Called up share capital is the portion of a company’s issued shares that the board of directors has formally demanded shareholders pay. Under Section 547 of the UK Companies Act 2006, it equals the total amount of calls made on shares, plus any amounts paid up without being called, plus any amounts due on a specified future date under the terms of allotment.1Legislation.gov.uk. Companies Act 2006, Section 547 – Called-Up Share Capital It matters when a company issues shares on a partially paid basis, taking some money upfront and keeping the right to demand the rest later. The figure tells you how much cash the company has actually asked for, as distinct from how much it could theoretically ask for.
How It Fits With Issued, Uncalled, and Paid-Up Capital
Share capital sits in layers, and called up capital is one of them. Reading a set of accounts means telling these layers apart.
Issued capital is the total face value of shares actually allotted to shareholders. A company may be able to issue far more than it has; issued capital is what has been placed with investors.
Called up capital is the slice of issued capital the company has formally demanded payment for. If shares were issued at £10 each but only £6 per share has been called, called up capital is £6 per share.
Uncalled capital is the remaining £4 per share in that example. It stays on the sidelines as a reserve the board can draw on later.
Paid-up capital is the cash actually received against the amounts called. When every shareholder pays what they owe, paid-up capital equals called up capital. When some don’t, it’s lower.
The gap between called up and paid-up is calls in arrears: money shareholders legally owe but have not handed over. If a company calls £500,000 and receives £450,000, calls in arrears are £50,000. That figure is both a receivable on the company’s books and a debt each defaulting shareholder must settle.2Investopedia. Called-Up Share Capital vs. Paid-Up Share Capital: What’s the Difference?
Why Companies Call Capital in Stages
Most companies collect the full share price upfront. It’s simpler. But partially paid shares earn their place in specific settings, and understanding them explains why called up capital exists as a separate figure at all.
A company raising a large sum may not need all of it right away. Collecting the money in stages avoids sitting on idle cash while still locking in investors’ commitments. Mining, infrastructure, and other capital-heavy sectors where spending unfolds over years often use this approach.
Partially paid shares also lower the entry point for investors. Someone who cannot commit £100,000 today might comfortably commit £25,000 now and take on the rest over time. From the company’s side, that remaining £75,000 is a contractual right the board can enforce whenever it decides to make a call. The result functions like a credit facility backed by shareholders instead of banks.
There’s a balance sheet effect too. Creditors can see that shareholders carry outstanding obligations, which reads as a financial cushion. The company can pull in cash without the delay and cost of issuing new shares, because the shares already exist and the obligation already exists.
How a Call Is Made
Calling on unpaid share capital is a formal legal act, not an informal request. The company’s articles of association and the terms under which the shares were originally allotted set out how it must be done.
The process begins with a board resolution. Directors specify how much per share is being called and set a payment deadline. The amount does not have to cover the entire unpaid balance; the board can call any portion, and it can make several calls over time.
Once passed, the resolution triggers a formal call notice to every shareholder holding partially paid shares. The notice converts a conditional future obligation into an enforceable debt. Model articles typically require at least 14 days’ notice before payment is due. The notice must state the amount, the deadline, and how to pay.
One rule sits at the heart of the process: calls must be uniform across all shares of the same class. If the board calls £3 per share, every shareholder in that class owes £3 per share. The board cannot single out individual shareholders. Breaking uniformity can invalidate the entire call and expose the company to challenge from affected shareholders.
How It Appears on the Balance Sheet
Called up share capital shapes the equity section directly. The standard presentation opens with total called up share capital, then deducts calls in arrears to arrive at paid-up capital. That layout gives an honest picture: the company has a legal right to the full called up amount, but only the paid-up portion sits in cash.
Calls in arrears appear either as a direct deduction from called up capital on the face of the balance sheet or as a note in the accounts. The figure cannot be hidden. Unpaid called capital is both a risk (a shareholder might default outright) and an asset (a legally enforceable receivable), and readers of the accounts need to see it.
The bookkeeping follows the same logic. When a call is made, the company records the amount owed against share capital. When cash comes in, it clears the call. When some shareholders don’t pay, the outstanding balance moves to a calls in arrears account and stays there until it’s settled or the shares are forfeited.
What Happens When a Shareholder Doesn’t Pay
Non-payment triggers a stepped response. The exact process usually lives in the articles of association.
Interest on Overdue Amounts
The company can charge interest from the date the call was due until the shareholder pays. The rate depends on what the articles or the original terms of allotment specify. If neither sets a rate, a statutory default applies. Under India’s Companies Act 2013 (Table F), the default caps at 10% per year. UK model articles have historically set 5%. The board usually has discretion to reduce or waive interest if the circumstances justify it.
Lien on the Shares
The company holds a lien on the defaulting shareholder’s partially paid shares. That lien secures the debt: while it’s in force, the shareholder generally cannot transfer or sell those shares. It stays in place until the outstanding balance and any interest are cleared.
Forfeiture
Forfeiture is the last step. After repeated demands, the board can pass a resolution cancelling the shares. The process typically requires a final warning notice with a minimum 14-day deadline making clear the shares will be forfeited if payment doesn’t arrive. The Companies Act 2006 treats forfeiture for failure to pay any sum payable in respect of the shares as a valid reduction of share capital.3Legislation.gov.uk. Companies Act 2006, Part 18 – Acquisition by Limited Company of Its Own Shares
Once shares are forfeited, the shareholder’s name comes off the register of members. Any money already paid toward the shares is lost; the company keeps it, usually in a forfeited shares account. The forfeited shares can be reissued, often at a discount to the original price, but not for less than the amount remaining unpaid on them. A former shareholder may still be liable for outstanding calls and interest, though that residual liability normally covers only the shortfall between what was owed and what the company recovers on reissue.
Where the Concept Does Not Apply
Called up share capital is a UK and Commonwealth idea. Section 547 of the Companies Act 2006 supplies the statutory framework in the UK, and Indian, Australian, and South African corporate law use similar terminology and mechanics.
In the United States, partially paid shares are uncommon. The Model Business Corporations Act, which underpins most state corporate law, generally treats shares as fully paid and nonassessable once issued. The company cannot come back later and demand more. Some older state statutes and specific industries still permit assessable stock, but for most US corporations, called up share capital simply does not arise.
The term also gets confused with “capital calls” in private equity and venture capital funds. The mechanics look alike because both involve demanding money that investors previously committed, but the legal structures differ. Called up share capital operates under corporate law: shareholders own partially paid shares, and the board calls under the articles of association. Private equity capital calls operate under a limited partnership agreement: limited partners commit a total to the fund, and the general partner draws it down over time. The remedies for default in private equity, which can include dilution, forced sale, or loss of the existing stake, come from the partnership agreement rather than from any corporate statute.
If called up share capital shows up in a set of accounts you’re reading, check where the company is incorporated. The rules governing calls, interest, and forfeiture depend on that jurisdiction’s corporate statute and on the company’s own articles.