Types of Capital

Called-Up Capital Depending on the jurisdiction and the business in question, some companies may issue shares to investors with the understanding they will be paid at a later date. This allows for more flexible investment terms and may entice investors to contribute more share capital than if they had to provide funds up front.

Companies may sell capital equipment for different reasons, including sheer necessity or to acquire new fixed assets to replace old ones. However, these examples are not among the daily operations of the business. Capital investments usually remain in use for a number of years.

Issued Share Capital: Issued share capital is simply the monetary value of the shares of stock a company actually offers for sale to investors. The number of issued shares generally corresponds to the amount of subscribed share capital, though neither amount can exceed the authorized amount.

Paid-up capital is created when a company sells its shares on the primary market, directly to investors. Paid-up capital is important because it's capital that is not borrowed. A company that is fully paid-up has sold all available shares and thus cannot increase its capital unless it borrows money by taking on debt. Paid-up capital can never exceed authorized share capital. In other words, the authorized share capital represents the upward bound on possible paid-up capital.

Subscribed share capital refers to the monetary value of all the shares for which investors have expressed an interest. Issued Share Capital: Issued share capital is simply the monetary value of the shares of stock a company actually offers for sale to investors.