. Share and Share Capital The term “Capital” is viewed by a layman as the money, which a business persons invest in the business and in case of company raise the capital by issue of shares. They uses this money to meet its requirements by way of acquiring business premises and stock-in-trade, which are called the fixed capital and the circulating capital respectively. The phrase “loan or borrowed capital” is sometimes used to mean money borrowed by the company and secured by issuing debentures.
This, however, is not the proper use of the word “capital”. In case of company limited by shares, the word “capital” means the share capital i.e., the capital in terms of rupees divided into specified number of shares each having fixed rupee value. For e.g. share capital of a company is Rs.
, , which can be divided into , shares of Rs. each or , , shares of Rs. each, whichever is reasonable to the company.