share capital


Also found in: Dictionary, Wikipedia.
Related to share capital: share premium, Equity Share Capital

share capital

the money employed in a JOINT-STOCK COMPANY that has been subscribed by the SHAREHOLDERS of the company in the form of ORDINARY SHARES (equity) and PREFERENCE SHARES, and which will remain as a permanent source of finance as long as the company remains in existence. See also LOAN CAPITAL, CAPITAL GEARING, STOCK.

share capital

the money employed in a JOINT-STOCK COMPANY that has been subscribed by the SHAREHOLDERS of the company in the form of ORDINARY SHARES (equity) and PREFERENCE SHARES and that will remain as a permanent source of finance as long as the company remains in existence. The providers of share capital share in the (residual) profits of the company in the form of DIVIDEND payments paid out of profits. The dividends paid will tend to vary from year to year with profits earned, although some profits may be retained in the company and added to RESERVES to be used to finance the acquisition of further assets. In this regard shareholders differ from the providers of LOAN CAPITAL, who are rewarded by means of regular INTEREST payments. However, shareholders rank after the providers of loan capital both in terms of receiving current income payments and repayment of the capital sums subscribed in the event of company INSOLVENCY. See CAPITAL-GEARING.