Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Accounting for Shares

Question:

When a company does not have its own articles of association, provisions of which table will apply:

Options:

Table A

Table F

Table C

Table E

Correct Answer:

Table A

Explanation:

The correct answer is option 1- Table A.

Note :The given answer is as per NTA . But there is some ambiguity in the question as explained below:

As per NCERT, Where there is no articles of association of its own, the following provisions of Table A will apply:

(a) A period of one month must elapse between two calls.

(b) The amount of call should not exceed 25% of the face value of the share.

(c) Calls must be made on a uniform basis on all shares within the same class.

(d) A minimum of 14 days’ notice is given to the shareholders to pay the amount.

It means Table A will apply only for the above four points. In other cases, Table A will not apply. As for example, in case of interest on calls in arrears, if nothing is mentioned in AOA,  the rule contained in Table F shall be applicable which states that the interest at a rate not exceeding 10% p.a. shall have to be paid on all unpaid amounts on shares

NCERT: The Articles of Association of a company may empower the directors to charge interest at a stipulated rate on calls in arrears. If the articles are silent in this regard, the rule contained in Table F shall be applicable which states that the interest at a rate not exceeding 10% p.a. shall have to be paid on all unpaid amounts on shares for the period intervening between the day fixed for payment and the time of actual payment thereof.