Question

Select the most appropriate answer from the alternatives given below and rewrite the sentence :

If articles are silent regarding interest on calls-in-arrears, the minimum rate of interest to be charged is _____________.
a) 5% p.a.
b) 6% p.a.
c) 8% p.a.
d) none of these

Answer 1

If articles are silent regarding interest on calls-in-arrears, the minimum rate of interest to be charged is none of these.

Explanation: No interest is charged when articles are silent about the interest on calls-in-arrears. However, if directors want and there is a provision in the Articles of Association, the company can charge interest @ 5% p.a. from the shareholders for the period for which such amount remains outstanding.