What is a call money notice, and why do I receive one?

A call money notice is an official communication from the company to its shareholders. You receive it after the company's Board of Directors approves a "call" for the remaining payment on your partly paid rights shares. This notice clearly outlines how much you need to pay, the deadline for payment, and the available methods to complete the transaction.

Who is responsible for issuing call money?

The company itself is responsible for issuing call money. This process begins after its Board of Directors, or a specially authorized committee, officially approves the call. Once approved, the company publicly announces the details of the call to the stock exchanges and informs all affected shareholders through official notices and public announcements.

How can I pay the call money for a rights issue?

You can typically pay call money using banking channels approved by SEBI (Securities and Exchange Board of India). The most common and convenient method is through the ASBA (Application Supported by Blocked Amount) facility, which you can access via your net banking account with a Self-Certified Syndicate Bank (SCSB). Some stockbrokers may also provide a service that allows you to pay directly through your linked trading, demat, and bank accounts. After your payment is successfully processed, the funds are credited to the company, and your partly paid shares are then converted into fully paid equity shares.

Rights Issue Call Money

Understanding Call Money in a Rights Issue

When companies issue shares through a rights issue, they sometimes offer shareholders the option to pay the full share price in parts. Initially, investors pay a portion of the total price at allotment. The remainder, referred to as call money, is collected later.

Call money is essentially the outstanding balance that needs to be paid by shareholders who hold these partly paid rights shares. According to SEBI rules, companies must ensure that the collection of call money is completed within a year from the date of the initial allotment.

Call Money vs Rights Issue

Aspect	Rights Issue	Call Money
What it is	Opportunity to purchase additional shares	Amount due on shares bought in installments
When it applies	During the fundraising period	Post allotment, if shares are partly paid
Mandatory	Optional for investors	Mandatory for holders of partly paid shares
Consequence of ignoring	Rights Entitlements (REs) may expire	Risk of shares being forfeited

Approval and Announcement of Call Money

Before a company can collect call money, it needs to go through a formal approval process:

The Board of Directors or an authorized committee must pass a resolution to approve the call.
Once approval is granted, the company notifies stock exchanges.
Public announcements are made through major newspapers like Financial Express and Business Standard and are also communicated in exchange bulletins.

Intimation to Shareholders

Once the call money is announced:

Shareholders receive a detailed call notice.
A minimum notice of 15 days is given.
Companies might send reminders before the payment deadline.
The Board can adjust the timelines if necessary.

The notice includes:

The amount due per share
The payment due date
Accepted modes of payment

Payment of Call Money

To ensure fairness and security, call money payments in rights issues follow a structured process:

Payments can be made via the ASBA facility through Self-Certified Syndicate Banks, whether online or in-branch.
Investors can also use 3-in-1 accounts (combining bank, demat, and trading services), depending on their broker's support.

Typically, UPI is not accepted for call money payments in rights issues.

Record Date and Trading Suspension

To determine which shareholders need to pay call money:

A Call Record Date is set by the company.
Only those holding partly paid shares on this date are required to pay.
Trading in these shares may be temporarily halted before this date to ensure accurate shareholder data.

Trading of Partly Paid Rights Shares

Partly paid rights shares have distinct trading characteristics compared to fully paid shares:

They are assigned a separate ISIN and trade independently on stock exchanges.
Shareholders can trade these shares during specified trading periods.
Once the final call money is paid:
- The shares are considered fully paid.
- They merge with the existing equity shares.
- Trading continues under the original ISIN as the fully paid shares.

Consequences of Non-Payment of Call Money

Not paying call money can lead to serious consequences:

Interest may be charged on late payments, often up to 10% per annum.
Outstanding amounts, including interest, might be deducted from any future dividends.
Continuous failure to pay can result in the forfeiture of the shares.
- If forfeited, both the shares and any amount already paid are lost.
- Forfeited shares lose their value and cannot be traded.

Key Takeaways

Call money is relevant only for partly paid shares from a rights issue.
Companies must collect call money within 12 months of the allotment date.
Payments are commonly made via ASBA or other approved banking methods.
Partly paid shares have a distinct ISIN until fully paid.
Failure to pay can lead to interest charges, deductions, or share forfeiture.