What are partly paid shares?
A partly paid share refers to a share in a company that has been paid for partially, instead of paying the full issue price upfront. This allows investors to acquire these shares without making the complete payment at the beginning. The remaining amount for partly paid shares can be paid in instalments when the company issues a call for payment.
Suppose we have a company with a stock price of ₹100. An investor decides to buy a share for ₹75. Sometime later, the company might ask the shareholder to pay the outstanding balance of ₹25 (or make an instalment payment). When you invest in partly paid shares, keep in mind that the company may request additional funds from time to time until the shares are completely paid off.
Now, let's address a few common questions that may arise regarding partly paid shares.
Q. Is it possible to sell partly paid shares before the call date?
A. Yes, investors have the option to sell partly paid shares before the call date.
Q. Are partly paid shares tradable in the market?
A. Yes, partly paid shares can be traded in the markets until they are suspended two days before the ex/record date.
Q. How and when are call payments made for partly paid shares?
A. The Registrar & Transfer Agent (RTA) of the company will provide a website link for the payment of call money. All communication from the RTA will be sent to the email ID associated with the Zerodha account. Payments for the call money should be made from the shareholders' bank account, as payments from third-party accounts are not eligible.
Q. What are the consequences of not making the call payment?
A. There are several potential outcomes if the call money is not paid. Firstly, currently held partly paid shares may be forfeited by the company. As a result, these shares would become worthless and would not be tradable on exchanges. The company may then proceed to issue new partly-paid shares under a different ISIN (International Security Identification Number).
Additionally, the company may impose interest on the unpaid amount. The specific interest rate would depend on the number of partly paid shares held.
What happens after paying the first call to the company?
The company will allocate new partly-paid shares to clients under a new ISIN (International Security Identification Number), which will be fully paid up to the amount they have already paid (including initial application money and the first call money). Once the first call payment is collected, these newly allotted partly-paid shares will be listed again, enabling clients to trade them. These shares will be visible under the new ISIN in the Zerodha Kite holding.