Page 23 - Ebook Financial Accounting 3

2.2 The terminology used to identify different amounts of shares capital

Paid-up

Called-up
Capital
Issued Unpaid
Capital
Authorized Uncalled
Capital Capital

Unissued
Capital

Figure 2.3
➢ Authorised Capital
✓ Also known as registered capital / nominal capital.

✓ Capital which enables the company to be register and operate.
✓ Show the maximum value of share that company can issue.

✓ If the company issue shares more than this value, the transaction will be void.

➢ Issued Capital

✓ A part of the authorized capital of a company which has been issued to its
shareholders.

✓ Company not necessarily issue all the capital simultaneously.

✓ The number of issued must not exceed the maximum authorized share capital.
✓ It is a source of funding where creditor can make their claims.

✓ Example: Megah Bhd has issued 5 billion shares at RM5 per share and they
are fully paid up. The issued capital will be RM25 billion.

➢ Called-up and Uncalled Capital

✓ Called-up capital is the amount that the shareholders are required to pay up on

the shares they have subscribed for.
✓ It is the part of subscribed capital that the company has call shareholder to

pay.
✓ Called-up capital is the amount that the shareholders are required to pay up on

the shares they have subscribed for.

17