Called-Up Share Capital: Financial Term for Partially Paid Shares

Definition

Called-Up Share Capital refers to the portion of the issued share capital of a company for which payment has been requested from shareholders. It involves shares that are partly paid, and the amount called up is the portion of the share’s price that shareholders have been asked to pay.

Types of Share Capital

• Issued Share Capital: The total value of shares that a company has issued to shareholders.
• Called-Up Share Capital: The portion of issued share capital that shareholders have been asked to pay.
• Paid-Up Share Capital: The amount of money shareholders have fully paid for their shares.
• Uncalled Share Capital: The portion of issued share capital that has not yet been called up by the company.

Detailed Explanations

When a company issues shares, they may not require the full payment of the share price immediately. Instead, they call up portions of the share price as needed. This allows the company to manage its capital requirements more efficiently and provides shareholders with flexibility in their financial commitments.

Mathematical Models

Called-Up Share Capital Formula:

For example, if a company issues 1,000 shares with a call price of $5 per share, the Called-Up Share Capital would be:

Importance

Called-Up Share Capital is crucial for understanding a company’s financial health and capital structure. It reflects the funds that the company has requested and can potentially call upon to meet its financing needs. This practice is common in industries where large-scale investments are required in stages.

Related Terms

• Paid-Up Share Capital: The amount fully paid by shareholders on the shares issued to them.
• Issued Share Capital: The total value of shares a company has issued to its shareholders.
• Authorized Share Capital: The maximum value of shares that a company can legally issue.

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