Share Capital vs Paid-Up Capital: What the Gap Costs You

Share capital is a figure you choose when the company issues its shares.

Paid-up capital is the part actually paid, and the gap between the two is a debt you owe your own company.

The short answer

Three things to hold on to:

• Paid-up capital can equal issued share capital. It cannot exceed it.
• The unpaid part is owed by the shareholder, personally, to the company.
• Singapore, Hong Kong and UK private companies can all start with a token amount.

Share capital, issued capital, paid-up capital: the terms

In everyday use, "share capital" means the issued share capital: the shares the company has actually allotted to its shareholders, at the price set for them.

Paid-up capital is narrower. It counts only the money that has reached the company for those shares.

Take a company that issues 10,000 shares at 1 each, and collects 2,500 from its shareholders.

A share sits in one of three states:

• Fully paid. The whole issue price has been paid.
• Partly paid. Some of it has been paid, and the balance is owed.
• Unpaid. Nothing has been paid yet.

When every share is fully paid, the two figures are the same number. That is the case to aim for.

What the unpaid part makes you owe

This is the point the ranking pages skip. The unpaid amount is the measure of a shareholder's personal exposure.

The UK statute writes it into the definition of the company. Under section 3(2) of the Companies Act 2006, a company is "limited by shares" if its members' liability "is limited to the amount, if any, unpaid on the shares held by them".

GOV.UK puts the same rule in plain words:

• "Shareholders will need to pay for their shares in full if the company has to shut down."
• "You can choose a low share value (for example, £1) to limit the shareholders' liability to a reasonable amount."

Paid-up capital

2,500of 10,000 issued

Already received by the company.

• Nothing more to pay on this part
• Counts toward the figure shown on official extracts

Unpaid capital

7,500of 10,000 issued

Owed by the shareholders to the company.

• Liability is limited to the amount unpaid on the shares
• Payable in full if the company has to shut down

The case to aim for: every share fully paid, so issued and paid-up capital are the same number and nothing more can be asked.

Limited liability is limited to what you have not yet paid. A fully paid share exposes you to nothing more. An unpaid share is a debt with your name on it.

Singapore's Companies Act uses the same words, the "amount unpaid" on a share, in sections 62B and 123. We quote no Hong Kong equivalent.

Why "authorised share capital" confuses the picture

Most pages ranking for this question open with authorised share capital, described as the most a company is allowed to issue. Provider guides tie that term to company laws that still cap capital in this way.

A founder reading those pages meets five terms:

1. authorised capital
2. issued capital
3. subscribed capital
4. called-up capital
5. paid-up capital

For a small company in our three jurisdictions, two of them do the work: what was issued, and what was paid.

Two points keep the confusion contained:

• Singapore and Hong Kong. Shares have no par or nominal value, so there is no face value to multiply by a ceiling.
• United Kingdom. The "authorised minimum" in the Companies Act is a floor for public companies, not a cap.

If a form or an adviser asks for your "authorised capital", ask which figure they need: the shares issued, or the amount paid on them.

Singapore: S$1 of paid-up capital, nothing deposited

• The minimum paid-up capital is S$1.
• You do not deposit it anywhere to incorporate.
• It can be increased later.

A Singapore share has no face value. Section 62A of the Companies Act 1967 says: "Shares of a company have no par or nominal value." That covers every share, whether issued before, on or after 30 January 2006.

Section 62B then defines the gap for shares issued before that date:

• Amount paid. The total of all amounts paid to the company for the share, premium excluded.
• Amount unpaid. The issue price, premium excluded, minus the amount paid.

The Act then makes sure both amounts are written down in two places.

Outsiders can read the figure too. The ACRA Business Profile shows a company's paid-up capital to anyone who pays S$5.50.

A company with S$1 of paid-up capital is legal and common. Some licences set their own minimum, so check the rules of your activity before you pick the figure.

Hong Kong: shares with no nominal value

Hong Kong applies the same rule. Section 135 of the current Companies Ordinance says: "Shares in a company have no nominal value."

Three consequences follow from Part 4 of the Ordinance:

• The rule covers shares issued before the section took effect, as well as after.
• Fully paid shares that rank equally do not need a distinguishing number, under section 136.
• Share certificates must be ready within 2 months after an allotment, under section 144.

On the practical side, when you are setting up a Hong Kong company:

• there is no statutory minimum share capital
• most companies start with a nominal amount, for example 10,000 shares of HK$1
• you do not deposit the capital anywhere to incorporate

The trap is the gap between issuing and paying. Founders who issue 10,000 shares at HK$1 and never transfer the HK$10,000 leave that amount unpaid.

United Kingdom: the share value you choose

A UK private company needs at least one shareholder and has no minimum capital. GOV.UK states the rule in one line: "The price of an individual share can be any value."

The standard setup for a solo founder is one share at £1. The details go into a statement of capital, filed when the company is registered.

Shares also decide who appears on the public register. A shareholder holding more than 25% of the shares or voting rights is a person with significant control.

Nor is a UK bank account needed before incorporating, so the £1 is not something to deposit first.

Called-up share capital on a UK balance sheet

UK accounts carry a line that reads "called-up share capital". It is not the same thing as paid-up capital, and section 547 of the Companies Act 2006 defines it.

Called-up share capital is the total of three amounts:

1. the calls made on the company's shares, whether or not those calls have been paid
2. any share capital paid up without being called
3. any share capital to be paid on a specified future date, under the articles or the terms of allotment

Whatever is left is "uncalled share capital".

For a company whose shares are all fully paid, the two figures match. They diverge only when money has been demanded and not yet received.

How much share capital to choose

The rule that follows from all this is short: issue few shares, and pay for all of them.

S$1Singapore: minimum paid-up capital

HK$10,000Hong Kong: a common start, 10,000 shares of HK$1, with no statutory minimum

£1United Kingdom: one share, the standard setup for a solo founder

A higher capital figure is often said to reassure banks and partners. We found no source for that. What is certain is that the figure is visible on official extracts, and the person reading the extract draws their own conclusion.

Before you fix the number, weigh four things:

• Liability. Every unpaid unit is one you can be asked to pay.
• Splits. Co-founders need enough shares to divide ownership as agreed.
• Licences. Some regulated activities set their own minimum.
• Cash. Choose an amount you can actually transfer to the company.

Then do it in this order:

1. Decide the number of shares and the price of each.
2. Pay the full amount to the company once it has an account.
3. Keep proof of the payment with the company records.
4. Check that the certificate or register describes the shares as fully paid.

Capital is not fixed for life. A company increases it with a new issue of shares, reported to the registry.

Where to check a company's paid-up capital

The figure is public, or close to it, in all three places.

In Singapore the free search does not show it. Our registry guide explains how to check a Singapore company's paid-up capital and when the profile costs nothing.

When you read someone else's figure, ask three questions:

• Is this the issued amount, or the paid amount?
• Does the document say whether the shares are fully paid?
• How old is the extract?

A low paid-up capital tells you how much the shareholders put in as capital, and nothing about what the company earns or holds today.

The summary