Calls-in-Arrears: When a shareholder fails to pay the amount due on allotment or any subsequent calls, then it is termed as Calls-in-Arrears. The Company is authorised by its Article of Association to charge interest at a specified rate on the amount of Call in Arrears from the due date till the date of payment. If the Article of Association is silent in this regard, then Table A shall be applicable that is interest at 5% p.a. is charged from the shareholders.
As per the Revised Schedule VI of the Companies Act, Calls-in-Arrears are deducted from the Called-up Share Capital in the Notes to Accounts (that is prepared outside the Balance Sheet) under the head ‘Share Capital’. The final amount of Share Capital is shown on the Equity and Liabilities side of the Company’s Balance Sheet. The company can also forfeit the shares on account of non-payment of the calls money after giving proper notice to the shareholders.
Calls-in-Advance: When a shareholder pays the whole amount or a part of the amount in advance, i.e. before the company calls, then it is termed as Calls-inAdvance. The company is authorized by its Article of Association to pay interest at the specified rate on call in advance from the date of payment tiJI the date of call made. If the Article of Association is silent in this regard, then Table A shall be applicable that is, interest at 6% p.a. is provided to the shareholders.
As per the Revised Schedule VI of the Companies Act, Calls-in-Advance (along with interest on it) is added to the ‘Other Current Liabilities’ in the Notes to Accounts. The final amount of Other Current Liabilities is shown under the main head of ‘Current Liabilities’ on the Equity and Liabilities side of the Company’s Balance Sheet.
