Share capital is the total value of shares that a company is authorised to issue to its shareholders in exchange for funding or ownership stakes.
Share capital represents the money that shareholders invest in a company by purchasing shares.
It forms part of the company's permanent funding and shows how ownership is distributed amongst the shareholders.
When you set up a company, you decide how many shares to create and their value.
Shareholders then buy these shares, providing the company with funds.
The total amount paid for all shares becomes the company's share capital.
There are two main types: authorised share capital (the maximum amount a company can issue) and issued share capital (the actual amount currently held by shareholders).
Companies often start with a small issued amount and can increase it later.
Most jurisdictions allow companies to start with minimal share capital, sometimes as little as one share worth £1 or €1.
The amount depends on your business needs and how you want to structure ownership amongst founders and investors.
Yes, companies can increase their share capital by issuing new shares or decrease it through various legal procedures.
Any changes typically require shareholder approval and must be filed with the relevant company registry.
Share capital is the nominal value of shares (sometimes called the par value), whilst share premium is any amount paid above this nominal value.
For example, if someone pays €10 for a €1 share, €1 is share capital and €9 is share premium.
Share capital determines ownership percentages and voting rights.
If you own 500 shares out of 1,000 total shares, you typically own 50% of the company and have corresponding voting power in shareholder decisions.
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