. The company has issued 8, 00,000 shares to raise a share capital of Rs 80, 00,000. However, the investors have subscribed only for 6, 00,000 shares. Further, the company has asked for Rs. 4 per share out of Rs.10 (Nominal value of shares), but has received payment for only 5, 50,000 shares.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Solution\"><\/span>Solution<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Authorized Share Capital (10, 00,000\nshares of Rs 10 each) = Rs 1, 00, 00,000<\/p>\n\n\n\n<p>Issued Share Capital (8, 00,000 shares\nof Rs 10 each) = Rs 80, 00,000<\/p>\n\n\n\n<p>Subscribed Share Capital (6, 00,000\nshares of Rs 10 each) = Rs 60, 00,000<\/p>\n\n\n\n<p>Called up Share Capital (6, 00,000 \u00d7 4)\n= Rs 24, 00,000<\/p>\n\n\n\n<p>Paid up Share Capital (5, 50,000 \u00d7 4) =\nRs 22, 00,000<\/p>\n\n\n\n<p>Call in  Arrears\n(50,000 \u00d7 4) = Rs2, 00,000<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, every business entity\nrequires funds to carry out its business operations. It can raise the same\neither internally or externally. Further, Share Capital means the amount\ncontributed by the members of the company in the form of issuance of shares. In\ntotal, there are 7 different types of share capital available under the\nprovisions of the Companies Act 2013.<\/p>\n\n\n\n<p>Lastly, in case of any other doubt or perplexity, contact <strong><a href=\"https:\/\/swaritadvisors.com\/\" class=\"text-primary\">Swarit Advisors<\/a><\/strong>, out proficient experts will guide you with the process of registration.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Every company, whether Private limited or Public limited, needs to have a share capital. Further, the term \u201cShare Capital\u201d denotes the amount contributed by the members of the company to carry out its operations. Also, it shall be relevant to note that a company can alter, modify, increase, or reduce its share capital, subject to [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":80,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[64],"tags":[77],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/77"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=77"}],"version-history":[{"count":7,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/77\/revisions"}],"predecessor-version":[{"id":88,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/77\/revisions\/88"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/80"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=77"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=77"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=77"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}