A Business Encyclopedia

Paid-up Capital

Definition: The Paid-up Capital refers to the amount that has been received by the company through the issue of shares to the shareholders. Simply, the money injected into the firm by the shareholders in exchange for the shares purchased by them is called the paid-up capital.

The Paid-up capital can be equal to or less than the authorized capital, since, the company may issue fewer shares against the maximum capital limit, it is authorized to sell. If the paid-up capital is equal to the authorized capital, then a company cannot raise its additional capital requirements through the issue of shares, unless the authorized capital is increased. Or otherwise, may resort to the external borrowings to finance its business requirements.

For Example, A firm has an authorized capital of Rs 10,000,000, where the value of each share is Rs 10. The firm received applications for 8,00,000 shares, but it issued only 10,00,000 shares of Rs 8 each. All the calls have been met by the shareholders; then the paid-up capital will be Rs 80,00,000 (10,00,000 x 8).

Thus, the firm’s capital has been funded by Rs 80,00,000 by the shareholders against the number of shares purchased by them. The remaining capital worth Rs 20,00,000 can be raised anytime a firm wants.

Leave a Reply

Your email address will not be published. Required fields are marked *


Related pages

cheque lockboxasset test ratio formulameaning of moratoriumwhat is linear programingproprietorship definitionwhat does guerrilla tactics meancost push inflation demand pull inflationansoff matrix in strategic managementwhat is meant by elasticity of demandelasticity of demand definitionchange agent competenciescyclic unemploymentvertical merger definitionschumpeterian meaningfixed asset turn over ratiowith cost push inflation in the short runstrategic human resource management shrmgrand strategy definitiondefinition of markup pricingexplain elastic demandlaw of diminishing utilitymarket mix definitionjob rotation training methodneoclassic theorypersuasive meaning in tagalogppf termdefine retrenchedmeaning of kinkedindia post mis schemecobb definitiontrendline meaningwhat is the johari windowdef of delegatemotivation meaning in tamilcarrot stick methodequity theory advantages and disadvantagesrationale meaning in telugudemographic segmentation meaningtreasury bills in india meaningemployee pf fundoperant definitionleadership styles laissez fairechit meansprocess reengineering techniquesmeaning of itemizedcost accounting marginal costingpath goal theory robert housefrontal attack strategy exampledefinition of variable expensesgolden parachute definitionexplain arbitragemeaning of g2gwhat is ordinal utilityformula for capmprovident definitionmodigliani miller dividend policyhenri fayol theory of managementwhat is liquidity ratio formulawhat does golden parachute meanimplied meaning in hindimain features of oligopolyconcept of sbucompulsory convertible debenturesmc gregor theory x and yarbitrage algorithmjohari windoeethnocentric meaningduality defexplain the term whistleblowinginventory stock turnoverjudgemental sampling examplemeaning of pert and cpmmodified internal rate of return calculatorwhat is job enrichment in hrmhedging transaction exposureoperant approach