Share capital: GCSE Business Definition

What is share capital?

In GCSE Business, share capital is finance raised from the sale of shares in a limited company.

In private limited companies, share capital is raised by selling shares to friends, family or private investors such as business angels. Upon buying shares, these investors become part-owners of the business and are known as shareholders. Ownership remains limited to those with a personal interest in the business. Some investors may bring and share expertise, which can be beneficial to the business. The founder often retains a majority of the shares and, thus, a controlling stake in the business.

Public limited companies can raise large amounts of share capital through the initial sale of shares at a specific price during stock market flotation. Each of the many thousands of shares commonly issued at flotation equates to a tiny proportion of ownership of the company, so a public limited company can have a large number of shareholders. Few of these will be involved in the day-to-day operation of the business. Public limited companies may issue further shares after flotation in a rights issue.

Share Capital Revision Resources to Ace Your Exams

Save My Exams has a great range of resources to explore the topic of share capital further. 
Read our GCSE Business revision notes on sources of finance, including share capital, or test your knowledge of share capital in our exam questions to improve your grades. 

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