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A corporation's share capital, commonly referred to as capital stock in the United States, is the portion of a corporation's equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash. Share capital may also denote the number and types of shares that compose a corporation's share structure.
Definition
In accounting, the share capital of a corporation is the nominal value of issued shares (that is, the sum of their par values, sometimes indicated on share certificates). If the allocation price of shares is greater than the par value, as in a rights issue, the shares are said to be sold at a premium (variously called share premium, additional paid-in capital or paid-in capital in excess of par).[citation needed]
This equation shows the constituents that make up a company's real share capital:
This is differentiated from share capital in the accounting sense, as it presents nominal share capital and does not take the premium value of shares into account, which instead is reported as additional paid-in capital.
Legal capital
Legal capital is a concept used in European corporate and foundation law, United Kingdom company law, and various other corporate law jurisdictions to refer to the sum of assets contributed to a company by shareholders when they are issued shares. The law often requires that this capital is maintained, and that dividends are not paid when a company is not showing a profit above the level of historically recorded legal capital.
See also
- Balance sheet
- Capital impairment
- Market capitalization
- Paid-in capital
- Share dilution
- Share premium account
References
- "Share Premium Account". Corporate Finance Institute. December 13, 2022. Retrieved August 13, 2023.
- Thakur, Madhuri (August 29, 2020). Vaidya, Dheeraj (ed.). "Legal Capital". WallStreetMojo.com. CFA Institute. Retrieved May 12, 2022.
This article needs additional citations for verification Please help improve this article by adding citations to reliable sources Unsourced material may be challenged and removed Find sources Share capital news newspapers books scholar JSTOR May 2022 Learn how and when to remove this message A corporation s share capital commonly referred to as capital stock in the United States is the portion of a corporation s equity that has been derived by the issue of shares in the corporation to a shareholder usually for cash Share capital may also denote the number and types of shares that compose a corporation s share structure Share certificate of the Boston American League Base Ball Club shows a capital stock of 100 000 DefinitionIn accounting the share capital of a corporation is the nominal value of issued shares that is the sum of their par values sometimes indicated on share certificates If the allocation price of shares is greater than the par value as in a rights issue the shares are said to be sold at a premium variously called share premium additional paid in capital or paid in capital in excess of par citation needed This equation shows the constituents that make up a company s real share capital Share capital Number of shares issued Par value Share premium displaystyle sum text Share capital Number of shares issued times text Par value Share premium This is differentiated from share capital in the accounting sense as it presents nominal share capital and does not take the premium value of shares into account which instead is reported as additional paid in capital Legal capitalLegal capital is a concept used in European corporate and foundation law United Kingdom company law and various other corporate law jurisdictions to refer to the sum of assets contributed to a company by shareholders when they are issued shares The law often requires that this capital is maintained and that dividends are not paid when a company is not showing a profit above the level of historically recorded legal capital See alsoBalance sheet Capital impairment Market capitalization Paid in capital Share dilution Share premium accountReferences Share Premium Account Corporate Finance Institute December 13 2022 Retrieved August 13 2023 Thakur Madhuri August 29 2020 Vaidya Dheeraj ed Legal Capital WallStreetMojo com CFA Institute Retrieved May 12 2022
