— Kishore V, SME and ACW at Edumarz
Calls-in-Arrears:
Calls-in-arrears refers to the part of called-up capital that is not paid by the shareholder within a defined time frame.
In other words, call-in-arrears occurs when a shareholder fails to pay the sum due on allotment or any future calls.
The company’s Articles of Association allow it to impose interest at a certain rate on the amount of call-in arrears from the due date to the payment date.
According to Table F of the Companies Act, 2013, if the company’s Articles of Association do not authorise it, it may collect interest at a rate of 10% per annum.
On the liabilities side of the Company’s Balance Sheet, it is subtracted from the called-up share capital.
After giving adequate notice to shareholders, the corporation can potentially lose the shares due to non-payment of the call money.
Calls-in-Advance:
These are calls that are not due but are paid in advance by the shareholder. As a result, the firm receives a number of future calls in advance.
In other words, calls in advance occur when a shareholder pays the entire amount or a portion of the amount in advance, i.e. before the firm calls.
The company’s Articles of Association authorise it to pay interest on calls in advance at the stipulated rate from the date of payment until the date of the call.
If the Articles of Association are silent on the subject, the Companies Act, 2013, Table F, which provides for interest at 12% per annum, will apply.
On the liabilities side of the Company’s Balance Sheet, it is included under the heading of current obligations.