Capital Stock

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Related to authorized shares: authorized capital, Outstanding shares, Issued shares

Capital Stock

All shares constituting ownership of a business, including common stock and preferred stock. The amount of shares that a corporate charter requires to be subscribed and paid, or secured to be paid, by shareholders. The amount of stock that a corporation may issue; the amount actually contributed, subscribed, or secured to be paid on. The liability of the corporation to its shareholders after creditors' claims have been settled. The valuation of the corporation as a business enterprise.

Capital stock is distinguishable from the property and assets of the corporation. The property of a corporation fluctuates and may be greater or less than the original capital invested, but the capital stock remains intact and unaffected by the vicissitudes of business.

Undivided profits, or surplus, are not part of the capital stock, although they are included in the general capital or assets of the corporation.

The capital stock of a corporation serves only corporate purposes. It functions as security for the creditors of the corporation who have relied on its existence, since it cannot be diverted or withdrawn to the detriment of corporate creditors. Capital stock is sometimes regarded as a trust fund.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

capital stock

n. the original amount paid by investors into a corporation for its issued stock. Capital stock bears no direct relationship to the present value of stock, which can fluctuate after the initial issue or first stock offering. Capital stock also does not reflect the value of corporate assets, which can go up or down based on profits, losses, or purchases of equipment. Capital stock remains as a ledger entry at the original price.

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
References in periodicals archive ?
The settlement agreements further provide that the shares will be delivered following the approval of an increase ?n the company's authorized shares by the company's stockholders.
The number of authorized shares of the company's common stock will be reduced from 50,000,0000 to 10,000,000.
Upon completion of the reverse split, the number of outstanding shares will be reduced from approximately 62.5m to approximately 12.5m; the number of authorized shares of common stock will be decreased from 250m to 50m, concluded the company.
(NASDAQ: HMST) said that its board of directors has authorized a two-for-one split of HomeStreet's common stock, no par value, and in connection therewith an increase in the number of authorized shares of common stock to 160m from 80m.
Moxian announced that on April 3, its board of directors approved a 1-for-5 reverse split of the company's authorized shares of common stock and issued and outstanding shares of common stock.
The number of authorized shares of common stock would remain at 170 million shares, and the number of authorized shares of preferred stock would remain at 5 million shares.
Ebix announced that its shareholders have approved "by a wide margin" an increase in the company's authorized shares to 220M from 120M.

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