Subscribed share capital – meaning & example

Meaning of subscribed share capital:

Subscribed share capital is that part of issued share capital for which a company has positively received subscription from the investors.

Subscribed share capital

In simple words, when a company issues shares to raise fund, it may or may not find the investors for all of its shares. Thus, the part of issued share capital for which company has successfully found the subscribers is known as subscribed share capital.

Example:

Let’s assume that ABC ltd. is registered with a total authorized share capital of INR 1,00,00,000 divided into shares of INR 10 each. The management issues 8,00,000 shares to raise a fund of INR 80,00,000. However, the investors subscribe for only 6,00,000 shares. The company calls for INR 4 per share out of INR 10 (nominal value of shares) and it receives the amount for only 5,50,000 shares.

Now,

Authorized share capital 1,00,00,000
Issued share capital (8,00,000 × 10) 80,00,000
Subscribed share capital (6,00,000 × 10) 60,00,000

So, from the figures given above, it is clear that the subscribed capital for ABC Ltd. is INR 60,00,000. It means that out of 8,00,000 shares, investors have subscribed only for 6,00,000 shares.

Definition of Treasury bills

Treasury bills are one of the short term debt instruments used by companies to raise funds. In India these type of instruments are issued by the Government of India. T- bills are zero coupon securities means no interest is paid on these instruments.

These bills are issued at price lower than the par value and redeemed at par value. Thus the difference between par value and purchase price becomes the yield for investors.

Definition of Unissued share capital

Unissued share capital is that part of authorized share capital which has not been issued by a company for subscription. A company keeps a part of authorized share capital unissued so that it can use the same in future to raise funds. The part which has been kept reserved by the company represents unissued share capital.