Understanding Different Types of Share Capital

The hierarchy of share capital flows from authorized to issued to subscribed to called up capital. Let me match each term with its appropriate definition:

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(A) Authorised Capital → (III)

Authorised Capital is the maximum share capital that a company can issue as mentioned in its Memorandum of Association. It represents the ceiling limit beyond which the company cannot issue shares without amending the memorandum.

Match: "The amount of share capital which a company is authorised to issue by its Memorandum of Association"

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(B) Issued Capital → (I)

Issued Capital is the portion of authorized capital that the company actually offers to the public. This includes shares given to vendors (for purchasing assets) and signatories (who sign the memorandum).

Match: "Capital which is actually issued to the public for subscription including the shares allotted to vendors and the signatories to the company's memorandum"

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(C) Subscribed Capital → (IV)

Subscribed Capital is the portion of issued capital that investors have agreed to buy. Not all issued capital may be subscribed if there's under-subscription.

Match: "It is that part of the issued capital which has been actually subscribed by the public"

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(D) Called up Capital → (II)

Called up Capital is the amount that the company has demanded from shareholders out of the subscribed capital. Companies may call up the share amount in installments (application, allotment, calls).

Match: "It is that part of the subscribed capital which has been called up on the shares, i.e., what the company has asked the shareholders to pay"

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Final Matching

(A) - (III), (B) - (I), (C) - (IV), (D) - (II)

Correct Answer: Option 3