6.2 Basic Concepts of Stock

6.2.1 Different Between Loan and Investment

There are two financing methods: borrowing and investment. In proprietorships and partnership, they take the form of capital investments in the business. In corporation, those investment take the form of stock purchase.

6.2.2 The Capital of Limited Liability Companies

The owner's capital in a limited liability company consists of share capital. When a company is set up for the first time, it issues shares, which are paid for by investors, who then become shareholders of the company. 

6.2.3 Authorised, Issued, Called-up and Paid-up Share Capital  

Authorised capital is the maximum amount of share capital that a company is empowered to issue.

Issued capital is the par amount of share capital that has been issued to shareholders.

Called-up capital is the value of the issued shares that have remained fully or partially unpaid and whose holders have now been called upon to pay the balance.

Paid-up capital is the amount of called-up capital that has been paid.