JAIIB FREE NOTES 2024 | FINAL ACCOUNTS
You will read all the types of Share Capitals which will help you cover the JAIIB Syllabus of Module C of AFB for 2024. You can also find many other such Free short notes on many other JAIIB 2024 Study material on our website in the blog section.
The monies are raised by the corporations by issuing shares to the public. The shares are all together referred to as share capital. In other words, it is money which is invested by shareholders in the company or firm.
‘Capital’ is usually referred to as the money which is used to start or launch a business. As per the Indian Companies Act, it has been used in different contexts but in general, when we talk about share capital it refers to these amounts that have been subscribed in the Company’s Memorandum of Association.
The Assets of the business are also referred to as the capital. There are different types of sure capitals which are available in the market. In the context of corporations, the term ‘capital’ & ‘share capital’ has been used interchangeably.
TYPES OF SHARE CAPITAL
The different types of share capitals are discussed below:
AUTHORIZED SHARE CAPITAL
Maximum capital venture Corporation can accept from its investors by issuing shares to them is referred to as authorized share capital. When a corporation gets registered, it has to provide the maximum amount of capital that it can issue which is registered as ‘Nominal Capital’ or ‘Registered Capital’.
Although the company can expand its authorized capital when it needs to issue more shares
Authorized Share Capital = Issued Share Capital + Unissued Share Capital
ISSUED SHARE CAPITAL
The part of authorized share capital which has been issued to the public for subscription is termed as issued share capital. This issuance of shares to the general public is referred to by different names such as issuance, allocation, and allotment.
So, when a subscriber becomes a shareholder after he/she is allotted the share, he or she becomes a shareholder.
UNISSUED SHARE CAPITAL
Companies issue shares from time to time and therefore you might see that its authorized and issued capital are not equal. The difference between the two is the unissued share capital.
This issued capital is what a company can raise more funds through.
The portion of the capital that has been issued to the public and which has actually been sold to the public is known as subscribed capital. It is that part of the issued capital which the company has received the applications for.
For example, A company issued 15000 shares of Rs. 10 each, and the public applied only for 10000 shares, the issued capital of the company will be Rs. 150000.00 while the subscribed capital of the company will be Rs 100000.00.
The part of the subscribed capital which has been called up for the payment is known as ‘called up capital’. In general, not the whole portion of the issued capital is called for the payment but only when it is required.
The uncalled capital is referred to as the remainder of the subscribed capital.
This is the portion of the called-up capital that has been paid by the shareholders.
UNCALLED SHARE CAPITAL
When shares are issued to the shareholders, it is expected that the shareholders will pay for the amount that has been called. Although they may choose not to pay.
The portion of uncalled share capital which has not yet been called for payment is referred to as the uncalled share capital.
Is also referred to as the contingent liabilities of the shareholders because shareholders can be called up to pay this portion of share capital.
RESERVE SHARE CAPITAL
The amount of stock that a company cannot sell or offer to the public until and unless the company goes bankrupt. This option capital is issued after passing the special resolution.
It should be noted that this provision of share capital cannot be overturned through any means or alteration in articles of association. The basic purpose of Reserve share capital is to make the process of liquidation easy.
The number of restrictions imposed on share capital. Companies can not use the money received on account of Reserve share capital to convert it into ordinary share capital.
FIXED AND CIRCULATING SHARE CAPITAL
The subscribed capital of a company includes circulating share capital. The operational assets of the companies such as receivables, book debts, and Bank Reserves. These are basically the funds that fund the basic operations of the business.
Fixed capital includes the non-current assets of the company.
BALANCE SHEET’S REPRESENTATION OF SHARE CAPITAL
In the company’s balance sheet, the share capital can be found under the heading – shareholders fund.
The funds which are always issued by the company by issuing shares are called share capital. It basically represents the fair value of the company’s total number of shares that are outstanding.
Companies are required to disclose numerous types of share capital in their financial statements. Issuance of shares dilutes the ownership interest of the original shareholders in the company. The prices of shares may also fluctuate from time to time depending on the demand and supply of the shares as well as many internal and external factors.