A share is a unit of capital or an equal portion of a company’s share capital, ownership of which is represented by a share certificate. In simple terms, shares are the divisions of a company’s capital. For example, if a company has a capital of ₹10,00,000 divided into 10,000 units of ₹100 each, then each unit of ₹100 is called a share. Shares are usually numbered for easy identification and are transferable in the manner prescribed by the Articles of Association. According to the Companies Act, 2013, “shares means shares in the share capital of a company and includes stock except where a distinction between stock and shares is expressed or implied
Disclosure of Share Capital in the Balance Sheet:
Share Capital of a company is disclosed in its Balance Sheet as follows:
Notes to Accounts:
*NOTES:
The Subscribed and Paid up Share Capital includes Unpaid Amount on Shares subscribed by the subscribers to Memorandum of Association and such unpaid amount will be disclosed under the head 'Current Assets' and sub-head 'Other Current Assets'.
Illustration 1:
Akanksha Ltd. was formed with a capital of ₹10,00,000 divided into 10,000 Equity Shares of ₹100 each. Out of these 3,000 Equity Shares were issued to vendors as fully paid-up in return for the purchase consideration for a fixed asset acquired. 5,000 shares were offered to the public, and the issue was fully subscribed. The directors called ₹80 per share and received the entire amount in full except a call of ₹20 per share on 600 shares. Show the relevant items in the Balance Sheet of Akanksha Ltd.
Solution:
Notes to Accounts:
1) 3,000 Equity Shares of ₹100 each were allotted as fully paid up as a contract without payments being received in cash.
2) Calls Unpaid on Shares by Others (600 x 20) ₹12,000
Illustration 2:
Nupur Ltd. has an authorised capital of ₹80,00,000 divided into 8,00,000 shares of ₹10 each. The company allotted 10,000 shares of ₹10 each as fully paid to the underwriters and 5,000 equity shares of ₹10 each as fully paid to the vendors against the purchase of land and offered 4,00,000 equity shares of ₹10 each (₹8 called-up) to the public. The issue was fully subscribed. All money were duly received, except:
Sukant, who holds 4,500 shares, has not paid anything after Application Money (₹3 per share)
Sayeba, who holds 500 shares, has paid only ₹6 per share.
Sahil, who holds 500 shares, has paid only ₹6 per share.
Shares held by Sukant were forfeited. Show the Share Capital in the Balance Sheet of Nupur Ltd. along with Notes to Accounts.
Solution:
Notes to Accounts:
1) 5,000 Equity Shares were allotted as fully paid up as a contract without payments being received in cash.
2) Calls Unpaid by Others [(4,500 x 5) + (1,000 x 2)] ₹24,500
3) Forfeited Shares (Amount originally paid up) [4,500 x 3] ₹13,500