What Are Calls In Arrears And Some Important Points Regarding Calls-In-Arrears

What are calls in arrears ? We know, in general the company collects the amount of shares in different instalments viz. Application money, Allotment money, first call , ….. Final call. The company sends a call letter to the shareholders requesting them to pay the amount of call. Some shareholders fails to pay the amount due on their shares.

 

“ The amount of calls , which remains uncollected from the shareholders , is called as calls in arrears “

 

 

Below are the some important points regarding calls in arrears :

 

• The amount due from shareholder, but not yet received is debited to calls in arrears account.
• The board of directors can charge interest on such amount of arrears as per the provisions of articles of association.
• The amount of share premium not received, if any, can not be debited to calls in arrears A/c’. It means that only the amount of share capital , which remains uncollected can be transferred to calls in arrears A/c’ as per provisions of companies Act 1956.
• Another notice is sent to the defaulting shareholder warning him the pay the required amount. If he again fails to pay the amount, his shares are forfeited.

 

Conclusion –

In the simple words calls in arrears means the amount of calls maid by company, which remains uncollected from the shareholders, is called calls in arrears.