Can I Sell Partly Paid Shares in the Stock Market?
Partly Paid Shares Explained
Partly paid shares are shares in which the investor pays only a portion of the full issue price. The remaining amount is usually paid in instalments through what is known as a 'call'. This allows investors to purchase shares with a lower initial outlay, making it a popular choice for many traders.
Example of Partly Paid Shares
Suppose the actual stock price of a company is Rs 100. An investor purchases it for Rs 75 per share. At a future date, the company issuing the share can call the shareholder to pay up the balance amount of Rs 25, or make an instalment. When you buy partly paid shares, you understand that as and when the company requires more funds, calls will be made from time to time until the shares are fully paid.
Can you Sell These Partly Paid Shares Before the Call Date?
Yes, you can sell partly paid shares before the call date. The flexibility to trade these shares gives investors the opportunity to capitalize on market movements before any further payments are required.
Are Partly Paid Shares Tradable in the Market?
Partly paid shares can be traded in the market until two days before the record date. However, during this period, they can still be suspended, meaning trading is halted. This is important to monitor if you're considering buying or selling these shares.
How and When Do You Make Call Payment for Partly Paid Shares?
The Registrar/Transfer Agent (RTA) of the company will send you a website link for making the payment of the call money. Communication will be sent to your email ID linked to your Zerodha account. Payments must be made from your shareholder's bank account, and not from a third party.
What Happens if You Don’t Make the Call Payment?
Failing to pay the call money can have serious consequences. The partly paid shares may be forfeited, meaning the current partly paid shares you hold will no longer be tradable. Instead, the company may issue new partly paid shares with a different ISIN (International Securities Identification Number).
The company may also impose interest on the amount you owe, depending on the number of partly paid shares you hold. This interest adds a financial motivator to ensure that all shares are fully paid.
What Happens After Paying the First Call to the Company?
Once you have made the first call payment, the company will issue new partly paid shares under a new ISIN. These new shares will be fully paid up to the amount you have paid (initial application money and first call money). After collecting the first call payment, the new partly paid shares will be listed for trading, and you will be able to trade them under this new ISIN. These new shares will be shown in your Zerodha Kite holding under a new ISIN.
Conclusion: Understanding the mechanics of partly paid shares, including how to handle call payments and the potential consequences of incomplete payments, is crucial for any investor looking to engage in this type of investment. By staying informed and proactive, you can navigate the stock market more effectively and make informed trading decisions.