Rights Issue Call Money
Once rights issue shares are allotted and listed, investors may come across another important concept—call money. This applies only when shares are issued as partly paid shares under a rights issue.
Once rights issue shares are allotted and listed, investors may come across another important concept—call money. This applies only when shares are issued as partly paid shares under a rights issue.
Content:
In some rights issues, companies allow shareholders to pay the issue price in installments instead of upfront. At the time of allotment, investors pay only a portion of the share price. The remaining unpaid amount is known as call money.
Call money represents the balance amount that the company will collect later from shareholders who hold partly paid rights shares. As per SEBI regulations, the company must collect the entire call money within 12 months from the date of allotment.
|
Aspect |
Rights Issue |
Call Money |
|---|---|---|
|
What it is |
Offer to buy additional shares |
Remaining amount payable on partly paid shares |
|
When it applies |
At the time of fundraising |
After allotment, if shares are partly paid |
|
Mandatory |
Optional for shareholders |
Mandatory if you hold partly paid shares |
|
Consequence of ignoring |
REs may lapse |
Shares may be forfeited |
Before collecting call money, the company must formally approve the call:
After the call is announced:
Payment of call money in a rights issue is regulated and structured to protect investors.
Accepted modes include:
UPI is generally not permitted for call money payments in rights issues.
To determine who is liable to pay call money:
Partly paid rights shares are treated differently from fully paid shares:
Failure to pay call money can have serious implications:
Rights issue call money is the remaining amount payable by shareholders when a company issues partly paid shares under a rights issue.
Investors initially pay only a portion of the issue price, and the balance is collected later through one or more calls approved by the company’s Board.
A call money notice is a formal intimation sent by the company to shareholders, informing them about the amount payable, due date, and payment mode for the pending call money on partly paid rights shares. It is issued after the Board approves the call.
Call money is issued by the company, following approval from its Board of Directors or an authorised committee.
The call details are announced to stock exchanges and communicated to shareholders through notices and public disclosures.
Call money can be paid through SEBI-approved banking channels, most commonly via ASBA using your net banking account with a Self-Certified Syndicate Bank (SCSB).
Some brokers may also facilitate payment through linked trading-demat-bank accounts, where available.
Once paid, the amount is credited to the company, and the shares are converted into fully paid equity shares.