Share capital
Share capital is the portion of equity representing the nominal value of all shares issued, shown separately on the balance sheet alongside retained earnings and any share premium.
See it move
A company issues 1 million shares with a nominal value of €0.10 each at a price of €1.50, raising €1,500,000 in total. Of that, only €100,000 — the nominal value times the number of shares — is recorded as share capital; the remaining €1,400,000 is credited to share premium. Share capital is the legal capital-maintenance floor and cannot ordinarily be paid out as a dividend.
Check yourself
A company issues 5,000,000 ordinary shares with a nominal value of €0.20 each at an issue price of €1.80 per share. How should this transaction be recorded in the equity section of the balance sheet?