What is Paid-Up Capital?
Paid-up capital is the portion of a company’s issued share capital that has actually been paid in by shareholders, either in cash or in kind, as opposed to authorized but unissued or called-but-uncalled portions. It is reported within shareholders’ equity on the balance sheet and represents owners’ direct cash investment in the company.
How It Works
- Authorize capital in the company’s constitutional documents.
- Issue shares to subscribers at par value (or above with a share premium).
- Shareholders pay for the shares in cash or in kind.
- Record paid-up capital at par; record the excess as share premium.
- Disclose authorized, issued, and paid-up capital separately in the notes.
Saudi Context
The Saudi Companies Law sets minimum paid-up capital thresholds by company form (LLC, joint stock). Joint stock companies require at least 25% of nominal capital paid on incorporation and the remainder within five years. Saudi Aramco’s IPO raised paid-up capital significantly; CMA monitors capital adequacy through its disclosures.
Example
A joint stock company’s articles authorize SAR 100 million of capital. It issues 10 million shares at SAR 10 par. Shareholders pay 60% at incorporation. Paid-up capital on the balance sheet = SAR 60 million; the remaining SAR 40 million is uncalled. Disclosure shows authorized SAR 100m, issued SAR 100m, paid-up SAR 60m.