Question

A portion of the uncalled capital reserved by a company to be called only in the event of winding up of the company, is called:

• A. Subscribed but not fully paid up capital
• B. Unissued capital
• C. Reserve capital
• D. Subscribed capital

Hint:

Reserve Capital is a special form of uncalled capital that can be demanded only at the time of winding up — not for regular business use.

Answer 1

The Correct Option is C

Reserve capital refers to that portion of the uncalled capital of a company which the company decides to call only in the case of winding up.
According to Section 65 of the Companies Act, 2013, a company (through a special resolution) can reserve a part of its uncalled share capital, which shall not be called except in the event of winding up.
This capital provides an extra layer of protection to creditors in case of the company's liquidation.
- It is not shown separately in the Balance Sheet.
- It is not available for daily business operations or emergencies — only winding up.

Let us clarify the incorrect options:
(A) Subscribed but not fully paid up capital refers to the portion of capital subscribed by shareholders but not yet paid fully — it can be called during normal business.
(B) Unissued capital is that part of authorized capital which has not been issued to the public at all.
(D) Subscribed capital is the portion of issued capital that investors agree to buy.
Thus, the only correct and legally specific term for capital callable at winding up is Reserve Capital.