Called up share capital is that part of share capital which has been called by the company for payment. Generally, a company does not call for the full amount of share at one lot. It calls for a part of share to be paid, at the time of allotment. The amount of share which a company has been called for is known as called up share capital.
In case, the company receives full amount of called up capital from its investors, then the called up share capital will be equal to paid up share capital. It is because of some defaulters (investors who does not pay the money) that the company’s called up share capital does not match with its paid up share capital.
Example of called up share capital:
Lets assume that ABC ltd. got registered with a capital of INR 1,00,00,000 (1 crore) divided into shares of INR 10 each. The management decides to issue 8,00,000 (8 lakh) shares to raise a fund of INR 80,00,000 (80 lakh) but the investors subscribe for only 6,00,000 (6 lakh) shares. Now the company calls for only INR 4 per share out of INR 10 (Nominal value of shares) and it gets the full amount for only 5,50,000 (5 lakh 50 thousand) shares.
Then,
Issued share capital = Rs 80 lakh (8 lakh shares of Rs 10 each)
Subscribed share capital = Rs 60 lakh (6 lakh shares of Rs 10 each)
Called up share capital = Rs 24 lakh (6 lakh shares × Rs 4)
The above given figures clearly indicate that the called up share capital for ABC Ltd. is Rs 24 lakh.