Legal Definitions - subscribed capital

Subscribed capital refers to the total value of shares that investors have formally agreed to purchase from a company. It represents the portion of a company's authorized capital that shareholders have committed to providing, whether or not the full amount has been paid to the company yet. It signifies the company's claim on funds from its shareholders based on their commitment to buy shares.

Here are some examples to illustrate this concept:

• Startup Funding Round:

  Imagine "InnovateTech Inc.," a new software startup, is seeking initial funding. The company is authorized to issue 1 million shares. During its first funding round, a group of venture capitalists and angel investors sign agreements to purchase a total of 600,000 shares at $10 each.

  In this scenario, the 600,000 shares that investors have committed to buy, along with their agreed-upon value of $6 million ($10 x 600,000 shares), represent InnovateTech's subscribed capital. This is the amount of capital the company can expect to receive from these investors, even if the payments are staggered over time according to the subscription agreements.

• Public Company Share Offering:

  "Global Logistics Corp.," a publicly traded company, decides to raise additional funds for a major expansion project by offering 500,000 new shares to the public. After the offering period, investors submit applications and commit to buying 450,000 of these new shares at $25 each.

  The 450,000 shares for which investors have made a firm commitment to purchase, along with the total value they represent ($25 x 450,000 shares = $11.25 million), constitute the subscribed capital from this particular share offering. It reflects the amount of new equity capital that Global Logistics Corp. has successfully secured commitments for.

• Partly Paid Shares:

  "Future Energy Solutions Ltd." issued 1 million shares five years ago with a face value of $10 each. The terms of the issuance stated that shareholders would initially pay $5 per share, with the remaining $5 to be "called" by the company at a later date if needed. Shareholders paid the initial $5 per share, totaling $5 million.

  The total value of all 1 million shares that shareholders originally agreed to purchase, which is $10 million ($10 per share x 1 million shares), represents Future Energy Solutions Ltd.'s subscribed capital. Even though only half has been paid, the shareholders' commitment to pay the full amount when called makes the entire $10 million the subscribed capital.