Types of capital - SS2 Commerce Lesson Note

Authorized/Registered/Nominal Capital:

Authorized, registered, or nominal capital refers to the maximum amount of capital that a company is legally allowed to issue and have based on its constitutional documents (such as the company's articles of incorporation). It represents the total value of shares that a company can offer to potential investors.

Issued Capital:

Issued capital is the portion of authorized capital that a company has actually offered and allocated to shareholders. It represents the total value of shares that have been issued and are held by investors. This capital is also referred to as "share capital."

Called-up Capital:

Called-up capital refers to the portion of issued capital that shareholders are required to pay or have already paid. When a company issue shares to shareholders, it may not require them to pay the full value of the shares immediately. Instead, the company may ask shareholders to pay in installments or when certain conditions are met. The amount that shareholders have been called upon to pay is called the called-up capital.

Capital Owned/Shareholders' Equity:

Capital owned, also known as shareholders' equity or net worth, represents the residual value of a company's assets after deducting its liabilities. It is the portion of the company's total assets that belongs to its shareholders. Capital owned includes the initial investment made by shareholders (issued and called-up capital) as well as any retained earnings or profits generated by the company over time.