Question25. What are calls in arears and calls in advance ?
Answer 25. CALLS IN ARREAR : It generally happens that some shareholders are unable or fail to pay the amount on allotment and , or calls due from them on the shares they hold. The total of the unpaid amount on account of the various installments is known as 'Call in Arrears ' or ' UNPAID CALLS ' . Hence this is the amount called by company ; but remaining unpaid. By making the provision in the Article of Association a company empowers to charge interest at a specified rate on calls in arrear or unpaid calls from the date of its receipt upyog the date when the particular call is due for payment. If no such provision is made in Article of Association then Table A of Companies Act becomes applicable and it leaves the matter to the matter to the Board of Directors who may charge interest on Call in Arrears at a rate not exceeding 5% per annum.
CALLS IN ADVANCE : An amount paid up by a shareholders in excess of the amount due on shares held by him is known as Calls in Advance. The amount so received is a liability and separately shown at liability side, if the Article of Association so provide interest at a specified rate will be paid by the companies on calls in advance. In case no such provision exist in Article, table A of Companies Act apply which provides that the company will have to pay interest at the rate of 6% per annum on calls in advance. The interest is calculated from the date of receiving the cas in advance and the date on which the call is made due for payment.