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ACCA Applied Skills · Corporate and Business Law (Global) · Share capital

Zenith Foods Ltd has issued 100,000 shares of $1 each. Shareholders have paid $0.60 per share on all of them, and the company has made no call for the remaining $0.40 per share. Which of the following correctly describes the company's position?

Issued capital is the nominal value of allotted shares, $100,000. Only $60,000 has been paid, so paid-up capital is $60,000. The remaining $40,000 has not been demanded by the company, so it is uncalled capital, not called-up or unpaid called capital.

  1. AIssued share capital is $100,000 and paid-up capital is $60,000, with $40,000 being uncalled capitalCorrect
  2. BIssued share capital is $60,000 and paid-up capital is $60,000, with no uncalled capital
  3. CIssued share capital is $100,000 and paid-up capital is $100,000, since the shares are fully allotted
  4. DIssued share capital is $60,000 and called-up capital is $100,000, with $40,000 being unpaid

Explanation

Issued capital is the nominal value of shares allotted: 100,000 x $1 = $100,000. Paid-up capital is what has been paid: 100,000 x $0.60 = $60,000. The unpaid $40,000 has not been called, so it is uncalled capital. Option D wrongly treats the uncalled amount as called-up capital.

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