Assignment – MGT211 Student I’D: BC230202357

Case:
Alpha and Gamma are friends since their childhood. They have got whole of their education in
every school jointly. Recently, both of them have graduated from a local business school getting degrees
in business management. After this graduation, they decided to start a business of online car rental. For
that purpose, they got developed a mobile application named Carg that can be run on all Android and
Apple smart phones. Further, they shared their business plan with a professional promotor to setup a
new business entity. With all the necessary documentation, the new entity has been successfully
registered on 5 th of January 2023 with the SECP as a limited liability company in the name of Alpha
Limited. It was registered with the capital of Rs. 500,000 divided into 25,000 ordinary shares of Rs. 20
each. On 20th of January, the new company offered 15,000 shares at par to the general public. On 23rd
of January, the company’s bank informed it that application money on 14,500 shares has been received
from the general public in the company’s bank account. Alpha’s management allotted shares to all the
applicants on 31st of January, 2023.

Solution:
In this provided case, company Alpha Limited has various kind of share capital.
Identification of capitals and their kinds are as follows

1. Approved Share Capital:

Approved share capital refers to the maximum amount of share
capital that a company has allowed to issue, as stated in its constitutional documents. In this
case the actual approved share capital is not mentioned, but it indicates that the company is
registered with the capital of Rs. 500,000 divided into 25,000 ordinary shares of Rs. 20 each.
This indicates that the total approved share capital of company is Rs. 500,000.

2. Issued Share Capital:

Issued share capital represents the amount of share capital from
approved share capital which company has issued to its shareholders. In this case the company
has shared 15,000 shares to the public on 20th January of 2023, having value of 300,000.
3. Paid Share Capital:
Paid share capital refers to the portion of issued share capital for those
shares which have been purchased by the shareholders. In this case 14,500 shares have been
purchased by the general public on 23rd January 2023, having value of 290,000.

4. Called-up Share Capital

Called-up share capital includes the portion of paid share capital
which company demands to be paid by the shareholders. In this case it is not exactly mentioned
whether the called-up share has been demanded or paid.

5. Paid-up Share Capital:

Paid-up share capital includes the portion of called-up share capital
which has actually paid to the company by the shareholders. In this case it is not exactly
mentioned whether the paid-up capital has been received by the company.