Definition

Shareholder capital or share capital is the amount of money that a company’s shareholders invest in it for business use. Share capital is a major line item in financial reporting. Some companies may further break it down into different types of equity issued such as common stock and preferred stock.

Example

For example, Vareto sells 1000 of its shares at $15 per share to raise $15,000 of share capital.

Why it matters

Companies may raise additional shareholder capital through the sale of shares to achieve further growth without bearing the cost of interest payments. Some companies may issue additional shares to dilute their shareholder base and allow more individuals to participate in the company's profits.

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