What are contributing shares?

• A. Ordinary shares where the shareholder has paid only part of the nominal value and must pay the remainder when called
• B. Shares that are always fully paid at issue
• C. Bonds that convert to equity automatically
• D. Shares with fixed dividends and voting rights

Answer: (A)

Contributing shares are partly paid ordinary shares. The holder has paid only part of the nominal value, and the company can call up the remaining amount later. In other words, the capital isn’t fully paid at issue; the shareholder must contribute more if a call is made. This arrangement lets a company raise capital gradually and creates a future liability for the shareholder until the calls are settled. It differs from shares that are fully paid on issue, from bonds that convert to equity, or from shares that have fixed dividends and voting rights, which describe different instruments or arrangements.