Called up capital vs. Paid up capital

There are two types of capital when a company is formed: authorized capital and issued capital. Authorized capital refers to the maximum amount of capital a company can raise through the sale of its shares. Issued capital, on the other hand, is the amount of capital that a company has actually sold to its shareholders.

Called up capital

Called up capital is the amount of money a company has demanded from its shareholders to pay for their shares. When a company issues shares, it may not require the full payment for the shares upfront. It may only demand a portion of the payment at the time of issue, with the remainder to be paid at a later date. This outstanding amount is known as the called up capital.

Paid up capital

Paid up capital refers to the amount of money that has been paid by the shareholders to the company for the shares they have purchased. It is the portion of the called up capital that has been paid by the shareholders.

Difference between called up capital and paid up capital

The main difference between called up capital and paid up capital is that called up capital is the amount that a company has demanded from its shareholders to pay for their shares, while paid up capital is the actual amount that has been paid by the shareholders to the company for their shares.

Significance of called up capital and paid up capital

- Called up capital is important for a company as it indicates the amount of money that the company can demand from its shareholders in the future if it needs to raise funds.
- Paid up capital is important as it represents the actual amount of money that the company has received from its shareholders, which it can use for its operations.

Conclusion

In summary, called up capital and paid up capital are two important concepts in the world of finance. While called up capital refers to the amount of money a company has demanded from its shareholders for their shares, paid up capital refers to the actual amount of money that has been paid by the shareholders to the company for their shares.

Called up capital is the capital that's issued by the company to the shareholder which is TO BE paid up ,Whereas, paid up capital is the capital that the shareholder has paid up to or more than the amount that the company wanted to raise or call willingly.