Calls in Arrears refers to the amount not paid by a shareholder on the due date when the company makes a call on shares.
When shareholders fail to pay the call money on time, the company is entitled to charge interest on the unpaid amount. This interest compensates the company for the delay in receiving funds.
As per Table F of the Companies Act, the maximum rate of interest that can be charged on calls in arrears is 10% per annum (p.a.).
The key point to remember is:
- It is per annum (yearly rate), not per month
- The maximum limit is 10%
- This rate can be lower if specified in the Articles of Association, but cannot exceed 10% p.a.
The company can charge interest from the date when the call payment became due until the actual payment is received.
Correct Option: 3 (10% p.a.)