What is the nominal share capital?

Nominal Share Capital (also called Authorized Capital or Registered Capital) is the maximum amount of share capital that a company is authorized to issue to shareholders as stated in the Memorandum of Association at the time of incorporation.

It represents the upper limit up to which a company can raise capital by issuing shares. The company need not issue all of it immediately - it can issue shares in parts as per its requirements.

To understand this better, here's how different types of capital relate to each other:

Authorized/Nominal Capital → Maximum limit fixed in the Memorandum

Issued Capital → Part of authorized capital that the company offers to the public (Option 4 describes this)

Subscribed Capital → Part of issued capital for which applications are received (Option 3 describes this)

Called-up Capital → Part of subscribed capital that the company calls for payment

Paid-up Capital → Part of called-up capital actually paid by shareholders (Option 1 describes this)

The relationship flows as: Authorized Capital ≥ Issued Capital ≥ Subscribed Capital ≥ Called-up Capital ≥ Paid-up Capital

Since nominal share capital is the starting point and represents the maximum authorized amount, Option 2 is correct.