Calls in arrear

“Calls in arrear” is a term used in accounting and finance to refer to unpaid amounts or installments on shares that have been issued by a company. In a company’s financial statements, it is common to find entries related to “calls in arrear” when shareholders have not paid the full amount they owe on their shares.




Here’s how it works:

Issuing Shares: When a company issues shares to shareholders, it sets a specific amount that shareholders need to pay for each share. This amount is known as the “call” or “call-up” on the shares.

Due Date: The company also specifies a due date or a schedule for shareholders to pay for the shares they have acquired. The due date is usually set by the company at the time of issuing the shares.

Calls in Arrear: If a shareholder fails to pay the full amount for their shares by the specified due date, the unpaid amount is referred to as “calls in arrear” or “calls unpaid.” It means that the shareholder is in arrears or in default of paying the required amount.




Accounting Treatment: In the company’s financial statements, “calls in arrear” are typically recorded as a part of shareholders’ equity. They are shown as a separate line item in the equity section of the balance sheet, often under the heading “calls in arrear” or “calls unpaid.”

Consequences: Companies may take various actions to collect the unpaid amount from shareholders in arrears. These actions could include sending reminders, imposing penalties, or even legal actions, depending on the company’s policies and local regulations.

It’s important to note that “calls in arrear” is different from “fully paid shares.” Fully paid shares are shares on which the shareholders have paid the entire amount due, and they do not have any outstanding balance. On the other hand, “calls in arrear” represents the portion of shares for which the shareholders still owe the company.




Companies closely monitor calls in arrear, as unpaid amounts can impact the company’s financial position and affect its ability to meet financial obligations. Investors and regulators also pay attention to calls in arrear as it can be an indicator of financial health and the level of shareholder compliance in fulfilling their obligations.

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