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6.4 Double Entry Book Keeping (Section A)—ISC XII

• Sub-Division of Share Capital
(i) Authorised Share Capital: ‘Authorised Capital’ or ‘Nominal Capital’ means such capital as is authorised by
the Memorandum of a company to be the maximum amount of Share Capital of the company.
[Section 2(8) of the Companies Act, 2013]
(ii) Issued Share Capital: ‘Issued Capital’ means such capital as the company issues from time to time
for Subscription. [Section 2(50) of the Companies Act, 2013]
(iii) Subscribed Share Capital: ‘Subscribed Capital’ means such part of the capital which is for the time
being subscribed by the members of a company. [Section 2(86) of the Companies Act, 2013]
(iv) Called-up Share Capital is the amount of nominal value of share capital that has been called by the
company to be paid by the shareholders. [Section 2(15) of the Companies Act, 2013]
(v) Paid-up Share Capital: ‘Paid-up Share Capital’ or ‘Share Capital Paid-up’ means such aggregate of
money credited and paid-up as is equivalent to the amount received as paid-up in respect of shares
issued and also includes any amount credited as paid-up in respect of shares of a company, but
does not include any other amount received in respect of such shares, by whatever name called.
[Section 2(64) of the Companies Act, 2013]
Reserve Capital is a part of subscribed share capital that a company resolves, by a Special Resolution, not
to call except at the time of winding up of the company.
Capital Reserve is the amount of profit arising out of capital transactions.
• Types of Shares: Shares that can be issued are Preference Shares or Equity Shares.
Preference Shares are the shares that carry preferential right as to dividend at fixed rate or amount and
preferential right as to repayment of capital.
Equity Shares are the shares that are not Preference Shares.
Shares can be issued for cash and for consideration other than cash.
Shares can be issued at par or at premium.
Shares are said to be issued at par when they are issued at a price equal to the nominal (face) value,
i.e., when the issue price and nominal (face) value are same.
Shares are said to be issued at premium when they are issued at a price higher than nominal
(face) value.
• A Company can issue its shares:
(i) for cash, and (ii) for consideration other than cash.
• Oversubscription of Shares means shares applied for are more than the shares offered for subscription.
• Undersubscription of Shares means shares applied for are less than the shares offered for subscription.
• Pro rata Allotment means allotment of shares in a fixed proportion. Pro rata allotment takes place only
when the shares are oversubscribed.
• Securities Premium Reserve can be utilised for the following purposes:
(i) issuing fully paid bonus shares;
(ii) writing off preliminary expenses;
(iii) writing off expenses such as share issue expenses, commission, discount allowed on issue of
securities or debentures;
(iv) providing for the premium payable on redemption of debentures or Preference Shares; or
(v) in buying-back its own shares.

• Call is a demand by a company to the holders of partly paid shares to pay a further instalment towards
full nominal value.