As the word itself reflects that its the amount paid to the company against the subscribed shares either in form of cash or in bank deposit. This amount can be lesser then actual paid up capital amount because companies act permissible to pay the subscribed amount into different chunks as totally depends on the subscriber.
By law, this amount should be report to the regulator within 45 days after incorporation. In case of failure to do so, can face penalty from adjudication department. Therefore, its highly recommended to submit Form-1 within the timeframe described by the law.
Form 1
This is first form of General Forms and provisions 2018 required by SECP to submit after incorporation as its first requirement of post incorporation of the company regardless of single member or private limited.
At time of submission this form, its mandatory to attach receipt of subscription capital which you may get from any practising member of ICAP and ICMAP.
Receipt of subscription capital contains the particulars of subscribers and the amount of shares subscribed by them along with number of shares. It must be on the letterhead of auditor along with their stamp and signatures.
Paid up capital reflects how much own investment of subscribers. This is very helpful in understanding of financial position of the company and also enable the reader to knew the debt/equity ratio. And its rule that paid up capital cant be greater than authorise capital.
Paid up capital showed in balance sheet on debt and equity side and it is the key element to check the financial position of the company. This capital amount can not reduce until judgement issued by the court. This is the main reason behind to increase the paid up capital very carefully by considering the strategic growth of the company.
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