Impaired Capital

Impaired Capital - Impaired Capital is the situation where the par value of a company stock exceeds the company's total capital. The capital of a bank impaired when the deficit in undivided profits account exceeds the surplus account so the sum of the paid-in-capital account, the surplus account, and the undivided profits account is less than the sum of the products of the number of shares outstanding in each class increased by the respective par value of the shares of each class. When capital of a bank is impaired, the superintendent of financial institutions shall give notice to the bank's board of directors.