The part of issued share capital that the company has asked the subscribers to pay for

Share capital terminology follows a chain: a company is first authorised to issue shares up to a fixed ceiling, then it actually issues some of those shares to subscribers, then it asks subscribers to pay for a stated portion of what they hold, and finally subscribers pay in response to that request.

The stage described here, the part of issued capital that the company has formally requested subscribers to pay, is called called-up capital. It is distinct from the total ceiling the company is legally permitted to raise, and it is also distinct from the amount subscribers have actually handed over so far, since a subscriber may still owe money on shares that have been called but not yet paid for.

A common mix-up is to treat the amount requested and the amount received as the same thing. They are not: the request creates a debt owed by the shareholder, while payment settles that debt. Only once the requested sum is actually received does it become paid-up capital.

Exam takeaway: read carefully whether a question describes capital the company is permitted to issue, capital it has issued, capital it has asked for, or capital it has received, since each has its own name.