Question

Describe the provision of law relating to ‘Calls-in-Advance’.

Answer 1

These are calls that are not yet due but have been paid in advance by the shareholders. As a result, the corporation receives an advance payment for future calls. In other words, when a shareholder pays the entire amount or a portion of the amount in advance, before the company calls, this is referred to as calls in advance. The corporation is authorized by its Articles of Association to pay interest at the specified rate on call in advance from the date of payment to the date of a call made. If the Articles of Association are quiet in this regard, Table A will apply, which provides interest at 6% per annum. On the liabilities side of the Company’s Balance Sheet, it is listed under the heading “current liabilities.”