What is share capital?
The share capital of an offshore company has two main components: the authorised capital and the issued capital. The share capital is stated in a base currency which will be the reporting currency of the company for accounting purposes with each share having a "nominal" or "par" value unless the company was formed with "no par value" shares. The nominal value is simply the minimum price shares may be allotted. Shares may be issued for more with the excess amount above the nominal value going to the "share premium" account, but shares may not be allotted for less than the nominal value which is why this number is usually very small. The authorised capital is the maximum number of shares and total nominal value of same that the directors may resolve to issue without a further resolution being required to increase the authorised capital in accordance with the governance and legal requirements of the company. The issued capital is simply the number of shares and total nominal value of same out of the authorised capital which has been issued to shareholders. For example, an offshore company may have an authorised capital of 100,000,000 shares of a nominal value of $.01 each for a total authorised capital of $1,000,000. Most of the time there is no minimum requirement in terms of the issued capital so a single owner may decide to only issue 1 share which would represent 100% ownership in the company in this case. Unless otherwise requested, Sterling will utilise a standard authorised capital as indicated in the brochure for the particular entity.