Paid Up Capital

Paid-up capital is the portion of the authorized share capital that has been paid for by shareholders at the time of subscription or purchase. It is also referred to as the contributed capital and represents the amount paid in cash or other assets for the shares.

Formula:

Paid-up capital = Issued shares × par value per share

Example:

If a company has issued 10,000 shares of $10 par value and has received full payment for 5,000 shares, the paid-up capital would be:

Paid-up capital = 5,000 shares × $10 par value = $50,000

Key points:

• Paid-up capital is a component of the company’s shareholders’ equity.
• It is used to raise initial capital and provide a base for the company’s operations.
• The paid-up capital can be increased through new share issuance or through the receipt of additional investment.
• It is important for companies to have sufficient paid-up capital to ensure financial stability and to meet their obligations to creditors and shareholders.