Which of the following terms is not used to describe the total amount stated in the memorandum of association approved by the Registrar of Companies?

Answer Details

The memorandum of association is a company's founding document, and one of its clauses states the total amount of share capital that the company is permitted to raise, as approved by the Registrar of Companies. This total figure is known by several interchangeable names in company accounting: registered capital, authorised capital, and nominal capital all refer to the same amount stated in that clause of the memorandum.

Issued capital is a different figure altogether. It refers only to the portion of the authorised capital that the company has actually offered and allotted to shareholders at a given time, which is often less than the full amount stated in the memorandum. Because issued capital describes shares actually given out to shareholders rather than the ceiling figure approved by the Registrar, it is not one of the terms used to describe the amount stated in the memorandum of association.

Examination reminder: registered, authorised, and nominal capital are synonyms for the memorandum's stated capital ceiling; issued capital is a separate, usually smaller, figure representing what has actually been allotted.