Describe the provision of law relating to ‘Calls-in-Arrears’ and ‘Calls-in-Advance’.
Answers
Answer:
Explanation:
Calls-in-Arrears refers to that part of the called up capital which remains unpaid by the shareholder within a particular time. In simpler words call in arrears refers to the amount which a shareholder fails to pay at the time of allotment or any subsequent calls. Under the Article of Association the company has all the right to charge interest on the amount of call-in-arrear at a defined rate from the due date till the date of payment. The company after issuing proper notice to shareholders regarding the non payment of call money can also forfeit the shares.
Calls in Advance refers to the situation when the shareholder pays in advance even before the company makes a call. Under the Article of Association the company needs to pay interest at a defined rate on call in advance starting from the payment date till the date when the call is made.
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Explanation:
Calls in Arrears- If any amount has been called as allocation or call money by the company and no shareholder has paid the money then the amount received is not termed as “call-in-arrears”.
Calls in Advance- Occasionally, it happens that a shareholder can pay the full amount on their shares, even if the whole amount is not called. The amount received in advance of the call from such shareholder should be deposited in the "call in advance" account and should be shown separately from the so-called capital in the balance sheet. Calls-in-advance usually rises when shares are subscribed more. Here, the additional application received is adjusted against funds allocated due to allocation or call. Additional application money after the adjustment for the allocation, if this article provides, then the call-in-advance account is shifted to an account. Sometimes, some shareholders may like to pay the full amount at the time of allocation. In such a situation, advance money in relation to future call is also shifted to a call-in-advance account.