What are Fully Paid Shares
Fully paid shares are shares issued for which no more money is required to be paid to the company by shareholders on the value of the shares. When a company issues shares upon incorporation or through an initial or secondary issuance, shareholders are required to pay a set amount for those shares. Once the company has received the full amount from shareholders, the shares become fully paid shares.
BREAKING DOWN Fully Paid Shares
Fully paid shares are different from partially paid shares in which only a portion of the market value has been received by the company. In the case of partially paid shares, the shareholder is still required to pay the remaining amount to the company. For example, let's say Company XYZ sells shares for $50 per share. If the company receives $50, the share is a fully paid share, but if less than $50 has been collected, it is a partially funded share.
For accounting purposes, companies issue shares with a par value, which is a nominal amount, such as $1. Typically, however, the market value is much higher, and the amount over the par value is called the share premium.
Normally, shares issued are fully paid. That is, investors pay the full amount per share. Sometimes companies will issue unpaid or partially paid shares, however, if the shareholder needs time to access the necessary funds but commits to a payment schedule. In some cases, issuing unpaid shares may also be more convenient for a start-up company.