MGT211 Assignment 1 Solution | MGT211 Assignment 1 Solution Spring 23 by getready
INTRODUCTION TO BUSINESS (MGT211)
ASSIGNMENT NO. 01
DUE DATE: MAY 19, 2023 MARKS: 10
Case
Alpha and Gamma are friends since their childhood. They have got whole of their education in every school jointly. Recently, both of them have graduated from a local business school getting degrees in business management. After this graduation, they decided to start a business of online car rental. For that purpose, they got developed a mobile application named Carg that can be run on all Android and Apple smart phones. Further, they shared their business plan with a professional promotor to setup a new business entity. With all the necessary documentation, the new entity has been successfully registered on 5th of January 2023 with the SECP as a limited liability company in the name of Alpha Limited. It was registered with the capital of Rs. 500,000 divided into 25,000 ordinary shares of Rs. 20 each. On 20th of January, the new company offered 15,000 shares at par to the general public. On 23rd of January, the company’s bank informed it that application money on 14,500 shares has been received from the general public in the company’s bank account. Alpha’s management allotted shares to all the applicants on 31st of January, 2023.
You are required to identify the kinds of share capital presented in this case describing briefly the each kind.
SOLUTION:
In the given case, the company Alpha Limited has different kinds of share capital. Let's identify and briefly describe each kind:
1. Authorized Share Capital:
- Authorized share capital refers to the maximum amount of share capital that a company is allowed to issue, as stated in its constitutional documents.
- In this case, the authorized share capital is not explicitly mentioned, but it indicates that the company is registered with a capital of Rs. 500,000 divided into 25,000 ordinary shares of Rs. 20 each. This suggests that the authorized share capital is Rs. 500,000.
2. Issued Share Capital:
- Issued share capital represents the portion of authorized share capital that the company has actually issued to its shareholders.
- In this case, the company issued 15,000 shares to the general public on 20th January.
3. Subscribed Share Capital:
- Subscribed share capital refers to the portion of issued share capital for which shareholders have applied to purchase shares.
- In this case, the company received applications for 14,500 shares from the general public.
4. Called-up Share Capital:
- Called-up share capital is the portion of subscribed share capital that the company has demanded to be paid by the shareholders.
- In this case, it is not explicitly mentioned whether the called-up share capital has been demanded or paid.
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5. Paid-up Share Capital:
- Paid-up share capital represents the portion of called-up share capital that the shareholders have actually paid to the company.
- In this case, it is not explicitly mentioned whether the paid-up share capital has been received.
It's important to note that the information provided in the case is limited, and some details related to the share capital, such as the amount paid and the status of the remaining shares, are not explicitly mentioned. Additional information would be required to provide a more comprehensive analysis of the share capital.
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