LWFully paid/ unpaid share capital

Strange as it may sound, shares can and are issued in the UK that are nil paid, partly paid or fully paid. Shares can no longer be issued at a discount to their nominal value in the UK but this has no impact on how they are paid for by shareholders. Subject to the articles of association, shareholders need only pay for shares when called upon and may do so in stages when called upon by a company. In such circumstances, a company will have issued share capital, called upon share capital and paid share capital. Unpaid share capital may be called upon by an administrator if a company gets into financial distress. In these circumstances (when called upon by administrator or company) shareholders become debtors of the company for their unpaid part of share capital. Public companies are subject to additional statutory provisions and I believe shareholders must pay at least a quarter of nominal share capital issued and all of share premium. If you have further questions please ask.

Hi Jon Thankyou very much for your explanation...that is very helpful So 'paid' share capital is the same as 'called upon' share capital? and Share capital = Called upon (paid) SC + Unpaid SC? thanks again

I will try to illustrate with an example to perhaps make it clearer than I was last time. For example, ABC ltd issues shares (one million shares) to shareholders and these are allotted to various shareholders who have collectively paid £250000 into the company as part payment for these shares. This would be recorded as a debit entry in the account of bank of ABC ltd and a credit in the share capital account each for £250000. As part of the articles of association of ABC ltd, the directors are conferred with the power to call up the remaining share capital on demand. The directors then write to shareholders with a demand for them for them to pay another 25p on each share. This would result in the called up share capital being entered into accounts of company. The called up share capital would be recorded as credit on share capital account to the value of £250000. At date statement of financial position is issued if say £200000 had been received by company this would have been recorded as an increase in asset of bank of £200000. The remaining £50000 would be recorded in the receivables part of the statement of financial position under the heading called up share capital not paid. So in this example the total nominal share capital of ABC ltd would be £1000000,the called up share capital would be £250000 and the paid share capital would be £450000.The directors would be able to call up another £500000 if needed in future.

So share capital only 'hits' the balance sheet once it is paid/ called up? So, in the above example, final share capital is £500,000? (£250k paid initially, £250k called up). Does the called up £250k appear on the the balance sheet separately, or is the full £500k simply "Share Capital"? Is the nominal share capital of £1,000,000 (or more specifically, the remaining £500k yet to be called up) contained on the balance sheet at all before it is called up? thanks again in advance

In all honesty I am not one hundred per cent sure about the answers to your questions. The Companies Act has a pro forma balance sheet associated with it which has a position on it for called up share capital that is unpaid in the debtors part of balance sheet. I have done some research and believe that the whole million would be recognised as share capital and a debit entry for other receivables (unpaid share capital) would be made under other sundry receivables. I am not sure In terms of the exact disclosures and presentation that these types of transactions would have on the financial statements. A related issue would be directors are a related party to whom significant disclosures must be made and the issue of shares that are not fully paid to directors would I imagine have to be recorded.

Hi Jon thankyou very much for your assistance- it is much appreciated

You are welcome.