Share Capital: - Share capital is that part of the capital of a company which is represent

by the total nominal value of shares, which it has issued.

Share: - A share in a company one of the units into which the total capital of the company is
divided.

Called up capital of a company: - Called capital is that part of subscribed capital

which is called by the directors of the company, from the shareholders, to whom the shares are allotted. For Example: A company issued 1 lakh share of Rs. 10 each and has called Rs. 2 on application, Rs. 3 on allotment and Rs. 3 on first call. After the first call, called up capital of the company is Rs. 8 lakhs.

Paid up capital of a company: - Paid up capital is that part of called up capital

which is actually paid by the shareholders. Paid up capital is the amount of called up capital reduced by Calls-in-arrears. Thus Paid up capital = Paid up capital Calls-in-arrears.

Reserve Capital: - A limited company may, by special resolution, determine that any
portion of its shares capital which has not been already called-up shall not be capable of being called up, except in the event if winding up of the company. This uncalled portion of the shares capital is called Reserve capital.

Share: - The capital of a company is divided into parts of units of a fixed denomination.
Every part is called a share. It forms the basis of ownership interest in a company. Types of shares Preference shares Equity shares

Preference shares: - Preference shares are those shares which carry the right to receive
dividend at a specified rate before any dividend is paid on the equity shares, and the right to repayment of capital before anything is paid to equity shareholders.

Equity shares: - Shares which carry no preferential right regarding the payment of
dividend and in the repayment of capital are called equity shares. Dividend on equity shares is paid after paying dividend on preference shares.

Cumulative preference share: - Cumulative preference share are those shares in

which arrears of dividend go on accumulating till they are paid. The accumulated arrears of dividends shall be paid before anything is paid out of profits to the holders of any other class of shares.

Non-cumulative preference shares: - A non cumulative preference shares is

one that carries the right to dividend at a fixed rate, payable only out of current years profits. When no dividends is declared in a year due to any reason, the right to receive such dividend for that year expires. Thus, arrears of dividend are not cumulative.

Redeemable Preference Shares: - These shares are repaid by the company either
after the fixed period or even earlier at the option of any the company. Terms of redemption are announced at the time of issue of such share.

Non redeemable Preference Shares: - These preference shares, which cannot

be redeemed during the life-time of the company, are known as non redeemable preference shares. As per the companies Act such shares cannot be issued in India.

Sweat Equity shares: - Sweat equity shares are those shares which are issued by the
company to its employees or directors at a discount or for consideration other than cash for providing know how or making available rights to use intellectual property.

Public Issue Of Shares: - When shares are issued to the public through issue of
prospectus, it is called public issue of shares. In this case, a company invites the public to subscribe its shares by issuing a prospectus.

Right Issue Of Shares: - When shares are offered to the existing shareholders, it is
called rights issue of shares. In this case, shares are offered in a fixed proportion. Shareholder have the right either to apply them selves or renounce their right in favor of any other person.

Buy Back Of shares: - The terms buy back of shares implies the act of purchasing its
own shares by a company.

Issue Of Shares At Premium: - When a company issues its shares above their
face value, the issue is called at premium.

For Example: - A share of the nominal value of Rs. 10 issued at Rs. 12.

Issue Of Shares At a Discount: - When a company issues its shares below their
face value, the issue is called at discount. for example: - a shares of the nominal value (i.e., face value) of Rs. 10 issued at Rs. 9.

Pro-Rata Allotment Of Shares: - when issues is over subscribed, a company may

allot shares in various ways. Pro-Rata allotment is one of them. Under Pro-rata allotment, applicant are allotted shares in a fixed proportion. In this case surplus application money is adjusted towards the sum due on allotment. For example: - If company allotted 60,000 shares to the applicants of 80,000 shares. It is a case of pro-rata allotment in the proportion of 6:8 or 3:4.

What is under subscription means: - When a company offers a certain number

of shares to the public and all the shares are not subscribed by the public, the situation is called Under Subscription.

Over subscription: - When the company received application for more shares than
issued by the company, the issue is said to be over subscribed. However the compay cannot allot shares more than those offered for subscription.

Call in Advance: - Call in advance refers to that amount which has not been called up
by the company but has been paid by some shareholders in advance.

Can a Company Accept The Call-In Advance: - Company can accept

call in advance only if it is authorized by its articles of association.

Call-In-Arrears: - Call in arrears refers to that part of called up capital which has not yet
been paid, by some shareholders. It can be paid by the shareholders with interest within a specified period. Rate of interest is specified by the company in its articles of association. If it is not mentioned in the articles then provision of table A of Companies Act, shall be applicable which provides interest @ 5% p.a.

Forfeiture of Shares: - Forfeiture of shares means cancellation of allotment of shares

due to non payment of allotment money or call money within the specified period and forfeiture of amount received on such shares. In other words, forfeiture of shares in the action taken by a company to cancel the share as a final action against the defaulting shareholder(s).