Share and Share Capital Of A Company

The share capital of a company is usually divided into certain numbers of units of a fixed amount. These units are called shares. A share refers to a fractional part of the capital. So, the individual unit of capital owned by a shareholder is called a share.

 It is that part of authorized capital which offered to the public for subscription. The company issues only those numbers of shares, which are sufficient to meet the present financial requirement of the company.

It is the share capital subscribed by the public. It can never exceed the issued capital. The issued share capital, which has not been subscribed by the public, is called under subscription of capital.

Authorized Capital is the maximum amount of capital that a company can raise as mentioned in the MOA. It is also known as registered or nominal capital. A company can increase its authorized capital by fulfilling necessary legal provisions.

Preference shares are risk-free and return on investment at certain fixed rate is fixed. Preference share are the shares issued by the company which have the right to received specified rate before paid on equity shares. The dividend is pre-determined in case of preference shares.

Calls in arrears are unpaid amounts by shareholders as per call notice of the company till the last date of payment. The company can charge interest in case of Calls in Arrear.

Calls in advance are prepaid amount by shareholders before making call. The company has to pay interest to shareholders as per the provision made in AOA (Article of Association).

 Debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. So, a debenture represents a debt.