Table of Contents
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.
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.
Maua Plc was formed with legal rights to be able to issue 200,000 Shares of Shs. 100 each. They have actually issued 150,000 shares and none of the shares have yet been fully paid up. So far the company have made calls of Shs 100 per share. All the call have been paid by shareholders except for 40,000 share. all issued shares were subscribed
Required:
Authorized Share capital
Issued share capital
Called up capital
Calls in arrear
Paid up capital
Subscribed share capital
Hi Mariano Chopra,
The authorized capital= 200,000 × 100 = 20,000,000
Issued Capital = 150,000 × 100 = 15,000,000
Subscribed Capital = 150,000 × 100 = 15,000,000
Called up capital = 150,000 × 100 = 15,000,000
Paid up capital = [(150,000 – 40,000) × 100] = 11,000,000
Calls in arrears = (40,000 × 100) = 4,000,000
Isn’t the paid up capital 5,50,000 x 4?
Yes, paid up capital is 5,50,000 x 4 = 22,00,000. You may refer the article https://www.monetarysection.com/topics/types-of-share-capital for your reference.
Hello Pooja, What if subscription money is paid to a company and shares are never issued? What is the recourse?
Hello Marni,
In such a scenario, companies are obliged to repay the amount within time period specified by SEBI.
I am talking about a private limited company as I paid money and company never issued shares even though I was a promoter director who subscribed for shares and paid for them.
Marni, Does the memorandum state that you hold the shares of that company?
Yes
The data given is very clear with example. so it is easy to understand.
A company issued 1,00,000 shares @ Rs.10 each (denomination 5+3+2) which was fully sunscribed. What are the journal entries for this…?
Hello Pillala,
There are different stages which needs to be followed by companies
Stage 1: When application money is received:
Bank A/c …………….. Dr.
To Share Application A/c
Stage 2: When allotment is made:
Share Application A/c …………….. Dr.
To Share Capital A/c
Stage 3: When allotment money becomes due:
Share Allotment A/c …………….. Dr.
To Share Capital A/c
Stage 4: When allotment money is received:
Bank A/c …………….. Dr.
To Share Allotment A/c
Stage 5: When first call becomes due:
Share First Call A/c …………….. Dr. 5,00,000
To Share capital A/c 5,00,000
Stage 6: When First call money is received:
Bank A/c ……………. Dr. 5,00,000
To Share First Call A/c 5,00,000
Stage 7: When second call becomes due:
Share Second Call A/c …………….. Dr. 3,00,000
To Share capital A/c 3,00,000
Stage 8: When second call money is received:
Bank A/c ……………. Dr. 3,00,000
To Share Second Call A/c 3,00,000
Stage 9: When third call becomes due:
Share Third Call A/c …………….. Dr. 2,00,000
To Share capital A/c 2,00,000
Stage 10: When third call money is received:
Bank A/c ……………. Dr. 2,00,000
To Share Third Call A/c 2,00,000
What is meant by fully subscribed…..?
Hello again,
It means that all available shares have been successfully sold to investors and not a single share is remained unsold.
Hello Pooja,
Could NCLT order a police investigation into mis-appropriation of funds in a private limited company as per the new companies Act? If yes, under what section?
Thanks.
Hello Marni,
The tribunal orders an investigation if certain requirements under Chapter XVI of companies act 2013 being met. You may refer section 241 and 244 of this chapter.