Types of Capital in a Company

Different Types of Capital in a Company

 (a)Nominal, authorized or registered capital: This is the sum stated in the memorandum of association of a company limited by the shares as the capital of the company with which it is registered. It is the maximum amount which the company is authorized to rise by issuing shares. This is the capital, on which it had paid the prescribed fee at the time of registration, hence also called registered capital.

(b)Issued capital: It is that part of the authorized or nominal capital which the company issues at the time being for public subscription and allotment. This is computed at the face or the nominal value.

(C)Subscribed capital:It is that portion of the issued capital at face value which has been subscribed for or taken up by the subscribers of shares in the company. It is clear that the entire issued capital may or may not be subscribed.

(d)Called up capital: It is that portion of the subscribed capital which has been called up or demanded on the shares by the company.

(e)Uncalled capital: It is the total amount not yet called up or demanded by the company on the shares subscribed , which the shareholders are liable to pay as and when.

(f)Paid up capital:It is that part of the total capital amount which is actually paid by the shareholders.

(g)Unpaid capital: It is the total of the called-up capital remaining unpaid .

(h)Capital reserve:Capital reserve is  created out of profits or earning which are not ordinarily distributed among shareholders of the company.

(i)Capital assets: These capital constitute fixed capital and circulating or working capital. Fixed capital assets comprise of assets acquired for retention and use, e.g., building and machinery. Circulating or working capital assets consists of assets manufactured or acquired for sale at a profit.

(j)Preference and equity share capital: Equity share capital with rights as to divided, voting or otherwise in accordance with the companies rules, 2001. A preference share has a preference in regard to payment of fixed amount of dividend or fixed rate of dividend and preferential rights of the repayment of capital in the event of winding up of company.

(k)Fixed and circulating capital: Fixed capital comprise of that part of capital which is invested in fixed assets acquired for retention and use  e.g., land, building, plant and machinery, whereas circulating or floating capital is that part of capital which is invested in acquiring current assests like like stock of goods, bill of exchange, cash, etc. It is required for use in the day to day business operations and keeps on circulating.

(l)Working capital: Working capital is represented by the excess of current assets over current liabilities.

(m)Loan or debenture capital: It is the capital raised by a company by the issue of debentures. It is a borrowing and not a capital in the true sense. It is the money borrowed and so is debts due by the company .The debenture holder are, therefore, the creditors of the company not the shareholders.