Table of Contents
In Short:
- It is the total amount shareholders pay for shares, including nominal value and any premium.
- Shares cannot be issued below nominal value, must be recorded accurately, and changes must comply with the Companies Act 2006.
- Paid-up capital is protected by law, with restrictions on returning it to shareholders except through approved methods.
Tips for Business Owners
Maintain accurate share records and file updates with Companies House promptly. Ensure shares are issued at or above their nominal value, and use the share premium account correctly. If altering share capital, follow legal procedures to avoid compliance issues and protect your business from penalties. Seek professional advice as needed.
As a business owner in the UK, it is crucial to understand the concept of paid-up capital and its legal implications. Paid-up capital, also known as paid-in capital or contributed capital, refers to the amount of money or assets a company has received from shareholders in exchange for shares. This article will explain the key legal requirements and considerations surrounding paid-up capital for UK businesses, including how it is created, reported, and regulated. It will cover the relevant provisions of the Companies Act 2006 and other applicable regulations to help you ensure compliance and make informed decisions about your company’s share capital structure.
What is Paid-Up Capital?
Paid-up capital is the total amount of money shareholders have paid to a company in exchange for shares. It consists of two main components.
The nominal value of the shares is the first component of paid-up capital. The second component is any premium paid above the nominal value, which is referred to as the share premium.
For example, if a company issues 100 shares with a nominal value of £1 each at a total price of £10 per share, the total paid-up capital would be £1,000 (£100 nominal value + £900 share premium).
Paid-up capital is an essential metric for assessing a company’s financial strength and the level of shareholder investment.
Legal Requirements for Share Capital
The Companies Act 2006 sets out several key requirements related to share capital:
Minimum Share Capital Requirements
There is no minimum share capital requirement for private limited companies in the UK. However, public companies must have a minimum allotted share capital of £50,000 before they can commence business or borrow money.
Nominal Value
All shares must have a fixed nominal value, such as £1 per share. It is important to note that shares cannot be issued at an amount lower than their nominal value; however, a Company could undertake a share split, resulting in a new nominal value.
Payment for Shares
Shares, such as property or services, can be paid for in cash or non-cash consideration. Private companies can issue partly paid shares, and the unpaid amount becomes a debt owed to the company.
Reporting Requirements
Companies must maintain a register of members showing details of shares held and paid-up amounts—this is known as a share register or, sometimes, a members register.

This guide will walk you through the due diligence process when purchasing a UK business.
The statement of capital, which includes information on paid-up capital, must be filed with Companies House in various circumstances, such as upon incorporation, after share allotments, or capital reductions.
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Share Premium Account
When shares are issued at a premium (above their nominal value), the excess must be credited to a separate share premium account.
Maintenance of Capital
The capital maintenance principle is fundamental to UK company law and aims to protect creditors. Key aspects include restrictions on returning capital to shareholders except through prescribed methods, such as dividends, share buybacks, or capital reductions.
Private companies in the UK are generally exempt from the prohibition on financial assistance for purchasing their own shares or shares of their private holding company.
However, company directors still need to be careful and ensure it will not cause financial problems. It is a good idea to ask shareholders if they agree with the decision.
Alterations to Share Capital
Companies can alter their share capital in various ways, subject to legal requirements. One such alteration is the allotment of new shares, which requires proper authorisation.
Companies can also consolidate or subdivide shares. Capital reduction is another option, but special procedures are required to protect creditors. Subject to specific rules, redemption or repurchase of shares is also possible.
Consequences of Non-Compliance
Failure to comply with legal requirements related to paid-up capital can have serious consequences. Transactions that breach capital maintenance rules may be void, and directors could be held liable.
It is also important to note that failure to file accurate information with Companies House could be deemed a criminal offence.
Key Takeaways
UK businesses must understand and comply with the legal requirements for paid-up capital. Key points to remember include:
- it is crucial to ensure all shares have a fixed nominal value and are not issued at a discount;
- companies must maintain proper records of share capital and file accurate information with Companies House; and
- businesses should be aware of the restrictions on returning capital to shareholders and the principle of capital maintenance.
By following these guidelines and staying informed about the relevant legal provisions, businesses can effectively manage their paid-up capital and avoid potential compliance issues.
If you need help with capital, our experienced corporate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
You can calculate this by multiplying the share numbers issued by your company against each share’s nominal value.
Potentially, yes, as it represents monies owed by the company to shareholders or owners.
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