Paid Up Capital

Paid-up capital (also called contributed capital or paid-in capital) represents the total funds a company has received from its shareholders in exchange for its shares. It is a key component of a company’s equity capital and reflects the actual capital raised by the company from investors.

Key Features Source of Capital Raised through the sale of shares in the primary market. Can be issued via Initial Public Offerings (IPO), private placements, or rights issues.

Difference Between Primary and Secondary Market Primary market: Funds go directly to the company increases paid-up capital. Secondary market: Shares are traded among investors no new paid-up capital is created. Significance Indicates the financial strength and equity base of the company.

Used for expansion, working capital, or debt repayment. Impacts shareholder rights and voting power. Accounting Treatment Recorded on the liabilities side of the balance sheet under shareholders’ equity. Can include both equity share capital and preference share capital, depending on the company’s structure.

Example: A company issues 1,00,000 equity shares of ₹10 each. If all shares are fully subscribed and paid by shareholders, Paid-Up Capital = 1,00,000 × ₹10 = ₹10,00,000.