Issued share capital
|Issued share capital|
Issued share capital is the nominal value of the actually issued shares. When issuing shares, the enterprise receives remuneration in cash or as another valuable component of the company. The price of the first issue shares is a matter of negotiations, but where the company's shares are yet listed on the stock exchange, the market price is going to be an important element in the valuation of new issues (D. Needham i in. 1999, s. 102).
It's also "money that company has already raised from shareholders" (Cambridge University 2011, s. 462)
The part of the issued share capital is subscribed capital that is actually subscribed by the public along with the evoked value of the shares. They are also issued other than cash for various reasons and issued as bonus shares which should also be awarded. Shares for which calls are overdue should also be demonstrated by deducting from the capital established. Shares lost due to non-payment must be reported separately. If lost shares are issued again in full or in part, in the case of profits they should be transferred only to the reserve capital account (V.K. Goyal 2007, s. 200).
"The share capital is the capital of a company which is divided into shares which are then bought and owned by the shareholders" (F. Wood, S. Robinson 2009, s. 467).
There are two main types of share capital, namely (F. Wood, S. Robinson 2009, s 467):
- Authorised share capital - the total share capital that the company could issue, also known as nominal capital.
- Issued share capital - the quantity of share capital issued and intended for shareholders.
If all approved share capital was issued, these items are the same. The share capital is included in the balance sheet as additional information to the accounts, while the issued capital is incorporated in the Financed section. The amount of unissued capital can be larger than the share capital if the entire share capital wasn't issued. The difference between them is unissued capital (F. Wood, S. Robinson 2009, s. 467).
The share capital could be considered the company's capital, subject to certain rules regarding the reduction, redemption, and investment of its own company's shares (D.J. Cooke 2011, s. 82).
Authorised share capital is the max number of shares and their value that directors may issue in accordance with the company's statute. The only possibility to increase it is voting by shareholders at the general meeting. By this, they can get assured that share issues are accurately undertaken in relation to the company's targets which could be keeping their company's proportional ownership. The consent to increase the share capital is usually related to detailed plans to enable financing of business development (D. Needham i in. 1999, s. 102).
- Cambridge University (2011), Cambridge Business English Dictionary, Cambridge University Press, Cambridge, s. 462
- Cooke D.J. (2011), Private Equity: Law and Practice, Sweet & Maxwell, London, s. 82
- Goyal V.K. (2007), Corporate Accounting, Excel Books, New Delhi, s. 200
- Needham D. (1999), Business for Higher Awards, Heinemann Educational Publishers, Oxford, s. 102
- Wood F., Robinson S. (2009), Book-keeping and Accounts, Pearson Education Limited, Harlow, s. 467
Author: Radosław Cieślik