What is the demand on shares? Discuss the method of making demands in the Companies Act and the provisions regarding valid demands. What is a Call on Shares? Discuss the Provisions and the Procedure laid down in the Companies Act regarding Valid Calls.]
Meaning of Calls
Generally, companies with share capital keep asking for small amount according to their requirement by not taking the face value of the shares together. Companies ask for some amount on application (which should not be less than 5 percent of the face value of the shares), some amount on allotment and the remaining amount in pre-determined installments at different times. The amount of capital which is demanded from the shareholders after allotment is called demand or solicitation. For these solicitations, resolutions are passed by the Board of Directors and after making the solicitation, some time is given to each shareholder to pay the amount of the solicitation within which the shareholders pay this amount.
Legal Provisions Regarding Calls
The following are the legal arrangements for a valid demand on the basis of the provisions of the Companies Act, Councilor’s Articles or Table ‘F’ and the decisions of the courts.
(1) Calling should not exceed 25 percent of the face value of shares – The Board of Directors may from time to time make solicitations on the members for the amount of their shares, but no solicitation shall exceed 25 percent of the face value of the shares. needed.
(2) Time difference in solicitations – There must be a gap of at least 1 month between two requests.
(3) Solicitations in accordance with the Articles of Councilors – If the company should have made its Councilor’s Articles. If so, the petitions should be made in accordance with the provisions and manner of the Articles of Association.
(4) Giving 14 days notice for payment – for payment of the amount demanded on the request.
At least 14 days prior notice is required. (5) Right to adjourn the requisition – The conducting body has the right to adjourn the requisition.
(6) Passing of the resolution by the Board of Directors – A request was accepted at that time.
When the Board of Directors passes the resolution for that solicitation. The date of passing of such proposal is considered as the date of petition. (7) Joint owner to be jointly liable – Joint owner of shares shall be liable for solicitations
are jointly and severally liable to make the payment.
(8) Paying 5% annual interest for non-payment within a reasonable period- If the amount called for on the call is not paid to a shareholder till the day which is fixed for payment, the shareholder shall have to pay the Where these solicitations are paid, interest has to be paid at the rate of 5% per annum (or at such lower rate as the operator may determine). (9) Right to waive interest – The Board of Directors has the right to
But waive the interest wholly or partly.
(10) Right to take advance The Board of Directors has the right to take advance on calls from any member who wishes to give advance amount of the calls.
(11) Right to pay interest of up to 6% on advance amount – Up to 6% interest can be given on this advance amount of solicitations.
(12) Payment of call to be made in cash or otherwise – The payment of call may be made in cash or otherwise. If it means to be considered equivalent to receiving cash by the company.