Skip to content

CS Executive · Corporate Accounting and Financial Management · Accounting for Share Capital

Bharat Ltd has 1,00,000 fully paid equity shares of ₹100 each, and its articles authorise alteration. By resolution in general meeting it sub-divides each share into 10 shares of ₹10 each. Which statement is correct?

Capital remains ₹1,00,00,000, now represented by 10,00,000 shares of ₹10 each. Sub-division is an alteration of share capital done in general meeting if the articles authorise it. It does not reduce capital, so no Tribunal confirmation for reduction is needed.

  1. APaid-up capital becomes ₹1,00,00,000 across 10,00,000 shares of ₹10 each, and Tribunal confirmation as for reduction is required
  2. BPaid-up capital falls to ₹10,00,000 because face value falls
  3. CPaid-up capital stays ₹1,00,00,000 across 10,00,000 shares of ₹10 each, and this is an alteration, not a reductionCorrect
  4. DPaid-up capital rises to ₹10,00,00,000 because the number of shares rises

Explanation

Capital = 1,00,000 × ₹100 = ₹1,00,00,000. Sub-division gives 1,00,000 × 10 = 10,00,000 shares of ₹10, totalling ₹1,00,00,000 unchanged. It is an alteration by general meeting if authorised by articles, not a reduction needing Tribunal confirmation under the reduction section.

Did you get it right without looking?

One question tells you little. A timed set on Accounting for Share Capital shows your real accuracy, how long you take and where you lose marks.

Practise Accounting for Share CapitalFree diagnostic mock

More Accounting for Share Capital questions