The amount of share capital which a company is authorised to issue by its Memorandum of Association is known as ........
Show Hint
- Nominal capital
- Issued capital
- Reserve capital
- Subscribed capital
The Correct Option is A
Solution and Explanation
To solve the problem, we need to identify the term for the amount of share capital a company is authorised to issue as per its Memorandum of Association.
1. Understanding the Memorandum of Association:
The Memorandum of Association is a legal document that outlines the fundamental details of a company, including its objectives, powers, and scope. One of its key components is the capital clause, which specifies the maximum amount of share capital the company is authorised to issue.
2. Identifying the Term:
The amount of share capital that a company is authorised to issue, as stated in the Memorandum of Association, is known as 'Authorised Capital' (also called Nominal Capital or Registered Capital). This is the maximum limit of share capital that the company can issue without amending its Memorandum.
Final Answer:
The amount of share capital which a company is authorised to issue by its Memorandum of Association is known as Nominal Capital.
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