📊 Called Up Capital: Complete Guide with Examples
Understanding Company Accounts Made Easy for Students in 2025!
📑 Table of Contents
What is Called Up Capital?
Called Up Capital is the portion of the share's face value that the company has asked shareholders to pay so far. Companies usually don't collect the entire share amount at once. Instead, they collect it bit by bit based on their funding needs.
🎯 Simple Definition
Called Up Capital = The amount a company has actually requested from shareholders out of the total share value
This is an important concept in company accounts and helps businesses manage their cash flow effectively.
Understanding with a Bicycle Example
Imagine you're buying a bicycle worth ₹100. The shopkeeper tells you:
Today
Called Up Capital
Money actually requested
Next Month
Second Payment
Later
Uncalled Capital
To be requested later
The ₹30 requested today is like "Called Up Capital" - the money the company has actually asked for. The remaining ₹70 is "Uncalled Capital", which will be requested when needed.
Watch: Called Up Capital Explained
Watch this comprehensive video explanation to understand Called Up Capital even better. This video covers all the concepts discussed in this article with visual examples.
💡 Pro Tip: Watch the video first for a quick overview, then read the detailed explanation below for in-depth understanding.
The Share Payment Installments
Companies collect share money in several installments. Let's understand each one:
Application Money
First payment made when applying for shares
Allotment Money
Paid when company allocates shares to you. You become a shareholder!
First Call
A few months after allotment, company requests first call payment
Second & Third Call
Subsequent payments until full share value is paid. Maximum 3 calls allowed!
Detailed Example: ABC Company
Let's understand Called Up Capital with a complete example of Company ABC:
📊 Company Details
Company: ABC Ltd.
Total Shares Issued: 1,000 shares
Face Value per Share: ₹10
Total Share Capital: 1,000 × ₹10 = ₹10,000
💰 Stage 1: Application Money
Amount per share: ₹3
Calculation: 1,000 shares × ₹3 = ₹3,000
At this stage, Called Up Capital = ₹3,000 (30% of total capital)
Remaining ₹7,000 not yet requested
💰 Stage 2: Allotment Money
Amount per share: ₹4
Calculation: 1,000 shares × ₹4 = ₹4,000
Total Called Up: ₹3,000 + ₹4,000 = ₹7,000
Now Called Up Capital = ₹7,000 (70% of total capital)
Remaining ₹3,000 to be called
💰 Stage 3: First Call
Amount per share: ₹2
Calculation: 1,000 shares × ₹2 = ₹2,000
Total Called Up: ₹7,000 + ₹2,000 = ₹9,000
Now Called Up Capital = ₹9,000 (90% of total capital)
Only ₹1,000 left to call
💰 Stage 4: Second and Final Call
Amount per share: ₹1
Calculation: 1,000 shares × ₹1 = ₹1,000
Total Called Up: ₹9,000 + ₹1,000 = ₹10,000
Finally, Called Up Capital = ₹10,000 (100% of total capital)
🎉 All share capital has been called up!
Timeline View
Month 1: Application
Amount Collected: ₹3,000
Percentage: 30% capital called
Month 2: Allotment
Amount Collected: ₹7,000 (total)
Percentage: 70% capital called
🎊 Investors become shareholders!
Month 6: First Call
Amount Collected: ₹9,000 (total)
Percentage: 90% capital called
Company now has sufficient funds for major operations
Month 9: Final Call
Amount Collected: ₹10,000 (total)
Percentage: 100% capital called
✅ Payment process complete!
Journal Entries
When a company calls for payment from shareholders, the accounting entry is recorded as follows:
To Share Capital Account
🔍 What This Means:
Share Allotment Account is debited because it's a collection account and shows an increase in assets
Share Capital Account is credited to show the increase in Called Up Capital
Important: Share Capital Account always shows the total Called Up Capital so far, NOT the entire Issued Capital!
For Subsequent Calls:
To Share Capital Account
Share Second Call Account Dr.
To Share Capital Account
Share Second and Final Call Account Dr.
To Share Capital Account
Just replace "Share Allotment Account" with the name of the specific call. For the last call, add "And Final Call" suffix.
Understanding Different Types of Capital
Let's understand the difference between similar capital terms:
| Type of Capital | Definition |
|---|---|
| Authorized Capital | The maximum amount a company can raise through shares according to its Memorandum of Association |
| Issued Capital | The portion of Authorized Capital that the company has actually offered to the public for subscription |
| Called Up Capital | The portion of Issued Capital that the company has asked shareholders to pay. Changes after each call! |
| Paid Up Capital | The amount shareholders have actually paid to the company. Usually equals Called Up Capital, but can be less if some shareholders fail to pay (Calls in Arrears) |
Key Points to Remember
📈 Called Up Capital Increases Over Time
It starts with Application Money and keeps increasing with each call until the full share payment is complete. Companies decide the timing based on their funding needs and business requirements.
⚖️ Legal Obligation of Shareholders
Once called, shareholders are legally required to pay within the specified time. Failure to pay can result in forfeiture of shares!