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1 (share capital) A fund representing the contributions given to the company by shareholders in return for their shares. These assets are intended to protect the interests of any creditors in the event of a limited company encountering financial difficulties, and there are rules under the Companies Act 2006 to ensure that this fund is not reduced unless it is absolutely necessary. Each share is assigned a nominal or par value to enable each holder to measure his interest in and liability to the company. In a company limited by shares the liability of a shareholder is limited to the unpaid purchase price of the share. If a company is able to command a market price for a share that is above the nominal value assigned to it, the difference is said to represent a premium. The total number of shares and their nominal values must be stated in the capital clause of the memorandum of association. See authorized capital.

2 See loan capital.

Subjects: Economics — Law.

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