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Question
Answer in brief.
What is calls on shares?
Answer in Brief
Solution
- "Calls on shares" means the demand made by the company on its shareholders holding partly paid shares to pay part or full unpaid amount on the shares.
- The board of directors of the company makes such a call on shares in accordance with terms and conditions of the issue of shares and as per articles of association of the company.
- A call may be defined as "A demand made by the company on its shareholders to pay whole or part of the balance remaining unpaid on each share at any time during the lifetime of a company".
- For instance, the price of a share is Rs.100/. At the time of applying for shares, the investor has to pay Rs. 5/- of the nominal value of a share, so Rs. 95/- is balanced on each share. As and when the company needs money it asks its shareholders to pay, it is known as calls on shares.
- The company has to send a call letter/notice to the shareholders asking them to pay the call money and give them a minimum 14 days' notice to pay the call money to the Company's Banker,
- No call can be made for more than 25% of the nominal value of shares. The gap between two calls should not be less than one month from the date fixed for the payment of the last preceding call.
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Calls on Shares
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Calls not paid by shareholder is called as calls in arrears.
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Call money cannot exceed 5% of nominal value of shares.
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Calls on shares
Call money cannot exceed 5% of the nominal value of shares.
