Salman Khan Being Human Kand 5: Red Sun Export Private limited - Page 3

Authorized capital: The amount of capital with which a company is registered with the registrar of companies (body responsible for registration of companies). It is the maximum amount of capital which a company can raise through shares i.e. shared capital can be maximum up to the authorized capital and not beyond. Due to this reason companies are registered with such authorized capital which is well above their current needs of financing so that if more is needed in future then it is easily possible. Authorized capital is also called Registered capital or Nominal capital.

Subscribed capital: The amount of capital (out of authorized capital) for which company has received applications from the general public who are interested in buying shares. If this term is too technical to be understood then subscription is simply an application in which investors expresses his interest to buy shares in the company. Usually only that much shares are subscribed which company intends to issue later. But sometimes, if company is in good shape then more and more people will be interested in buying shares and in this case over-subscription will be the result. But if company's financial position is not sound or due to other factors it may be possible that subscriptions are received for lesser then intended shares in which case there will be under-subscription.

Issued capital: The amount of capital (out of subscribed capital) which has been issued by the company to the subscribers and thus are now shareholders.

Called-up capital: In some jurisdictions, company is permitted to ask for only part of the total issued capital i.e. company will require shareholders to pay only part of the amount of the shares they hold and not to pay fully. The partial amount (out of issued capital) so asked by the company from the shareholders out of the total value of shares is called-up capital.

Paid-up capital: The amount of capital (out of called-up capital) against which the company has received the payments from the shareholders so far.

Example:

ABC Ltd was registered with registrar with a registered capital of Rs. 20,000,000 where each share is of Rs. 10.

In response to the advertisements made by the company to buy shares in the company applications have been received for 1,000,000 shares but company actually issued 700,000 shares where company has called for Rs. 8 per share.

All the calls have been met in full except three shareholders who still owe for their 6000 shares in total.

Solution:

Authorized capital = Rs. 20,000,000

Subscribed capital = 1,000,000 x Rs. 10 = Rs. 10,000,000

Issued capital = 700,000 x Rs.10 = Rs. 7,000,000

Called-up capital = 700,000 x Rs. 8 = Rs. 5,600,000

Paid-up capital = 5,600,000 - (6000 x Rs. 8 ) = Rs. 5,552,000

--------------------------

so, to match up authorised capital and paid up capital diff, share helders feel the gap. But here, neither the company is known, now it was listed for buying shares, its gap of authorised and paid up capital is @ 4 lakhs. In 4-5 lakhs u cant even buy even small business. So why n how this company is running for 16 years. Only family names r attached with the company, nobody else. Its staus is active, so what r those activities. Its title says export, what r they exporting? Entertainment? Which r those events? What is salman's parents' role in it? Why was Katrina a member of board and then excluded? R this company showing losses? To save salman's earnings taxes? And if losses r there then it wud have been shut down. If there r profits, the paid up capital shud read authorised capital and company can go public limited. PPl will buy shares of a profitable company easily.

This is goin on for 16 years... 5 lakhs in 99 was big money compared to these days.

There is huge golmaal between this company, BH and salman's income. Why just blame Reshma and Shera, salman's accountant must be very smart n crook too.

More digging needed.