Fully Paid Shares

Quick Summary of Fully Paid Shares

Shares on which the amount of share capital has been paid in full to the company.

Fully paid shares are those for which shareholders are not required to pay any further money to the corporation on the value of the shares. Shareholders are required to pay a specified amount for shares issued by a company upon incorporation or through an original or secondary issuance. The shares become fully paid shares once the corporation has received the full amount from shareholders.

Fully paid shares differ from partially paid shares in which the corporation has received only a fraction of the market value. In the case of partially paid shares, the shareholder must still pay the remainder to the corporation. Assume that Company XYZ sells shares at $50 per share. If the corporation collects $50, the share is fully paid; if less than $50 is collected, the share is partially financed.

Companies offer shares with a par value, which is a nominal sum such as $1, for accounting purposes. Typically, however, the market value is significantly greater, and the difference between the par value and the share premium is referred to as the share premium.

Fully paid shares are those for which shareholders are not required to pay any further money to the corporation on the value of the shares.
Fully paid shares differ from partially paid shares, in which the corporation has only received a fraction of the market value.

Fully Paid Shares vs. Partly Paid Shares

Typically, issued shares are fully paid. That is, investors pay the whole price per share. Companies will occasionally issue unpaid or partially paid shares if the shareholder needs time to collect the required funds but agrees to a payment schedule. In some circumstances, issuing unpaid shares may be more convenient for a start-up company.

Partially paid shares are typically provided to a shareholder only when there are compelling business reasons to do so. For example, a corporation may aim to issue shares to a strategically aligned partner who may not have enough cash to pay for all of the shares at the time of issue.

Typically, the shareholder and the corporation agree when the company can call on payment at the time of issue. The corporation may then issue partially paid shares together with a payment schedule outlining when the shareholder must pay the remaining balance. The partially paid shares are converted to fully paid shares once the balance is received by the corporation.

Partially paid shares have the same rights as fully paid shares, including the following:

• The right to receive dividend payments
• The ability to vote at shareholder meetings
• Right to participate in the company’s liquidation

In most cases, a shareholder’s claim to dividend payments is proportional to the amount already paid. A shareholder with partially paid shares has the same vote as a shareholder with fully paid shares at a shareholders’ meeting if voting is by show of hands (one vote per share).

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Synonyms For Fully Paid Shares

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