INTRODUCTION TO BUSINESS (MGT211)

ASSIGNMENT 01
Solution:

1. Authorized share capital is the maximum amount of capital that a company can issue to
general public as per in its memorandum of association. In this case, it is of Rs. 500,000
divided into 25,000 ordinary shares of Rs. 20 each.
2. Issued share capital is the portion of authorized capital offered to the general public for
subscription for cash or to some other person for cash or other consideration. The amount of
issued capital should not exceed the amount of authorized capital. In this example, issued
capital is the amount of Rs. 300,000 divided into 15,000 ordinary shares of Rs. 20 each.
3. Unissued share capital is a part of authorized capital that has not been offered till now but
can be offered to the general public in the future. In this example, unissued capital is the
amount of Rs. 200,000 divided into 10,000 ordinary shares of Rs. 20 each.
4. Subscribed share capital is the part of issued capital that has been subscribed (applied) by
the general public. Subscribed capital may exceed the issued capital – over-subscription or
not – under-subscription. It rarely equates the subscribed capital. In this example, issued
capital is the amount of Rs. 290,000 divided into 14,500 ordinary shares of Rs. 20 each.
5. Unsubscribed share capital is the part of issued capital that has not been subscribed (applied)
by the general public. In this example, unsubscribed capital is the amount of Rs. 10,000
divided into 500 ordinary shares of Rs. 20 each.
6. Paid-up capital is the part of subscribed capital, for which the required amount is paid by
the share applicants along with the share applications. In Pakistan, full value assigned to each
share is required to be deposited in the company’s bank account along with the share
application. Hence, these days, share are issued and allotted as fully paid shares. In this
example, whole of the subscribed capital can be termed as the paid-up capital which is Rs.
290,000 divided into 14,500 ordinary shares of Rs. 20 each.