Elucidate what do you mean by Share Capital

Question

Elucidate what do you mean by Share Capital?

Answer 1

Most corporations have one class of shares called common shares, whose holders have the three rights referred to above: “rights to vote, to receive dividends, and to receive the remaining property of the corporation upon dissolution”. In contrast, holders of preferred shares are entitled to receive specified dividends, to be paid in priority over common dividends, and to receive a return of the amount invested before any payments are made to common shareholders. They may or may not have the right to vote. Large multinational corporations often have many classes of shares, and the distinction between common and preferred shares can also begin to blur as the bundle of rights given to each class to attract investors becomes more complex.

Authorized capital is the maximum number (or value) of shares a corporation can issue according to its charter. Only letters patent or memorandum jurisdictions impose such an upper limit. Issued capital refers to shares that have been issued by a corporation; since shares must now be fully paid for when issued, it equals paid-up capital (shares issued and fully paid for). Stated capital equals the amount received for the issue of shares. Par value is a nominal value attached to a share at time of issue; most jurisdictions (those using articles of incorporation) no longer have par value shares.