Impaired capital

Impaired capital

When a company's total capital is less than the par value of all its capital stock.

Impaired Capital

A situation in which the total value of the capital in a publicly-traded company is less than the par value of its capital stock. Companies with impaired capital have usually taken out too many loans or have made a series of poor investments. Impaired capital may force a company to issue more stocks (for example, in a down round) or to liquidate.