Accounting for Share Capital

and Debentures
UNIT 6
 Joint Stock Company

Meaning:
It is an association of persons formed to carry on business with a view
to earn profit, having a common stock called “Share Capital” which is
divided into equal units called “Shares” held by the persons called
“Share Holders”.
Definition:
Lord Justice Lindley “a voluntary association or organisations of many
persons who contribute money or money’s worth to a common stock
and employ it in some trade or business and share the profit or loss
arising there from”.
 Features of JSC

 Is a association of persons formed to earn profit.

 Compulsory registration under Companies Act.
 It has perpetual succession.
 It is a legal person.
 It is an artificial person, but acts through directors.
 Liability of members is usually limited.
 Shares are freely transferable.
 Company is required to have its own seal which acts as an official
signature.
 Share Capital of a Company

It is the capital raised by the company by the issue of shares.

Different phases of Share Capital:
1) Authorised or Registered or Nominal capital - Maximum amount of capital which a
company is authorised to raise from the public.
2) Issued capital – It is that part of the authorised capital which is issued to the public
for subscription.
3) Subscribed capital – it is that part of the issued capital which is subscribed or
taken- up by the public.
4) Called up capital – it is that part of subscribed capital which is called up by the
company.
5) Paid-up capital – it is that part of the called up capital which is actually paid by
share holders.
 Shares

According to the Indian Companies Act, 1956 as “ A Share is the share in the
Share Capital of the Company”.
 Issue of Shares

 Issue of prospectus
 Minimum subscription
 Application for shares
 Allotment of shares
 Calls on shares