Legal Definitions - legal capital

Legal capital refers to the minimum amount of money that a company must have in order to protect its creditors. This amount is equal to the total value of all outstanding shares of a corporation or an amount set by the board of directors. Some states require this amount to remain in the corporation to protect creditors.

For example, if a company has 100 shares of stock with a par value of $10 per share, the legal capital would be $1,000. This means that the company must have at least $1,000 in assets to protect its creditors.

Legal capital is also known as stated capital and is different from paid-in capital, which is the money paid for the capital stock of a corporation.