Question:
The amount of share capital which a company is authorised to issue by its Memorandum of Association is known as ........
The amount of share capital which a company is authorised to issue by its Memorandum of Association is known as ........
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Authorised/Nominal/Registered Capital is the maximum ceiling for share capital mentioned in the company's Memorandum of Association (MoA).
Updated On: Mar 28, 2025
- Nominal capital
- Issued capital
- Reserve capital
- Subscribed capital
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The Correct Option is A
Solution and Explanation
Step 1: Recall Definitions of Share Capital Types:
- Authorised/Nominal/Registered Capital: Maximum amount stated in MoA.
- Issued Capital: Part of Authorised Capital offered for subscription.
- Subscribed Capital: Part of Issued Capital actually taken up by subscribers.
- Reserve Capital: Part of uncalled capital reserved for winding up.
Step 2: Match Question with Definition:
The question asks for the capital amount a company is *authorised to issue* by its MoA.
This directly matches the definition of Nominal Capital (also known as Authorised or Registered Capital).
Conclusion:
The capital authorised by the MoA is Nominal capital.
- Authorised/Nominal/Registered Capital: Maximum amount stated in MoA.
- Issued Capital: Part of Authorised Capital offered for subscription.
- Subscribed Capital: Part of Issued Capital actually taken up by subscribers.
- Reserve Capital: Part of uncalled capital reserved for winding up.
Step 2: Match Question with Definition:
The question asks for the capital amount a company is *authorised to issue* by its MoA.
This directly matches the definition of Nominal Capital (also known as Authorised or Registered Capital).
Conclusion:
The capital authorised by the MoA is Nominal capital.
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