Company Accounts

Share Capital

Easy

common

What is the nominal share capital?

The amount actually paid by the shareholders

The maximum amount of share capital which a company is authorised to issue.

The amount of capital which is actually applied for by the prospective shareholders.

That part of the authorized capital which is issued by the company.

✅ Correct Option: 2

Nominal share capital (also called Authorized Capital or Registered Capital) is the maximum amount of share capital which a company is authorised to issue as stated in the Capital Clause of its Memorandum of Association.

This represents the upper limit up to which a company can raise capital by issuing shares. The company cannot issue shares beyond this limit without altering the Memorandum of Association through proper legal procedures.

To understand the distinction clearly:

Authorized/Nominal Capital → Maximum limit stated in Memorandum (Option 2 ✓)

Issued Capital → Part of authorized capital actually offered to public (Option 4 refers to this)

Subscribed Capital → Part of issued capital applied for by investors (Option 3 refers to this)

Paid-up Capital → Amount actually received from shareholders (Option 1 refers to this)

For example: If a company's Memorandum states authorized capital of ₹10,00,000, the company cannot issue shares worth more than ₹10,00,000 unless it increases the authorized capital through proper amendment procedures.

Option 2 is correct.

2022: 16 July Shift 2

Identify the correct sequence of steps in the process of Issue of Shares:

A. Making allotment of shares

B. Issue of Prospectus

C. Forfeiture of shares

D. Receiving applications for shares

E. Making calls

Choose the correct answer from the options given below:

2025: 26 May Shift 2

Match List-I with List-II

List-I	List-II
(A) Calls in Arrears	(I) Sometimes shareholders pay a part or the whole of the amount of the calls not yet made.
(B) Calls in Advance	(II) When any shareholder fails to pay the amount due on allotment or on any of the calls
(C) Over Subscription	(III) When number of shares applied for is less than the number for which applications have been invited for subscription
(D) Under Subscription	(IV) When applications for more shares of a company are received than the number offered to the public for subscription

Choose the correct answer from the options given below:

2023: 11 June Shift 3

Calculate the amount of Dividend paid during the year 2022 from the following information :

Balance of Proposed Dividend as on 31st March, 2021 was Rs. 40,000 and on 31st March, 2022 Rs. 60,000. Interim Dividend was paid @20% on share capital. Share capital was Rs. 4,00,000.

2022: 20 Aug Shift 2

Match List I with List II

List I	List II
A. Share forfeiture	I. Reserve Capital
B. Uncalled Capital	II. Pro-rata allotment
C. Over-subscription	III. Capital Reserve
D. Discount on issue of shares	IV. Reissue of shares

Choose the correct answer from the options given below:

2022: 20 July Shift 1

MNO Ltd. forfeited 1,000 shares of Rs. 10 each on which shareholders had paid only application money of Rs. 3 per share. Out of these, 400 equity shares were reissued as fully paid for Rs. 9 per share. The gain on reissue of shares transferred to Capital reserve is :

2026: 21 May Shift 2

The rule contained in Table F shall be applicable which states that interest at a rate not exceeding ______ shall have to be paid on all unpaid amounts on shares for the period intervening between the day fixed for payment and the time of actual payment thereof.

What is the nominal share capital?

Solution

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