The amount of share capital which a company is authorised to issue by its Memorandum of Association is known as ........
Show Hint
- Nominal capital
- Issued capital
- Reserve capital
- Subscribed capital
The Correct Option is A
Solution and Explanation
To address this issue, we must pinpoint the specific term for the maximum share capital a company is legally permitted to issue, as defined in its Memorandum of Association.
1. The Memorandum of Association Explained:
The Memorandum of Association serves as a foundational legal charter detailing a company's core aspects: its aims, authorities, and operational boundaries. A crucial element within this document is the capital clause, which delineates the upper limit of share capital the company is empowered to distribute.
2. Ascertaining the Correct Terminology:
The maximum share capital a company is authorised to issue, as stipulated in its Memorandum of Association, is identified as 'Authorised Capital'. This designation is also commonly referred to as Nominal Capital or Registered Capital. It represents the ceiling for share capital issuance unless the Memorandum itself is formally revised.
Conclusion:
The quantum of share capital a company is empowered to issue under its Memorandum of Association is termed Nominal Capital.
Top Questions on Shares
- 600 shares of ₹10 each were issued at 20% premium. Final call of ₹3 not received on 100 shares. What is the forfeiture amount?
Alexia Limited invited applications for issuing 1,00,000 equity shares of ₹ 10 each at premium of ₹ 10 per share.
The amount was payable as follows:- On application ₹ 9 per share (Including premium ₹ 6 per share)
- On allotment ₹ 8 per share (Including premium ₹ 4 per share)
- On first and final call ₹ 3 per share.
Applications were received for 1,50,000 equity shares and allotment was made to the applicants as follows:
Category A: Applicants for 90,000 shares were allotted 70,000 shares.
Category B: Applicants for 60,000 shares were allotted 30,000 shares.
Excess money received on application was adjusted towards allotment and first and final call.
Shekhar, who had applied for 1200 shares failed to pay the first and final call. Shekhar belonged to category B.
Pass necessary journal entries for the above transactions in the books of Alexia Limited. Open calls in arrears and calls in advance account, wherever necessary.- Ajay Ltd. forfeited 100 shares of Rs 10 each for non-payment of first call of Rs 1 per share and second and final call of Rs 3 per share. The minimum price per share at which these shares can be reissued will be:
- Read the passage given below and answer the questions: Q5 to Q9.
Ram Motors Ltd. invited applications on 3,000 Equity Shares of ₹100 each at a premium of ₹20. For application ₹50 (including premium), on allotment ₹50, and on final call ₹20. Total applications received were 4,000 and allotted on pro-rata basis. Excess application money adjusted towards allotment. - Want to practice more? Try solving extra ecology questions todayView All Questions
