Question

The amount of share capital which a company is authorised to issue by its Memorandum of Association is known as:

• A. Issued Capital
• B. Reserve Capital
• C. Nominal Capital / Registered Capital
• D. Subscribed Capital

Hint:

The term Nominal Capital (or Registered/Authorised Capital) refers to the legal ceiling set in the MoA. A company cannot issue shares beyond this limit without altering the MoA.

Answer 1

The Correct Option is C

Step 1: As per the Companies Act, the Memorandum of Association (MoA) of a company specifies the maximum amount of share capital that a company is authorised to raise.
Step 2: This maximum limit is called Nominal Capital or Authorised Capital, also known as Registered Capital. It is mentioned in the Capital Clause of the MoA.
Step 3: The other types of capital mentioned are:
- Issued Capital: Part of authorised capital offered to investors.
- Subscribed Capital: Part of issued capital actually taken up by shareholders.
- Reserve Capital: Part of subscribed capital reserved to be called only at the time of winding up.