Meaning & use
nominal capital
Last updated
Meaning
noununcountablebusinessfinance
The maximum amount of money a company is allowed to raise by selling shares, stated in its official documents.
Grammar: Used as an uncountable noun: 'The nominal capital is £1 million.' Not used with 'a' or in the plural.
Patterns
- the nominal capital of a company
- increase the nominal capital
- have a nominal capital of something
The company was set up with a nominal capital of £50,000.
Before issuing new shares, the board voted to increase the nominal capital.
The nominal capital is stated in the company's memorandum of association.
Common combinations
- increase the nominal capital
- The shareholders agreed to increase the nominal capital to allow more shares to be issued.
- a nominal capital of
- The firm has a nominal capital of two million dollars.
- authorized nominal capital
- The authorized nominal capital is the ceiling for share issuance.
- reduce the nominal capital
- The company applied to reduce the nominal capital after buying back shares.
Synonyms and how they differ
- authorized capital
- A very close synonym, often used in US English; it emphasizes the amount officially permitted rather than just 'in name'.
- registered capital
- Used especially in some legal systems to mean the amount recorded with the authorities; it is not always identical to nominal capital.
Word family
Commonly confused: nominal capital or paid-up capital?
nominal capital vs paid-up capital
Paid-up capital is the money a company has actually received from shareholders. Nominal capital is only the maximum it is allowed to raise.
Practice
A company has a nominal capital of $1 million but has only received $400,000 from shareholders. What does the nominal capital represent?
Choose one answer.
Nominal capital is the ceiling or maximum amount stated in the company's documents, not the money actually received. Option 0 describes paid-up capital, and options 2 and 3 are unrelated financial measures.
Make it your own
Write a sentence using “nominal capital”, then check it and compare it with the examples above.