Question
Alpha and Gamma are friends since their childhood. They have got whole of their education in every school jointly. Recently, both of them have graduated from a local business school getting degrees in business management. After this graduation, they decided to start a business of online car rental. For that purpose, they got developed a mobile application named Carg that can be run on all Android and Apple smart phones. Further, they shared their business plan with a professional promotor to setup a new business entity. With all the necessary documentation, the new entity has been successfully registered on 5 th of January 2023 with the SECP as a limited liability company in the name of Alpha Limited. It was registered with the capital of Rs. 500,000 divided into 25,000 ordinary shares of Rs. 20 each. On 20th of January, the new company offered 15,000 shares at par to the general public. On 23rd of January, the company’s bank informed it that application money on 14,500 shares has been received from the general public in the company’s bank account. Alpha’s management allotted shares to all the applicants on 31st of January, 2023.
You are required to identify the kinds of share capital presented in this case describing briefly the each kind.
Assignment Solutions:
Answer
1. Authorized Share Capital
The authorized share capital refers to the maximum amount of capital that a company is authorized to issue to its shareholders. In this case, the authorized share capital is not explicitly mentioned, but it can be inferred that the company has the authority to issue up to 25,000 ordinary shares of Rs. 20 each, as stated during the company’s registration.
2. Issued Share Capital
The issued share capital represents the portion of the authorized share capital that a company has actually issued to its shareholders. In this case, the company has issued 15,000 shares to the general public on 20th January.
3. Subscribed Share Capital
The subscribed share capital is the portion of the issued share capital that has been subscribed or applied for by the shareholders. On 23rd January, the company’s bank informed that application money for 14,500 shares has been received from the general public. Therefore, the subscribed share capital in this case is 14,500 shares.
4. Called-up Share Capital
The called-up share capital is the portion of the subscribed share capital that the company has requested the shareholders to pay. In this case, it is not explicitly mentioned whether the called-up share capital has been requested or not.
5. Paid-up Share Capital
The paid-up share capital represents the amount of the called-up share capital that has been paid by the shareholders. In this case, it is not mentioned whether the shareholders have paid the called-up share capital or not.
