The concept of legal capital of the corporation (often just called its "capital") is relevant in the corporate law of some states, such as Delaware. The amount of the legal capital of the corporation is the aggregate amount of the par value of all of its shares. So if a corporation has 10 shares outstanding with a par value of $1 each, its legal capital would be $10.
In a state that recognizes it, the amount of legal capital affects whether a corporation can pay dividends. Generally, statutes provide that the corporation cannot pay dividends "out of" its legal capital, meaning that the assets of the corporation must always exceed its liabilities by at least the amount of the legal capital. As dividends are paid (or losses incurred), the amount of the corporation's assets declines, and it becomes less and less able to pay dividends.
One of the rationales for legal capital is that the capital could serve as an "cushion" for the protection of creditors in the event the corporation encountered financial problems. Having an amount set aside that shareholders could not pay out to themselves in dividends would provide some protection. But modern companies have set such low par values that legal capital provides little protection even where it exists.
The concept of legal capital is no longer a part of the Model Business Corporation Act but continues to be retained in important states like Delaware.