Civil Procedure Code (CPC)

Paid up capital


Dear Experts Please clarify the following for me a) As per companies act what is the minimum paid up capital required and how is it calculated. b)I have seen companies recently incorporated having a very high paid up capital.What is the reason for such companies with no operations as yet to pay such a high paid up capital. Please clarify I would be very grateful. Regards Roshini
 
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Lawyer

Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock. Paid-up capital is only created when a company sells its shares on the primary market directly to investors. When shares are bought and sold between investors on the secondary market, no additional paid-up capital is created because the proceeds of those transactions go to the selling shareholders, not the issuing company.

 

 
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“paid-up share capital” or “share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paidup in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called.

 

 

Name the companies recently incorporated having a very high paid up capital, which you have seen.

 
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as per the recent amendment minimum paid up capital requirement has been deleted.The ereason behind the high capital may be for business strategy or discretion of managemnt.

 
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I think minimum paid up capital is Rs. 20/- in the case of private company and Rs. 70/- in the case of a public company. 

 

 

 

 
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Company Secretary

a) Now there is no requirement of minimum paid-up capital.  Private company must have minimum 2 subscribers.  If each one of them subscribes for 1 share of Rs.10 each, company can be incorporated with Rs.20 only.

b) If two JV partners enter into a JV agreement to form a new JVC with paid  up capital of say Rs.5 crores  in which each partner will contribute Rs.2.5 crores, they  may  form the company with initial subscribed capital of Rs.5 crores.  JVC can temporarily park the funds till the same is needed for acquisition of land & building, purchase  of machinery etc.

 

 

 

 
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Agrawal Ji, You have said

 

"Now there is no requirement of minimum paid-up capital."

 

On the other hand you say 'company can be incorporated with Rs.20 only.'

 

Does it not mean Minimum paid up capital in the case of a private company is Rs. 20/-, as subscribers will have to pay for the shares subscribed?

 
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Company Secretary

Every subscriber is required to  subscribe minimum one share each.  Face value has not been prescribed in the Act.  If the face value per share is Re.1, then minimum paid up capital will be Rs.2 only.

 

 
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Yes, may be it is two paisa. But the question arises, whether it can be said ?

 

 "Now there is no requirement of minimum paid up capital"

 
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