Paid up capital

Paid up capital is the amount being paid to a company for shares allotted or issued to a shareholder.
If the shareholder makes full payment to purchase the share, the amount received is referred to as
fully paid-up capital. If the company allows the shareholders to make only partial payment of the
total purchase price, such shares are known as partly paid-up shares. The remaining balance of the
shares’ price shares be recorded in the same company’s account as an amount that the company
may call upon in the future, which is known as uncalled capital.

Ooregum Gold Mining Co of India Ltd v Roper

Shares will only be deemed to be fully paid up when a company receives payment that is equivalent
to the nominal or par value of those shares. If company permits the shareholders to make partial
payment of total price, shares will be referred to as partly paid up share.

Unpaid shares

Unpaid shares are the amount of unpaid price on the shares issued which can be called upon at a
specific time.

Section 82(1) of the CA 2016 stated that the directors may make calls upon the shareholders in
respect of any money unpaid on the shares of the shareholders and not by the conditions of
allotment of shares made payable at fixed date.

Section 82(3) of the CA 2016 stated that subject to the company’s constitution no call shall exceed
one-fourth of the issued price of the share or be payable at less than thirty days from the date fixed
for the payment of the last preceding call; and each member shall, subject to receiving at least
fourteen days’ notice specifying the date, time and place of payment, pay to the company the
amount called on his shares.

Section 82(6) of the CA 2016 stated that if a sum called in respect of a share is not paid before or on
the day appointed for payment of the sum, the person from whom the sumis due shall not be
required to pay any interest or compensation on that sum unless stated in the constitution of the
company

Failure to pay

Section 83(1) of the CA 2016 stated that if a shareholder fails to pay any call or instalment of a call
within the stipulated time, the directors may serve a notice on the shareholder requiring payment of
the amount unpaid together with any interest or compensation which may have accrued.

Section 83(2) of the CA 2016 states that the notice given shall specify a date on or before which the
payment is required to be made; and state that in the event of non-payment on or before the
specified date, the shares in respect of which the call was made is liable to be forfeited.

Section 83(3) of the CA 2016 states that upon failure to comply with the notice served under
subsection (1), the share in respect of which the notice has been given shall be forfeited by a
resolution of the directors unless the payment as required by the notice has been made before such
resolution.
Section 83(4) of the CA 2016 states that for the purposes of subsection (3), the forfeiture shall
include all dividends declared in respect of the forfeited shares and not actually paid before the
forfeiture.

Section 83(5) of the CA 2016 states that a person whose shares have been forfeited under subsection
(3) shall cease to be a member in respect of the forfeited shares.

Section 83(6) of the CA 2016 states that notwithstanding subsection (5), the person shall remain
liable to pay to the company all money which at the date of forfeiture was payable by him to the
company in respect of the shares together with interest or compensation at the rate of eight per
centum per annum from the date of the forfeiture on the money for the time being unpaid if the
directors think fit to enforce payment of the interest or compensation, and the liability shall cease if
and when the company receives payment in full of all such money in respect of the shares.

Section 83(7) of the CA 2016 states that a statutory declaration in writing by a director or secretary
that a share in the company has been duly forfeited on a date stated in the declaration shall be
conclusive evidence of the facts stated in the declaration against all persons claiming to be entitled
to the share.

Section 83(8) of the CA 2016 states that a forfeited share may be sold or otherwise disposed of on
such terms and in such manner as the directors think fit.

Section 83(9) of the CA 2016 states that the company may receive the consideration, if any, given for
a forfeited share on any sale or disposition of the share and may execute a transfer of the share in
favour of the person to whom the share is sold or disposed of and such person shall be registered as
the shareholder and not have his title to the share be affected by any irregularity or invalidity in the
proceedings in reference to the forfeiture, sale or disposal of the share.

Section 83(10) of the CA 2016 states that the forfeiture may be cancelled on such terms as the
directors think fit at any time before a sale or disposition of the forfeited shares.

Section 83(11) of the CA 2016 states that this section shall apply in the case of non-payment of any
sum which, by the terms of issue of a share, becomes payable to the company at a fixed date, as if
the shares had been payable by virtue of a call duly made and notified.

Lien on shares

Section 111(1) of the CA 2016 stated that unless provided otherwise in the constitution, a company
shall be entitled to a lien, in priority to any other claim, over a partly paid issued share and any
dividend payment on the share, for all money due by the shareholder to the company by way of
money called or payable at a fixed date.

Section 111(2) of the CA 2016 stated that a company may sell any share over which the company has
a lien in a manner as the directors consider appropriate.

Partly Paid Up (No par value)

Section 74 of Companies Act

All shares issued before or upon the commencement of this Act shall have no par or nominal value
Company no longer needs to specify nominal value of shares

Upon incorporation of company, company also not required to state authorized share capital The
authorized capital does not reflect the actual worth of the company. It is just figures/numbers and
shares may have been issued / not. Thus, not a true indicator on the company’s ability to pay its
debt. In short, a company can now issue shares, not just in numbers they deemed fit, but also in
value they deem fit (each share will still = a share each, regardless of difference in price)

Rationale: Retrospective Effect

Nominal/Par value is only applicable at the point of issuance of shares, actual value of shares in
company varies in accordance with current situation faced by company (current value of the
company, factors affecting the business and the capital it is seeking to raise) Nominal value does not
accord protection to shareholders. Rights of shareholders attached to shares itself
(meeting/vote/etc.) = Right depend on number of shares held, not on value of shares when first
purchased

Liability of members for unpaid shares

Whether a member who is yet to fully pay his shares before the act was enforced is still liable to the
company to the unpaid amount?

Section 618: Transitional Provision (from par value to no par value regime)

Section 618(1)(b): recognizes the amount unpaid on shares is the difference between issue price of
share and the amount paid

Section 618(6): liability of shareholder not affected by the fact that shares have ceased to have a par
value

Section 82: Director can make call upon unpaid shares

Credit in Share Premium Account

Share premium = Capital surplus = amount the company reraised on the issue of shares in excess of
their par value. (will be in share premium account before No par value regime)

Henry Head and Co Ltd v Ropner Holdings Ltd

case concerned an issue of shares by one company in exchange for the transfer to it of all the shares
in another company. The nominal value of the shares issued was some 1.75million pounds. A
valuation obtained at the time the transaction was entered into showed that the shares acquired had
a value of some 6.75 million pounds. The cost of the assets acquired was recorded at the 6.75 million
pounds figure. It was held that the difference of5.00 million pounds had to be carried to share
premium account.

Held: if company issues share at a premium, Companies Act requires that “a sum equal to the
aggregate amount or value of the premium on those shares” must be transferred to “share premium
account”.

Section (618) (2): Any amount standing to the credit of company’s share premium account, shall
become part of company’s share capital.

Section 618(3): provides alternative ways the company can utilize the share premium within 24
months from 31 January 2017.According to subsection (3), a company may use the moneys within 24
months from January 31, 2017 as follows. Firstly, to provide for the premium payable on redemption
of debentures or redeemable preference shares issued before January 31, 2017 (section 618(1)(a)).
Secondly, to write off preliminary expenses and other expenses incurred before January 31, 2017 in
connection with any issue of shares (section 618(1)(b)). Thirdly, to “pay up under an agreement
made before the commencement of section 74, shares which were unissued before that date and
which are to be issued upon that date to members of the company as fully paid bonus shares”
(section 618(1)(c)). Fourthly, to pay the whole or part of the balance unpaid on shares issued before
January 31, 2017 to members of the company (section 618(1)(d)). Fifthly, to pay for the dividend
shares declared before January 31, 2017 (section 618(1) (e)).

Section 618(5): companies dealing with insurance/takaful have been given another option of
transferring the money to any fund established under the Financial Services Act 2013 or Islamic
Financial Act 2013.

Chloride Eastern Industries Pte Ltd v Premium Vegetables Oils Sdn Bhd

Held: company is prohibited from redeeming redeemable preference, at a lesser value than the
aggregate amount subscribed. Where subscriber of shares paid a premium to the company at time
he subscribed to the redeemable preference shares, and company later redeems those shares,
shareholder is entitled to a return of his premium