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.
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.