A partly paid share refers to a share in a company that you have paid for partially, instead of paying the full issue price upfront. This allows you to acquire these shares without making the complete payment at the beginning. You can pay the remaining amount for partly paid shares in instalments when the company issues a call for payment.
Suppose a company has a stock price of ₹100. You decide to buy a share for ₹75. Sometime later, the company might ask you as a 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 you from time to time until you completely pay off the shares.
Common questions about partly paid shares
1. Can I sell partly paid shares before the call date?
Yes, you have the option to sell partly paid shares before the call date.
2. Are partly paid shares tradable in the market?
Yes, you can trade partly paid shares in the markets until they are suspended two days before the ex/record date.
3. How and when do I make call payments for partly paid shares?
The Registrar & Transfer Agent (RTA) of the company will provide you with a website link for the payment of call money. The RTA will send all communication to the email address associated with your Zerodha account. You should make payments for the call money from your bank account, as payments from third-party accounts are not eligible.
4. What are the consequences if I don't make the call payment?
You face several potential outcomes if you don't pay the call money:
- The company may forfeit your currently held partly paid shares. 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)
- The company may impose interest on the unpaid amount. The specific interest rate would depend on the number of partly paid shares you hold
5. What happens after I pay my first call to the company?
The company will allocate new partly-paid shares to you under a new ISIN (International Security Identification Number), which will be fully paid up to the amount you have already paid (including initial application money and the first call money). Once the company collects the first call payment, these newly allotted partly-paid shares will be listed again, enabling you to trade them. You will see these shares under the new ISIN in your Zerodha Kite holdings.