We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is a Share Capital?

Malcolm Tatum
By
Updated: May 17, 2024
Views: 10,088
Share

Also known as equity financing, share capital is the term used to describe funds that are generated by issuing shares of stock as a means of raising cash for the issuer. Over time, the amount of share capital raised by a given company will change, since that amount is subject to change each time new shares are made available to current and prospective investors. Share capital can be composed of any type of shares issued by the company, including preferred and common stock shares.

The term share capital as a means of identifying the funds raised from a stock offering is commonly used in the United Kingdom, along with the term issued capital. In the United States, this type of income may be known as either share capital or capital stock. While this capital is most often received in the form of cash, it is also possible to accept other means of payment, such as equipment that is manufactured by the investor. There are even instances where share capital is generated by trading the issued shares with shares of stock that are issued or in the possession of the investor, accepting those stocks as payment, based on their current market value.

Share capital is created as the result of an initial public offering and any public offerings that may occur at some point in the future. Any type of shares that are sold or assigned are included in this figure, including common or preferred shares that may be issued to employees as part of their overall benefit package. Capital reduction occurs when these shares are repurchased at prices higher than what investors paid for the shares originally. Once in hand, share capital can be used to fund any project that the company desires, including the construction of new facilities, the launch of a new product, or some other project that is likely to increase the value of the business and enhance shareholders’ equity in the business.

It is important to note that share capital focuses on the price per share at the time the shares were purchased by investors. This means that if a business raises a total of $5 million US dollars (USD) from a stock offering, and those same shares increase in value to $8 million USD after a year or so, the company still only lists the amount of capital received at $5 million USD. Increases or decreases in the value of the shares do not affect the amount of capital that the company posts when the shareholder resells the acquired shares at a later date.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

Editors' Picks

Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
Share
https://www.wisegeek.net/what-is-a-share-capital.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.