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Question
Long Answer Question
Describe the provision of law relating to ‘Calls-in-Arrears’ and ‘Calls-in-Advance’
Solution
Calls-in-Arrears: When a shareholder fails to pay the amount due on allotment or any subsequent calls, then it is termed as Calls-in-Arrears. The Company is authorised by its Article of Association to charge interest at a specified rate on the amount of Call in Arrears from the due date till the date of payment. If the Article of Association is silent in this regard, then Table A shall be applicable that is interest at 5% p.a. is charged from the shareholders. As per the Revised Schedule VI of the Companies Act, Calls-in-Arrears are deducted from the Called-up Share Capital in the Notes to Accounts (that is prepared outside the Balance Sheet) under the head 'Share Capital'. The final amount of Share Capital is shown on the Equity and Liabilities side of the Company’s Balance Sheet. The company can also forfeit the shares on account of non-payment of the calls money after giving proper notice to the shareholders.
Example- X Ltd. issued 12,000 shares of Rs 10 each. All the shares were duly subscribed, however, the first and final call of Rs 4 on 5,000 shares remained unpaid.
X Ltd.
Balance Sheet
| Particulars | Note No. | Amount (rs) |
|
I. Equity and Liablities
2. Non-Current Liablities 3. Current Liablities |
1 |
1,00,000 - - |
| Total | ||
|
II. Assets
|
- - |
|
| Total | ||
Notes to Accounts
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