Issued capital
Also written Issued share capital
The part of a company's authorised capital that has actually been issued to investors — promoters, the public or specified investors — counted at face value, whatever price the shares were sold at.
In plain language
A company's Memorandum of Association fixes the most share capital it may ever have. That ceiling is the authorised capital. The company does not have to use all of it at once, and usually does not.
Whenever it needs money, it issues a slice of that ceiling — to its promoters when it starts, to the public in an IPO, to a strategic investor in a preferential allotment, to existing shareholders in a rights issue. The total of all the slices issued so far is the issued capital.
Two things about it are easy to forget. It is counted at face value, so a share sold at Rs 50 adds only its Rs 10 face value to issued capital. And it says nothing about whether the money has all come in — that is what paid-up capital measures.
How it works
The workbook sets the three capital figures inside one another and asks candidates to remember the order:
Paid-up capital ≤ Issued capital ≤ Authorised capital
Issued capital may be issued at face value, at a premium (above face value), or in special cases at a discount. The number of shares issued is the company's outstanding shares — in the workbook's example, Rs 10 crore of issued capital in Rs 10 shares is 1 crore outstanding shares.
What moves it:
| Event | Effect on issued capital |
|---|---|
| IPO or FPO by fresh issue | Rises — new shares are allotted |
| Offer for sale | No change — existing shares change hands; proceeds go to the sellers |
| Bonus issue | Rises — more shares outstanding, no money received |
| Rights issue / preferential allotment / conversion of FCDs or warrants | Rises |
| Buy-back | Falls — bought-back shares are extinguished |
| Forfeiture of partly paid shares | Falls — a reduction that needs a special resolution |
| Split / consolidation | Share count changes, rupee total does not |
Issued capital is also a reconciliation item. The depositories' Distinctive Number database records, for each listed company, the issued capital, the DN ranges, and how much is held in physical and in demat form — so that issued capital, listed capital and demat capital can be tied out.
The formula
Issued capital = Number of shares issued × Face value
Outstanding shares = Issued capital ÷ Face value
Share premium = Number of shares issued × (Issue price − Face value)
A worked example
Illustrative figures. A company has authorised capital of Rs 50 crore and 3 crore shares of Rs 10 in issue.
Issued capital before the IPO = 3 crore × Rs 10 = Rs 30 crore
The IPO. It issues 1 crore fresh shares at Rs 180 and, in the same offer, a promoter sells 50 lakh existing shares.
Fresh issue adds to issued capital = 1 crore × Rs 10 = Rs 10 crore
Fresh issue adds to share premium = 1 crore × Rs 170 = Rs 170 crore
Offer for sale adds to issued capital = Rs 0
Issued capital after the IPO = 4 crore shares × Rs 10 = Rs 40 crore
The company received Rs 180 crore. The promoter received the OFS money. Issued capital records only Rs 10 crore of all that.
Three years later, a buy-back of 20 lakh shares:
Shares outstanding = 4 crore − 20 lakh = 3.8 crore
Issued capital = 3.8 crore × Rs 10 = Rs 38 crore
Throughout, issued capital stays under the Rs 50 crore authorised ceiling — the headroom that any later bonus or rights issue will need.
Why NISM asks about it
Chapter 2.4 (Equity Terminology) defines issued capital alongside authorised, paid-up and outstanding shares and works the Rs 20 crore / Rs 10 crore example; the inequality is flagged there as something to remember. Chapter 7.4 supplies the fresh-issue-versus-offer-for-sale contrast, Chapter 2.6 the ways share capital is reduced, and Chapter 12.6.1 the DN database. Expect a fact pattern asking for one of the three capital figures, or a statement to mark true or false about which events change the share capital.
Common exam traps
- Issued capital is counted at face value. The premium goes to the share premium account, never into issued capital.
- An offer for sale does not change issued capital. The workbook is explicit: the list of shareholders changes, the amount of share capital does not.
- Issued is not paid-up. When shares are issued partly paid, issued capital is the full face value; paid-up capital is only what has been collected.
- Issued capital can never exceed authorised capital. A question implying otherwise is testing whether you remember the inequality.
- A bonus issue raises issued capital without any money coming in; a buy-back lowers it because the shares are extinguished.
- A split changes the number of shares, not the rupee amount of issued capital — 100 shares of Rs 10 become 200 of Rs 5.
Where this is taught
- Series II-A · Chapter 2: Characteristic of Equity Sharesintroduced here
- Series II-B · Chapter 2: Characteristic of Equitiesintroduced here
Related terms
- BuybackA company purchasing its own shares out of reserves and extinguishing them, reducing share capital and raising earnings per share for the shareholders who remain.
- Authorised capitalThe maximum amount of share capital a company is allowed to issue, fixed in its Memorandum of Association — a ceiling on what can be created, not money the company has.
- Paid-up capitalThe part of the issued capital that shareholders have actually paid for — issued capital less the calls still outstanding on partly paid shares.
- Share premiumThe amount a company receives over the face value of a share when it issues shares above par — Rs 40 on a Rs 10 share sold at Rs 50. It is capital raised, not profit.
- Bonus sharesAdditional shares issued free to existing shareholders in proportion to their holding — no tax at allotment, a nil cost of acquisition, and a fresh holding period from the allotment date.
- Partly paid-up sharesShares on which the company has not yet collected the full face value; the holder must pay the balance when called, and on default the shares — and the money already paid — can be forfeited.
- Anti-dilution rightsA special shareholder right to buy a proportional number of new shares when a company issues fresh securities, so the shareholder's existing percentage ownership does not shrink.
- Sponsored DR issueA depository receipt issue built from existing shares bought back from current shareholders, rather than from fresh shares issued by the company — the alternative being an unsponsored or fresh-share DR issue.
- Closely held companyA company whose equity is held only by promoters and a handful of other investors, with no shares offered to the public — it stays free of the disclosure duties a listed company carries.
- Identified PersonsThe select group a company names to receive a private placement under Section 42 — capped at 50 allottees a year excluding QIBs and ESOP employees, with allotment within 60 days or a mandatory refund.