Capital Injection
Capital Injection is when new funds are invested into a company by existing or new shareholders to boost its capital base.
Why is it important for businesses?
Injecting capital strengthens the financial position, funds expansion, supports cash flow, or helps meet regulatory capital requirements.
Examples in practice
A startup receives capital injection from angel investors to finance growth.
Owners contribute additional equity to shore up working capital.
A company raises funds by issuing new shares to new partners.
Frequently Asked Questions
Is capital injection considered taxable income?
No, capital injection is equity, not revenue, so it’s not taxable income but affects shareholding structure.
How is capital injection recorded?
As equity on the balance sheet under share capital or additional paid-in capital.
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