# ISSUE OF SHARES AND TYPES OF SHARE CAPITAL

## ISSUE OF SHARES

A company needs money to start  a business.

IF A person wants to start a business it can start a business as sole proprietorship where he alone do the business and invest his own money but it if needs funds than it can convert it to partnership business where 2 or upto 50 people can do business But limit of the partnership is 50. Now If the person wants to have more funds than he can turn business of partnership  into Company now it can have unlimited number of members and company can rase funds from bank or any financial institution and most important a company can raise money from public also.

Now if the public invest a money in company now the people who are invested in money is a capital and is known as share capital and in lieu of which a public will get a part known as share capital.

If a company needs 50,0000 lakhs rupees hence, they are divided into small part such as 500000 means  5000000/500000 = 10 value of share is Rs. 10.

This particular process is known as shares.

Now company can ask to pay money in installment of the share from public if they want or even in one go.

### Share capital

Now company can ask to pay money in installment of the share from public if they want or even in one go.

Now if company want money in parts than this Rs 10 is further divided to raise the fund from public by breaking its amount such as 3+3+2+2

The money taken by company after certain period of time from public  by dividing Rs 10 share  are given in list below

 Division of share Rs 10 3 Application money 3 Allotment money 2 Calls (first call) 2 Calls  (second call) Total 10

Here take an example Rajesh purchased 100 share of company share value Rs 10 each total value of share 10X100=10000 now company will take money  in the list given below

 Money invested in company Date Division of share Rs 10 100X3=3000 1 Jan 3 Application money 100X3=3000 3 march 3 Allotment money 100X2=2000 6 June 3 Calls (first call) 100X2=2000 10 July 2 Calls  (second call) Total money paid 10,000 10

Therefore, we can understand that Share capital is money in form of share collected from public

## Types of share capital

• Authorized share capital
• Issued capital
• Subscribed capital : a) Subscribed capital and fully paid b) Subscribed and not fully paid

### Authorized share capital

is given in memorandum of association of company it gives information about how much money company can raised through public through share capital.

### Issued capital :

It is the amount which company has issued to public for raising share capital.

### Subscribed capital :

The share buy by pubic is called as subscribed capital

Subscribed and fully paid if the share is fully paid by public .Example  suppose company issue share Rs 10 and paid by public in parts if it fully paid then it is subscribed and fully paid.

Example given below

 Division of share Rs 10 status 3 Application money paid 3 Allotment money paid 2 Calls (first call) paid 2 Calls  (second call) paid Total 10 If its fully paid then Subscribed and Fully paid

Subscribed and not fully paid: if share is not fully paid by pubic such are known as subscribed an dnot fully paid.

example given below

 Division of share Rs 10 status 3 Application money paid 3 Allotment money paid 2 Calls (first call) Not paid 2 Calls  (second call) Not paid Total 10 If its fully paid then Subscribed and not Fully paid

• Share at par