Calls in Arrears & Interest on calls in Arrears - Calls in Advance & Interest on calls in Advance

Calls in Arrears & Interest on calls in Arrears - Calls in Advance & Interest on calls in Advance

Calls-in-Advance and Interest on Calls-in-Advance
A company may receive the amount remaining unpaid on shares, from the shareholders, even though the amount has not been called up subject to the authorization in its articles. In a case where the number of shares allotted to a person is much smaller than the number applied for and the terms of issue permit the company to retain the amount received in excess of application and allotment money, it shall be calls-in-advance.

Disclosure Treatment: The money received on calls-in-advance does not become part of the share capital. It is shown under a separate heading, namely ‘calls-in-advance’ on the liabilities side of the Balance Sheet. Further, the liability to sundry shareholders is to be treated as outstanding liability and should be shown under the head “Current Liabilities” in the balance sheet.

Interest - The amount received as calls-in-advance is a debt to the company and thus the company is liable to pay interest on the amount received as Calls-in-Advance from the date of receipt of the amount till the date when the call is scheduled and made due for payment.
Generally, the Articles of the company specify the rate at which interest will be payable on Calls-in-Advance. If the articles do not contain such a rate, Table F of the Companies Act, 2013 will be applicable which leaves the matter to the Board of Directors to decide the rate of such interest, subject to a maximum rate of 12% p.a. Interest payable on Calls-in- Advance is a charge against the profits of the company. As such, Interest on Calls-in-Advance must be paid even when NO profit is earned by the company.
****************************************************************

Calls-in-Arrear and Interest on Calls-in-Arrear
When calls are made upon shares allotted, the shareholders holding the shares are bound to pay the call money within the date fixed for such payment. If a shareholder makes a default in payment of the call money within the appointed date, the amount thus failed for payment on a call is called Calls-in-Arrear.
The interest is recoverable according to the provisions in this regard in Articles of the company. But if the Articles are silent, Table ‘F’ of Schedule I of the Companies Act, 2013, shall be applicable which prescribes that if a sum called in respect of shares is not paid before or on the day appointed for payment, the person who failed to pay shall pay thereof from the day appointed for payment to the time of actual payment at a rate not exceeding 10% per annum. However, the Directors have the right to waive the payment of interest on Calls-in- Arrear.

Do Subscribe to the Channel - For Further Updates, News, Previous Year Questions Paper Analysis, and more.
Don't forget to share your presence by- LIKE AND COMMENT. So that you do not miss any updates as you are active members of us.

Commerce Achiever brings up online courses for Commerce and Accountancy. Courses help to gain complete knowledge and prepare you for Exams. Courses include Online Classes where each student is taken care of by solving their queries (if any), tests, tracking progress topic-wise in each subject, ETC.

- No limitations on Watch Numbers/Time.
- Revision through videos becomes easy and quick to cover.
- Watch from any device, from anywhere, anytime.
- Course customized which helps working professionals also.

We work on overall development. If the student follows our strategy and is persistent, success is all one own.

Trust us and help us to be part of your dream goal, we assure you that you are proud of your choice.

Contact for various courses.
कोर्स वो चुने जो आपकी जरूरत का हो और आपके बजट में हो ।

#commerce #commerceachiever #Sharecapital #Accountancy

[vaishnavigidwani]

I loved this sessions....calls in arrears & advance effectively cleared....I used to run from call in arrears in my 12 class😅but today I am thinking how easy it was and how stupid of me ..😅