The liability of a shareholder to pay the full value of the shares held by him is enforced by making “calls” for payment. Every shareholder is under a statutory liability to pay the full amount of his shares as Section 10(2) declares that “all money payable by any member to the company shall be a debt due from him to the company”. But the liability to pay this debt arises only when a valid call has been made.
For example, in Pabna Dhanabhandar Co Ltd v Foyezuddin Mia: It was held that “a mere demand by a company acquiring the rights of another company in respect of its uncalled capital cannot take the place of a formal call’
However, according to Section 50 a company can accept voluntary payment of the uncalled amount, if it is so authorised by its articles. Voting rights are, however, regulated only by the amount actually called by the company.
The power cannot be delegated to a director or to a committee of directors or to any other officer of the company (Sec. 179 of the Companies Act, 2013).
As per sec Sec. 49 of the Companies Act, 2013:
- A call on the shares falling under the same class must be made on a uniform basis.
- Shares of the same nominal value, on which different amounts have been paid up, are not deemed to fall under the ‘same class’
An enforceable call shall have to conform to the provisions of the Act and the articles of association of the company. The following are some of the important requisites of a valid call:
- By resolution of Board. – In the first place, a call must be made under a resolution of the Board of directors. “In making a call care must be taken that the directors making it are duly appointed, and duly qualified, and that the meeting of the directors has been duly convened that the proper quorum is present and that the resolution making the call is duly passed. However, every small irregularity should not be taken to render a call invalid. Such as defect in the appointment or qualifications, etc of such directors.
Accordingly, in Dawson v African Consolidated Land & Inding Co, where a clause of this kind existed, it was held that a call made by a resolution of three directors was valid, although one of them had under the articles of association vacated his office by parting with all his qualification shares for a few days. Shiromani Sugar Mills Ltd v Debi Prasad is another Illustration: The directors had by not paying allotment and call moneys disqualified themselves, yet their act in making a call was held to be valid.
Section 50 of Companies Act 2013 gives the company the power, if so authorised by its articles, to accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up. Such payment will not entitle the member to more voting rights as compared with other members until all have been called upon to рау.
2. Amount and time of payment. – Secondly, the resolution must state the amount of the call and the time at which it is to be paid, otherwise the call will be invalid.
In E&W Insurance Co Ltd v Kamala Mehta: 1956, The directors of a company had, by two resolutions, resolved to make a call. But neither resolution specified the date and the amount of payment. The blanks were subsequently filled by the secretary, who sent a notice of call to the defendant. The call notice was held to be invalid.
3. Bona fide in interest of company. -Thirdly, the capital of a company is a trust fund in the hands of directors. The amount called up must be used scrupulously for the objects of the company and the amount uncalled must be called only when it is necessary for the promotion of those objects. Hence the power to make a call is in the nature of a trust and is to be exercised in the interest of company.
4. Uniform basis : Section 19 provides that “calls shall be made on a uniform basis on all shares falling under the same class”. Hence a call cannot be made on some of the members only, unless they constitute a separate class of shareholders. Thus where a shareholder paid the first two calls after a great delay and neglected to pay the third call and the directors, being annoyed, called upon him to pay the whole amount due, the call was held to be invalid. But “shares of the same nominal value on which different sums have been paid shall not be deemed, for this purpose, to fall under the same class.”
A shareholder on whom a regular call for payment has been served may choose to pay the sum due in respect of only a part of his shares. In the view of the Punjab High Court the debt is not “an entire and indivisible debt’ and, therefore, the company may be bound to accept the amount tendered by the shareholder.