# Calls-in-Advance — Section 50

## Core Concept

A company may accept money from a shareholder before a call is made, for the unpaid portion of shares held. This is called calls-in-advance.

## Conditions for Acceptance

1. Authorisation by Articles — The Articles of Association must permit acceptance of calls-in-advance.

2. Acceptance can be of the whole or part of the amount remaining unpaid on the shares.

3. Acceptance is from a member holding the shares.

## Voting Rights Position

Payment of calls-in-advance does NOT give extra voting rights to the paying member.
The member gets enhanced voting rights only after all members have been called upon to pay that amount through a regular call.

## Interest on Calls-in-Advance

Interest is payable only if the Articles permit it.
The rate of interest fixed by the Articles can be varied by shareholders in a general meeting.
Example: A rate of 6% per the Articles may be increased to 10% by shareholders in general meeting.

## Related Concept — Partial Payment of Call

A shareholder served with a regular call may choose to pay only a part of the call money. The debt of calls is not entire and indivisible, so the company may be bound to accept partial tender.

## How Much to Call on Partly-Paid Shares?

This decision lies with the Board of Directors, subject to:

Clauses in the Articles, and
Terms of issue of those shares.

Worked example

### Example 1

Example (Voting Rights): Mr. A holds 1,000 shares of ₹10 each, ₹5 called up. He voluntarily pays the remaining ₹5 in advance under Section 50. Until the company makes a call on remaining ₹5 on all members, Mr. A does NOT get enhanced voting rights merely because he has paid the full ₹10.

### Example 2

Example (Interest variation): XYZ Ltd's Articles permit 6% p.a. interest on calls-in-advance. In a general meeting, shareholders pass a resolution to enhance the rate to 10% p.a. This is valid since the Articles-prescribed rate can be varied by the shareholders in general meeting.

⚠️ Common exam mistakes

Assuming calls-in-advance automatically grants extra voting rights (it does not, until others are called).
Believing interest on calls-in-advance is mandatory — it requires authorisation in the Articles.
Confusing 'calls-in-advance' with 'calls-in-arrears' — advance is voluntary prepayment; arrears is unpaid call money.
Forgetting that authorisation by Articles is a prerequisite to even accept calls-in-advance.

Bare-Act text Section 50 · Companies Act, 2013 · click to expand

Section 50: A company may, if so authorised by its articles, 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 advance payment shall not entitle the member to voting rights in respect of the moneys so paid until the same would, but for such payment, become presently payable.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Calls-in-Advance (Section 50)

Worked example

⚠️ Common exam mistakes