Btw - should have googled "partly paid shares" several weeks...

Btw - should have googled "partly paid shares" several weeks ago. Corresponds exactly to what you said Seik.


Partly paid shares, and your obligations

http://www.theaustralian.com.au/business/wealth/partly-paid-shares/story-e6frgac6-1225697048829

by: WHAT'S THAT?: Paul Zwi
From:The Australian
April 15, 200912:00AM


WHEN company shares are issued, shareholders wishing to invest are required to pay the amount of the share's value.

If the whole amount is paid up-front, then the shares are said to be ordinary fully paid shares.

Companies can also choose to offer shares where only a portion of the face value of the share is payable up-front. These are known as partly paid or contributing shares. For example, let's say Company XYZ sells shares for $50. If the company has received $50, it becomes a fully paid share, but if less than $50 has been collected, it is a partly paid share.

The company may set a date for the remaining payment or can opt to inform shareholders of the "call-up" date when it needs the funds. Owners of these shares are legally obligated to pay the balance when the company requests it. When these monies are received by the company, the partly paid shares become ordinary fully paid shares.

In terms of value, owners of partly paid shares will receive the same entitlements as owners of fully paid shares, including dividend payments, the opportunity to participate in rights and bonus issues and an equal vote at company meetings. However, dividend payments and additional share issues will usually be only in proportion to the amount that has been paid up to that date.

Owning partly paid shares can be useful to investors who want to spread the cost of share acquisitions through time. However, great care should be taken before purchasing partly paid shares. Investors should ensure they have read the fine print and have planned for payments that will become due at some point in the future. Shareholders will be required to make full payment despite the financial performance of the company, including any sharp drop in its share price.

An example of the risks in buying partly paid shares is playing out in the courts with the Brisconnections case. In this instance, some investors allege they bought partly paid Brisconnections units, not understanding they came with a $2 a unit liability attached.