No, it is correctly worded!

Unpaid called-up share capital is a significant aspect of corporate finance, representing the outstanding amount of share capital that shareholders have committed to pay but have not yet fulfilled. It is disclosed separately on the balance sheet under the equity section as a liability.

Don’t forget that the entity exists as a result of interested parties getting together to form ‘the company’. Those human (mostly) interested parties undertake to put in finance to ‘float’ the company. That finance is possibly not all required in the initial stage of the company’s existence, so some of these parties’ undertakings will not immediately be required. But the undertaking remains as the liability of these parties. There may be confusion in your mind with the use of the word ‘company’ as in the expression ‘it is a reserve liability of the company’

In this context, the company is the aggregation of these participating interested investors

Does that make it any clearer?

Comments

OliviaJoy24 says
September 29, 2024 at 12:31 am
Please, has Q4 been worded wrong, it doesn’t make sense to me either.
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- MikeLittle says
  September 29, 2024 at 7:17 am
  No, it is correctly worded!
  Unpaid called-up share capital is a significant aspect of corporate finance, representing the outstanding amount of share capital that shareholders have committed to pay but have not yet fulfilled. It is disclosed separately on the balance sheet under the equity section as a liability.
  Don’t forget that the entity exists as a result of interested parties getting together to form ‘the company’. Those human (mostly) interested parties undertake to put in finance to ‘float’ the company. That finance is possibly not all required in the initial stage of the company’s existence, so some of these parties’ undertakings will not immediately be required. But the undertaking remains as the liability of these parties. There may be confusion in your mind with the use of the word ‘company’ as in the expression ‘it is a reserve liability of the company’
  In this context, the company is the aggregation of these participating interested investors
  Does that make it any clearer?
  Log in to Reply
Ldusabe says
July 17, 2020 at 4:06 pm
Having trouble understanding Q4. Are you able to expand please.
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- Sybs says
  August 12, 2021 at 12:17 pm
  Me too. I will appreciate a clarification as well. Thank you
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jcas says
September 19, 2018 at 7:42 am
Q3 shouldnt this answer be both shares and debentures
Please clarify
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