What are the rights and liabilities of a shareholder which arises on payment of calls made in Advance?


The right and liabilities of the shareholders when a company receives payment in advance of calls are as follows:-

  1. The liability of the shareholders to the company n respect of the calls for which the amount paid is finished.
  2. The amount received in advance of calls is no refundable
  3. The shareholder voting right ends in respect of the money’s so paid by him till the same would, but for such repayment becomes presently payable [sec. 92(2)]
  4. The shareholder is in a position to claim interest on the amount of the call to the extent payable according to AOA. If there are no profits, it must be paid out of capital of the company.
  5. The power to receive the payment in advance of calls must be exercised in the general interest and for the benefit of the company.
  6. In the event of winding up the shareholder position is after the creditor but they must be paid his amount with interest, if any before the other shareholders are paid off.


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