Section 49 of the Companies Act, 2013 ensures that all shareholders of the same class of shares are treated fairly when a company makes a “call” for unpaid share money. This means that if additional money is demanded on partly paid shares, every shareholder holding the same type of shares must be asked to pay the same amount per share. The provision safeguards minority shareholders, prevents discrimination, and strengthens investor trust.
Overview of the Companies Act, 2013
The Companies Act, 2013 is India’s primary corporate law that regulates how companies are formed, managed, and governed. Among its objectives is ensuring fair treatment of shareholders and promoting transparency in company operations. Section 49 is one such provision designed to protect shareholders when companies demand unpaid share capital.
What Are Calls on Shares?
When companies issue shares, they may not collect the full face value at once. Instead, the payment is taken in stages.
- Allotment money: Paid at the time shares are allotted.
- Call money: The remaining unpaid amount collected later in installments (calls).
For example, if a share worth ₹100 is issued but only ₹50 is paid upfront, the remaining ₹50 may be collected through calls over time.
Key Provisions of Section 49
- Uniform Calls Requirement
- Calls must be made on a uniform basis for all holders of the same class of shares.
- No shareholder can be asked to pay more or less than another for identical shares.
- Calls must be made on a uniform basis for all holders of the same class of shares.
- Applicability
- Applies to both equity shares and preference shares.
- Uniformity is required within each class of shares.
- Applies to both equity shares and preference shares.
- Restriction on Discrimination
- Companies cannot favor certain shareholders by demanding unequal amounts.
- This ensures fairness and compliance with corporate governance principles.
- Companies cannot favor certain shareholders by demanding unequal amounts.
Objectives of Section 49
- Fairness among shareholders: Prevents arbitrary or preferential treatment.
- Transparency in shareholding: Ensures clarity in capital raising.
- Protection of minority investors: Safeguards smaller shareholders from being disadvantaged.
Procedure for Making Calls
- Board Resolution – The company’s board must approve the decision to make a call.
- Notice to Shareholders – Written notice must be sent to all shareholders clearly stating the amount, due date, and mode of payment.
- Time Frame – Typically, at least 14 days are given to make the payment.
- Record-Keeping – Proper documentation of board decisions, notices, and receipts is required for compliance.
Consequences of Non-Uniform Calls
- Loss of credibility – Unfair treatment damages the company’s reputation.
- Shareholder rights – Aggrieved shareholders can approach courts or tribunals for relief.
- Regulatory action – Though Section 49 does not prescribe direct penalties, violations may invite action under broader provisions of company law.
Legal Interpretations and Compliance
- Courts’ View: Judicial precedents emphasize that unequal calls go against the spirit of shareholder equality.
- RoC Oversight: The Registrar of Companies monitors compliance with Section 49.
- SEBI Rules: For listed companies, SEBI mandates additional disclosure and transparency in call procedures.
Practical Examples
- Compliant Example: If a company makes a call of ₹10 per share, every shareholder holding partly paid equity shares must pay ₹10 per share.
- Non-Compliant Example: If one shareholder is asked to pay ₹10 and another ₹15 for the same class of shares, the call is discriminatory and violates Section 49.
Best Practices for Companies
- Draft clear policies on share calls in the articles of association.
- Ensure timely communication and uniform notices to all shareholders.
- Maintain consistent treatment for large and small shareholders alike.
Conclusion : Section 49 of the Companies Act, 2013 ensures fairness by requiring uniform calls on shares of the same class. It prevents discrimination, protects minority shareholders, and upholds transparency. By following due process and equal treatment, companies can strengthen shareholder trust and maintain good governance while raising capital efficiently.
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