Acorporation'sshare capital, commonly referred to ascapital stock in the United States, is the portion of a corporation'sequity that has been derived by the issue ofshares in the corporation to a shareholder, usually forcash.
Inaccounting, the share capital of a corporation is the nominal value ofissued shares (that is, the sum of theirpar values, sometimes indicated on share certificates). If the allocation price of shares is greater than the par value, as in a rights issue, the shares are said to be sold at a premium (variously calledcapital surplus orshare premium, additional paid-in capital or paid-in capital in excess of par).[1]
This equation shows the constituents that make up a company's real share capital:
This is differentiated from share capital in the accounting sense, as it presents nominal share capital and does not take the premium value of shares into account, which instead is reported as additional paid-in capital.[1]
Legal capital is a concept used inEuropean corporate and foundation law,United Kingdom company law, and various othercorporate law jurisdictions to refer to the sum of assets contributed to a company by shareholders when they are issued shares.[2] The law often requires that this capital is maintained and that dividends are not paid when a company is not showing a profit above the level of historically recorded legal capital.[2]
