What is share capital?

Prepare for the ATT Law Exam. Practice with multiple choice questions, each providing hints and explanations. Be well-prepared for exam day!

Multiple Choice

What is share capital?

Share capital is the funds a company receives from shareholders when it issues shares, representing the nominal value of those shares that has been paid up. It sits in the equity section of the balance sheet and reflects the original contributed capital at the time of issue (the amount investors paid for the shares’ face value). It is not the profits earned by the company, not the current market value of the shares, and not money borrowed to fund operations. If shareholders pay more than the nominal value, that excess goes to share premium, but the share capital itself is the original paid-up nominal value.

Share capital is the funds a company receives from shareholders when it issues shares, representing the nominal value of those shares that has been paid up. It sits in the equity section of the balance sheet and reflects the original contributed capital at the time of issue (the amount investors paid for the shares’ face value). It is not the profits earned by the company, not the current market value of the shares, and not money borrowed to fund operations. If shareholders pay more than the nominal value, that excess goes to share premium, but the share capital itself is the original paid-up nominal value.

More practice questions