(i) Authorized Share Capital : Authorized Capital refers to that Amount which is Stated in the Memorandum of Association . This is the Minimum Capital for which a Company is Authorized to Issue Shares during its Lifetime. This Capital as also known by the name of Registered Capital or Nominal Capital .
(ii) Calls-in-Arrears : It often happens that some Shareholders Fail to Pay the Amount of Allotment or Call when it becomes Due . This is known as Calls-in-Arrears . There are Two Methods to Deal with Calls-in-Arrears :
- Without Opening Calls-in-Arrears Account : Under this Method there is No Need to Open Calls-in-Arrears Account . In such a case the Actual Amount Received from the Shareholders is Credited to the Call Account and all Account will show a Debit Balance, Equal to the Unpaid Amount of the Call . On a Subsequent Date, when the Unpaid Amount is Received , Bank Account is Debited and the Relevant Call Account is Credited .
- By Opening Calls-in-Arrear Account : Under this Method, “Calls-in-Arrears Account” is Opened and the Account is Debited when Some Amount of Allotment or Calls is Not Received. On a Later Date , when the Arrear Amount is Received , Bank Account is Debited and the Calls-in-Arrear Account is Credited .
(iii) Pro-Rata Allotment : In this case, No Application as for Shares is Refused and No Applicant is Allotted the Shares in Full . Each Applicant Receives the Share in the same Proportion which is the Ratio of Total Number of Shares Offered to the Total Number of Shares Applied for . In this case, the Excess Application Money Received is Normally Adjusted towards the Amount Due on Allotment. In case, if the Excess Money is More than the Amount Due on Allotment of Shares, the Excess Amount may either be Refunded or Credited to Calls-inAdvance Account .
(iv) Preference Share : Preference Share are the Shares that carry the following Two Rights :
- They have a Right to Receive Dividend at a Fixed Rate before any Dividend is Paid on the Equity Shares .
- When the Company is Wound Up they have a Right to the Return of Capital before that of Equity Shares. In addition to the above, the Preference Shares may carry some More Rights such as the Right to Participate in Excess Profits when a Specified Dividend has been Paid on the Equity Shares or the Right to Receive a Premium at the Time of Redemption .
