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Charge on Uncalled Share Capital

Every Company has the power to call the uncalled portion of the issued capital of the company. Once the uncalled portion of the capital is called for and is paid up by the shareholder, the same can be put to charge by the company. 

But if the capital is not called for and remains as uncalled capital, then unless the articles / memorandum of association of the company authorise the company to charge the uncalled share capital, the company cannot create any charge on such uncalled portion, as the company do not have any implied authority in this regard. 

Only after an express power / authority given under the Memorandum or Articles of Association of a company, the company can charge its uncalled capital.


One exception or limitation to this power is that on the reserve capital (that is the capital reserved to be utilised in the event of winding up) a charge cannot be created even though the company is authorised to create a charge on the uncalled share capital of the company. 

If the current provisions in the articles do not provide for any such authority then the articles can be modified by a special resolution in the general meeting to include the power to charge on the uncalled capital.


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