Capital in United Kingdom

Definition of Capital

In accordance with the work A Dictionary of Law, this is a description of Capital : 1. (share capital) A fund representing the contributions given to the company by shareholders in return for their shares. These assets are intended to protect the interests of any creditors in the event of a *limited company encountering financial difficulties, and there are rules under the Companies Act 1985 to ensure that this fund is not reduced unless it is absolutely necessary. Each share is assigned a nominal or par value to enable each holder to measure his interest in and liability to the company. In a company limited by shares (See limited company) the liability of a shareholder is limited to the unpaid purchase price of the share. If a company is able to command a market price for a share that is above the nominal value assigned to it, the difference is said to represent a premium. The total number of shares and their nominal values must be stated in the capital clause of the *memorandum of association and represents the company’s authorized share capital.

See authorized capital.

2.

See loan capital.

Capital in the Context of Mortgages

In the context of mortgages, capital describes the original sum borrowed as distinct from interest required on that loan. A repayment mortgage involves repayment of a little of the capital interest each month.

Similar Terms

Capital appreciation or depreciation

Capital appreciation or depreciation

The increase or decrease in the value of the individual’s investment in the property.

Capital expenditure

Capital expenditure

The cost of making improvements on a property.

Capital gains

Capital gains

Profits an investor makes from the sale of real estate or investments.

Resources

See Also

Capital gains tax

Capital growth