Question

As per Table A to the Companies Act, a company can charge interest on calls-in-arrears at the rate of ___________.

• A. $10$% p.a.
• B. $9$% p.a.
• C. $5$% p.a.
• D. $6$% p.a.

Answer 1

The correct option is A $10$% p.a.

When money is demanded from shareholders on allotment or on calls, the respective accounts are debited. Sometimes, some shareholders do not pay their dues on allotment and/or on calls within the fixed time. The amount which is not paid by defaulter shareholders is called ‘Calls-in-arrears’. This shows a debit balance. The opening of ‘calls in arrears account’ facilitates in preparing the balance sheet because it is deducted from called up capital.

The interest on calls-in-arrears is recoverable from the defaulters according to the provisions of Articles. But if the Articles are silent, shall be applicable a rate of 5% p.a., on the amount of Calls-in-arrears. However, the directors have the right to waive off the payment of interest on calls-in-arrears. Interest on calls-in-arrears is a nominal account. It is the income of the company, therefore, it is credited.