Question

Study the following case/situation and express your opinion.

Red Tubes Ltd. has made a demand on its shareholders to pay the balance unpaid amount of ₹ 20/- per share (having a face value of ₹ 100) held by them. The company has sent letters asking the shareholders to pay the money to its Bankers within the specified time.

1. Are the shareholders liable to pay ₹ 20 for the shares held by them?
2. Name the letter sent by the company to its shareholders asking them to pay ₹ 20/-
3. What happens if a shareholder fails to pay the money within the specified time?

Answer 1

1. Yes. The shareholders are liable to pay ₹ 20 for the shares held by them. This is because it is the responsibility of every shareholder to pay the call money as demanded by the company.
2. The company has to send the call letter to shareholders for the payment of call money. This letter is sent by ordinary post.
3. If a shareholder fails to pay the money within the specified time, then the company sends a warning letter and after that, the company can forfeit (cancel) the shares of the shareholders.