CA Final SPOM

SET A – Corporate and Economic Laws

Comprehensive Question Bank

(Contains all SM (MCQs+
*Descriptive) questions, Model test
paper and all past MCQs)

*Descriptive Questions can help in concept building which would help in solving MCQs,

Compiled by CA Sanidhya Saraf

 CA Final Law
SPOM SET A
NEW SM Questions Compilation
Note: It a compilation of ICAI NEW syllabus Study material questions. It has two sections-Section
A– Test Your Knowledge (MCQ Questions) and Section B- Descriptive Questions.

Index
PART I: CORPORATE LAWS
SECTION A: COMPANY LAW
MODULE 1
Sr.no. Chapter Page no.

1 Appointment and Qualification of Directors 3-12

2 Appointment and Remuneration of 13-22

Managerial Personnel
3 Meeting of Board and its Powers 23-36
4 Inspection, Inquiry and Investigation 37-42
5 Compromises, Arrangements & Amalgamations 43-48

6 Prevention of Oppression and Mismanagement 49-54

7 Winding Up 55-59
8 Miscellaneous Provisions 60-64
9 Compounding of Offences, Adjudication, Special 65-69
Courts, National Company Law Tribunal and
Appellate Tribunal

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 10 E-filing 70-72

SECTION B: SECURITIES LAWS

MODULE 2
Sr.no. Chapter Page no.
The Securities Exchange Board of India Act, 73-81
1 1992 and SEBI (LODR) REGULATIONS, 2015,
SEBI (ICDR) REGULATIONS, 2018, SEBI (SAST)
REGULATIONS, 2011, SEBI (PIT) REGULATIONS,
2015

PART II: ECONOMIC LAWS

Sr.no. Chapter Page no.

1 The Foreign Exchange Management Act, 1999 82-89

2 The Foreign Contribution Regulation Act, 90-95

2010
3 The Insolvency and Bankruptcy Code, 2016 96-101

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MODULE 1
1. Appointment and Qualification of Directors
Section A- Test Your Knowledge
(1)Mr. Q, a Director of PQR Limited, is proceeding on a foreign tour covering entire Europe for four months. He proposes
to appoint Mr. Y as an alternate Director to act on his behalf during his absence. The Articles of Association of PQR
Limited provide for the appointment of alternate Directors. Mr. Q claims that he has a right to appoint alternate Director
of his choice. Which of the following options is applicable in the given situation:
a) Claim made by Mr. Q to appoint Mr. Y as alternate Director is valid as the Articles of Association of PQR
Limited provide for such appointment.
b) Claim made by Mr. Q to appoint Mr. Y as alternate Director is not valid as the authority to appoint alternate
Director has been vested in the Board of Directors only and that too subject to empowerment by the
Articles of Association.
c) Mr. Y cannot be appointed as an alternate Director in place of Mr. Q since Mr. Q is proceeding on a foreign
tour covering entire Europe for four months only which is less than the required absence of minimum six
months.
d) Mr. Y cannot be appointed as an alternate Director in place of Mr. Q since Mr. Q is proceeding on a foreign
tour covering entire Europe for four months which is more than the required absence of maximum three
months.
Ans 1: (b)

(2) In compliance with the Companies Act, 2013, at least one woman director shall be on the Board of the prescribed
class or classes of companies. Ms. Riya is keen to seek the office of woman director in a company. Which of the
following companies is mandatorily required to appoint a woman director where Ms. Riya can hold such office:
a) PQR Limited, an unlisted company, whose paid-up share capital is not exceeding ₹ 150 crore rupees as per
the last date of latest audited financial statements is mandatorily required to appoint a woman director.
b) ABC Limited, a listed company, whose turnover is ₹ 250 crore rupees as per the last date of latest audited financial
statements is mandatorily required to appoint a woman director.
c) XYZ Limited, an unlisted company, whose turnover is not more than ₹ 300 crore rupees as per the last
date of latest audited financial statements is mandatorily required to appoint a woman director.
d) BCZ Limited, an unlisted company whose paid-up share capital is not exceeding ₹ 100 crore and turnover is
less than ₹ 300 crore rupees as per the last date of latest audited financial statements is mandatorily
required to appoint a woman director.
Ans 2: (b)

(3) Kutumb Agro Limited (KAL), a newly incorporated company, has not mentioned the names of the first
Directors in its Articles of Association. There are eight subscribers to the Memorandum of Association

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including Parivaar Agro Private Limited. From the following four options, choose the one which indicates as to
who shall be deemed to be the first Directors of KAL when nothing is mentioned in the Articles?
a) All the eight subscribers to the Memorandum of Association of KAL shall bedeemed to be the
first Directors.
b) Except Parivaar Agro Private Limited, all other subscribers to the Memorandum ofAssociation of KAL
shall be deemed to be the first Directors.
c) The shareholders shall appoint the first Directors in the General Meeting of KAL.
d) Out of the eight subscribers to the Memorandum of Association, the first Directors being three individuals
shall be nominated by Sriniwas, the Chartered accountant who has signed the Memorandum as witness
and they shall be deemed to be thefirst Directors of KAL.
Ans 3: (b)

(4) The turnover of XYZ Components Limited as on the last date of latest audited financial statements is 400 crore
rupees. An intermittent vacancy of a woman Director arose on June 15, 2021 due to the resignation of Ms.
Swati. The immediate Board Meeting after the resignation of Ms. Swati was held on October 10, 2021. From the
following options, choose the one which indicates the date by which the vacancy of the woman Director must
be filled by XYZ Components Limited.
a) July 14, 2021
b) August 14, 2021
c) September 14, 2021
d) October 10, 2021
Ans 4: (d)

(5) Mr. Nagarjuna, one of the directors of MGT Mechanics Limited, due to his own business interests, decided to
resign as director and accordingly, sent his resignation letter dated 12th June, 2021 to the company stating that he
intends to resign w.e.f. 15th June, 2021. Since no communication in relation to his resignation was received from
MGT Mechanics Limited, he sent an e-mail on 17th June, 2021 enquiring about the receipt of his resignation
letter by the company but there was no response. However, MGT Mechanics Limited received his resignation
letter on 18th June, 2021. Out of the following four options, choose the one which indicates the correct date
from which his resignation will be effective:
a) 12th June, 2021
b) 15th June, 2021
c) 17th June, 2021
d) 18th June, 2021
Ans 5: (d)

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(6) Mr. Z is proposed to be appointed as the Director in RLP Mechanics Limited. It is noteworthy that Mr. Z
already holds directorship in one dormant company, two Section 8 companies, eight public limited companies and
nine private limited companies. However, out of nine private limited companies, two are subsidiaries of public
limited companies. In the given circumstances, is it possible for Mr. Z to accept another directorship in RLP
Mechanics Limited without attracting any invalidity:
a) It is not possible for Mr. Z to accept another directorship in RLP Mechanics Limited since he is already
holding directorships in twenty companies.
b) It is not possible for Mr. Z to accept another directorship in RLP Mechanics Limited since he is already
holding directorships in eight public limited companies and two such private limited companies which
are subsidiaries of public limited companies.
c) It is possible for Mr. Z to accept another directorship in RLP Mechanics Limited since Section 8
companies and dormant companies are excluded while calculating the limit of twenty companies.
d) It is possible for Mr. Z to accept another directorship in RLP Mechanics Limited since there is no
limit on holding any number of directorships.
Ans 6: (b)

Section B- Descriptive Questions

(1)The Articles of Association of Rajasthan Toys Private Limited provide that the maximum number of
Directors in the company shall not exceed 10. Presently, the company has 8 directors. Its Board of Directors
desires to increase the number of directors from 8 to 16. Advise whether under the provisions of the Companies
Act, 2013, the Board can do so?
Ans 1: Under Section 149(1) of the Companies Act, 2013 every company shall have a Board of Directors consisting
of individuals as directors and shall have a minimum number of 3 directors in the case of a public company, 2 directors
in the case of a private company, and one director in the case of a One Person Company. The maximum number of
directors shall be 15.
The First Proviso to Section 149(1) states that a company may appoint more than 15 directors after passing a special
resolution.
From the provisions of section 149 (1) as above, though the minimum number of directors may vary depending on
whether the company is a public, private or a one person company, the maximum number of directors is same for
all types of companies i.e. 15 directors.
In the given case since the number of directors is proposed to be increased from 8 to 16, the company will be required
to comply with the following provisions:
Alter its Articles of Association as per the provisions of Section 14 of the Act by passinga special resolution, so as to
increase the number of directors in the Articles from 10 to 16;
Also take approval for increasing the maximum number of directors from 8 to 16 bymeans of a special resolution passed
by the members at a duly convened general meeting.

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(2) ADJ Limited has 10 directors on its Board. Two of the directors have retired by rotation at an Annual General
Meeting. The place of retiring directors is not so filled up and the meeting has also not expressly resolved
'not to fill the vacancy'. Since the AGM could not complete its business, it is adjourned till the same day in
the next week, at the same time and place. At this adjourned meeting also the place of retiring directors could
not be filled up, and the meeting has also not expressly resolved 'not to fill the vacancy'.
Referring to the provisions of the Companies Act, 2013, decide:
(i)Whether in such a situation the retiring directors shall be deemed to have been re- appointed at the adjourned
meeting?
(ii)What will be your answer in case at the adjourned meeting, the resolutions for re-appointment of
these directors were lost?
(iii)Whether such directors can continue in case the directors do not call the AnnualGeneral Meeting?
Ans 2: Retiring director – When to be deemed director?
In accordance with the provision of the Companies Act, 2013, as contained in section 152(7)(a) which provides that
if at the annual general meeting at which a director retires and the vacancy is not so filled up and the meeting has not
expressly resolved not to fill the vacancy, the meeting shall stand adjourned to same day in the next week, at the
same time and place, or if that day is a national holiday, till the next succeeding day which is not a holiday, at the
same time and place.
Section 152(7)(b) further provides that if at the adjourned meeting also, the place of the retiring director is not filled
up and that meeting also has not expressly resolved not to fill the vacancy, the retiring director shall be deemed to have
been re-appointed at the adjourned meeting, unless at the adjourned meeting or at the previous meeting a resolution for
the re- appointment of such director was put and lost or he has given a notice in writing addressed to the company
or the Board of Directors expressing his desire not to be re-elected or he is disqualified.
Therefore, in the given circumstances answers to the asked questions shall be as under:
i. In the first case, applying the above provisions, the retiring directors shall be deemed to have been re-
appointed.
ii. In the second case, where the resolutions for the reappointment of the retiring directors were lost, the retiring
directors shall not be deemed to have been re-appointed.
iii. Section 152(6)(c) states that 1/3rd of the rotational directors shall retire at every AGM. Accordingly, the directors
will retire as soon as the AGM is held on its due date. Further, as per Section 96 (dealing with Annual
General Meeting), every company other than a One Person Company is required to hold an Annual General
Meeting in each year. Hence, it is necessary for the company to hold the AGM, where the directors liable to
retire by rotation shall retire. In case AGM is not held till the last date on which it should have been held,
the term of retiring directors ends on this last date and it can not be extended till the new date when the
AGM shall be held. As the calling of the AGM is the duty and responsibility of the directors, they by omitting
to call the AGM on its due date cannot take advantage of their own fault and by that means cannot extend
their own continuance in the office for any period of their choice and as long as the holding of the next AGM
does not take place.

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(3) Prince Ltd. desires to appoint an additional director on its Board of directors. The
Articles of the company confer upon the Board to exercise the power to appoint such a
director. As such M is appointed as an additional director. In the light of the provisions of
the Companies Act, 2013, examine:
(i) Whether M can continue as director if the annual general meeting of the company is not held within the
stipulated period and is adjourned to a later date?
(ii) Can the power of appointing additional director be exercised at the Annual General Meeting by the
members?
(iii) As the Company Secretary of the company what checks would you make after M is appointed as an
additional director?
Ans 3: 161(1) of the Companies Act, 2013 provides that the articles of association of a company may confer on its
Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director at the
general meeting, as an additional director at any time and such director will hold office upto the date of the next annual
general meeting or the last date on which such annual general meeting should have been held, whichever is earlier.
(i) M cannot continue as director till the adjourned annual general meeting, since he can hold the office of
directorship only up to the date of the next annual general meeting or the last date on which the annual
general meeting should have been held, whichever is earlier. Such an additional director shall vacate his
office latest on the date on which the annual general meeting should have been held under Section 96 of the
Companies Act, 2013. He cannot continue in the office on the ground that the meeting was not held or
it could not be called within the time prescribed.
(ii) The power to appoint additional directors vests with the Board of Directors and not with the members
of the company. The only condition is that the Board must be conferred such power by the articles
of the company.
(iii) As a Company Secretary, I would put the following checks in place in respect of M’s appointment as an
additional director:
a) He must have got the Directors Identification Number (DIN).
b) He must furnish the DIN and a declaration that he is not disqualified to become a director under the
Companies Act, 2013.
c) He must give his written consent in Form DIR-2 on or before his appointment as director and such consent
stands filed with the Registrar within 30 days ofhis appointment.
d) His appointment is made by the Board of Directors.
e) His name is entered in the statutory records as required under the Companies Act, 2013.

(4) The Board of Directors of XYZ Ltd. filled up a casual vacancy caused by the death of Mr. P by appointing
Mr. C as a director on 3rdApril, 2019 which was subsequently approved by the members in the immediate next
general meeting. Unfortunately, Mr. C expired on 15th May, 2019 after working about 40 days as a director. The
Board now wishes to fill up the casual vacancy by appointing Mrs. C in the forthcoming meeting of the Board.
Advise the Board in this regard keeping in view the provisions of the Companies Act, 2013.
Ans 4: Section 161(4) of the Companies Act, 2013 provides that if the office of any director appointed by the company
in general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in

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default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a
meeting of the Board which shall be subsequently approved by members in the immediate next general meeting.
Further, any person so appointed shall hold office only up to the date up to which the director in whose place he is
appointed would have held office if it had not been vacated.
In view of the above provisions, in the given case, the appointment of Mr. C in place of the deceased director Mr. P was in
order. In normal course, Mr. C could have held his office as director up to the date to which Mr. P would have held
the same.

However, Mr. C expired on 15thMay, 2018 and again a vacancy has arisen in the office of director owing to death
of Mr. C who was appointed by the board and approved by members to fill up the casual vacancy resulting from P’s
demise. Vacancy arising on the Board due to vacation of office by the director appointed to fill a casual vacancy in the
first place, does not create another casual vacancy as section 161 (4) clearly mentions that such vacancy is created
by the vacation of office by any director appointed by the company in general meeting. Hence, the Board cannot fill
the vacancy arising from the death of Mr. C who was appointed to fill a casual vacancy.
The Board may however appoint Mrs. C as an additional director under section 161 (1) of the Companies Act, 2013
provided the articles of association authorise the Board to do so, in which case Mrs. C will hold the office up to the
date of the next annual general meeting orthe last date on which the annual general meeting should have been held,
whichever is earlier.

(5) Mr. John is a director of MNC Ltd., which had accepted deposits from public. The financial position of MNC
Ltd. took a southward turn and became bad to worse and ultimately, it failed to repay the deposits which fell
due for payment on 10thApril, 2018 and such repayment has not been made till 5th May, 2019. Another
company JKL Ltd. wants to appoint the said Mr. John as its director at its annual general meeting to be held
th
on 6 May, 2019. You are requiredto state with reference to the provisions of the Companies Act, 2013 whether
Mr. John can be appointed as a director of JKL Ltd.
Ans 5: Section 164 (2) (b) of the Companies Act, 2013 states that where a person is or has been a director of a company
which has failed to repay its deposit on due date and such failure continues for one year or more, then such person shall
not be eligible to be appointed as a director of any other company for a period of five years from the date on which
such company,in which he is a director, failed to repay its deposits.
In the instant case, MNC Ltd., has failed to repay its deposit on due dates and the default continues for more than one
year. Hence, Mr. John will not be eligible to be appointed as a director of JKL Ltd.

(6) XYZ Limited is an unlisted public company having a paid-up share capital of twenty crore rupees as on 31st
March, 2019 and a turnover of one hundred fifty crore rupees during theyear ended 31st March, 2019. The
total number of directors is thirteen.
Referring to the provisions of the Companies Act, 2013 answer the following:
(i)State the minimum number of independent directors that the company should appoint.
(ii)How many independent directors are to be appointed in case XYZ Limited is a listed company?

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Ans 6: (i) According to Rule 4(1) of the Companies (Appointment and Qualifications of Directors) Rules, 2014, the
following class or classes of companies shall have at least 2 directors as independent directors:
1) the Public Companies having paid up share capital of 10 crore rupees or more; or
2) the Public Companies having turnover of 100 crore rupees or more; or
3) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding
50 crore rupees.
In the present case, XYZ Limited is an unlisted public company having a paid-up capital of 20 crore as on 31st
March, 2019 and a turnover of 150 crore during the year ended 31st March, 2019. Accordingly, as per stated Rules it
must have at least 2 directors as independent directors.
(ii) According to Section 149(4) of the Companies Act, 2013, every listed public company shall have at least one-third
of the total number of directors as independent directors. The Explanation to Section 149(4) specifies that any fraction
contained in such one- third numbers shall be rounded off as one.
In the present case, XYZ Limited is a listed company and the total number of directors is 13. Hence, in this case, XYZ
Limited must have atleast 5 directors (1/3 of 13 is 4.33 rounded as 5) as independent directors.
Explanation to Rule 4 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 clarifies that for the
purpose of this Rule the paid up share capital or turnover or outstanding loans, debentures and deposits, as the case
may be, as existing on the last date of latest audited financial statements shall be taken into account.

In the present case, it is mentioned that paid up capital of XYZ Limited is 20 crore ason 31st March, 2019 and
turnover is 150 crore during the year ended 31st March, 2019. It is, therefore, assumed that 31st March, 2019 is the
last date of latest audited financial statements.

(7) Bright Motors (P) Limited at the Annual General Meeting (AGM) held on 30.09.2016 appointed Mr. Anmol as
nd
a Non-Executive Director on the Board of the company for a period of three years. On 2 October, 2017, Mr.
Anmol suffered a severe heart failure and expired. The Board of Directors of the company on 16 t h October,
2017 appointed Mr. Prateek to fill the casual vacancy so created. The appointment of Mr. Prateek was made
for a term of three years by the Board. Subsequently at the AGM held on 29-09-2018, Mr. Prateek's
appointment was not proposed or approved as the Board was of the view that it is not required. But the CFO
of the company is of the opinion that the Board of Directors have contravened the provisions of the Companies
Act, 2013 in respect of non-approval of the appointment of Mr. Prateek and his office tenure. Decide.
Ans 7: According to section 161(4) of the Companies Act, 2013, if the office of any director appointed by the company
in general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in
default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a meeting
of the Board which shall be subsequently approved by members in the immediate next general meeting.
Provided that any person so appointed shall hold office only up to the date up to which thedirector in whose place he is
appointed would have held office if it had not been vacated.
In the given question, the casual vacancy caused due to death of Mr. Anmol (who was appointed by the company in
AGM held on 30.9.2016, for a period of 3 years) is filled by the Board of Directors by appointing Mr. Prateek for a
period of three years. However, the appointment of Mr. Prateek for a period of three years is in contravention of above

9|Page By CA Sanidhya Saraf

stated provisions as he can hold office only up to the date up to which Mr. Anmol would have held office if it had
not been vacated.
Further, as per the provisions of the Act, the appointment of Mr. Prateek ought to be approved by members in the
immediate next general meeting. However, the appointment of Mr. Prateek was not even proposed or approved in
the AGM held on 29.9.2018. Hence, the appointment of Mr. Prateek is in contravention of the provisions of the
Companies Act, 2013.Therefore, the opinion of CFO is correct.

(8) Mr. Dhruv is a Director of LT Limited and XT Limited respectively. LT Limited did not file its financial
statements for the year ended 31st March, 2016, 2017 & 2018 respectively with the Registrar of Companies (ROC)
as mandated under the Companies Act, 2013. LT Limited also did not pay interest on loans taken from a Public
Financial Institution from 1st April, 2017 and also failed to repay matured deposits taken from public on
st
due dates from 1 April, 2017 onwards.
Answer the legality of the following in the light of the relevant provision of the Companies Act, 2013:
(i) Whether Mr.Dhruv is disqualified under Companies Act, 2013 and if so, whether he can continue as a
Director in LT Limited? Further can he also seek reappointment when he retires by rotation at the AGM of
XT Limited scheduled to be held inSeptember, 2019?
(ii) Mr.Dhruv is proposed to be appointed as an Additional Director of MN Limited in June 2019. Is he eligible
to be appointed as an Additional Director in MN Limited? Decide.
Ans 8: According to section 164(2) of the Companies Act, 2013, no person who is or has been a director of a
company which has not filed financial statements or annual returns for any continuous period of three financial
years; or has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the
due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for
oneyear or more, shall be eligible to be re-appointed as a director of that company or appointed in other company
for a period of five years from the date on which the said company fails to do so.
Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause(b), he
shall not incur the disqualification for a period of six months from the date of his appointment.
Also, according to section 167(1)(a), the office of a director shall become vacant in case he incurs any of the
disqualifications specified in section164;
Provided that where he incurs disqualification under sub-section (2) of section 164, the office of the director shall
become vacant in all the companies, other than the company which is in default under that sub-section.
Thus, in the light of the said provisions of the Act and the facts of the question:
(i) Yes, Mr. Dhruv is disqualified under the Companies Act, 2013, as LT Limited did not file financial
statements for a period of three years. Also, the LT Limited has defaulted in the repayment of matured
deposits taken from public since 1stApril, 2017 (i.e. the default has continued for more than oneyear).
Mr. Dhruv can continue as a director in LT Limited as proviso to section 167(1)(a) provides that where the director
incurs disqualification under section 164(2), the office of the director shall become vacant in all the companies, other
than the company which is in default. Whereas he has to vacate the office of director in XT Limited.

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Mr. Dhruv cannot be reappointed (in the AGM to be held in September 2019) as director in XT Limited.
(ii) Mr. Dhruv cannot be appointed as an Additional Director (in the AGM to be held in June 2019) of MN
Limited because as per section 164(2), he is not eligible to be appointed in other company for a period
of five years from the date of such default.

(9) You are the CFO and in-charge of legal compliances of large multi-national company in India. The Board
of Directors of the Company comprises of directors who are Indian as well as Foreign Nationals. Mr. “X”, who
is a Director (Business Development) on the Board is very often on business tour abroad. He approached you and
wants to know from you the regulatory provisions of the Companies Act, 2013 relating to appointment of Alternate
Directors.
Analyse the following situations and advise suitably. Mr. X referring to the provisions of the Companies Act, 2013.
(a)To how many directors can a person be appointed as an alternate director and how many votes does he
have in one Board Meeting.
(b)In case of private company, where an alternate director is appointed in place of a non- executive director whose term
is indefinite, then, what will be the tenure of such alternate director, provide the original director does not return to
India for a longer period say 3-4 years?
(c)Can an Executive Director/Whole Time Director/Managing Director appoint alternate directors?
Ans 9: (a) According to Section 161(2) of the Companies Act, 2013, the Board of Directors of a company may, if so
authorized by its articles or by a resolution passed by the companyin general meeting, appoint a person, not being a
person holding any alternate directorship for any other director in the company or holding directorship in the same
company, to act as an alternate director for a director during his absence for a period of not less than three months
from India.
According to section 165, no person shall hold office as a director, including any alternate directorship, in more
than twenty companies at the same time. However, the maximum number of public companies in which a person can
be appointed as a director shall not exceed ten.
Hence, in the instant case, a person can be appointed as an alternate director for onlyone director in the same company
but maximum twenty different companies.
An alternate director will have only one vote as he can hold alternate directorship for one director only in the
same company.
(b) According to second proviso to section 161(2), an alternate director shall not hold office for a period longer than
that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director
in whose place hehas been appointed returns to India.
Third proviso says that if the term of office of the original director is determined beforehe so returns to India, any
provision for the automatic re-appointment of retiring directors in default of another appointment shall apply to the
original, and not to the alternate director.
Hence, in the instant case, the alternate director shall hold office till the time original director returns to India, even if
the period is as long as 3-4 years.

11 | P a g e By CA Sanidhya Saraf
(c) As per section 161(2), the Board of Directors of a company may, if so authorized by its articles or by a resolution
passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for
any other director in the company or holding directorship in the same company, to act as an alternate director for a
director during his absence for a period of not less than three months from India.
From the above provision, it is clear that an alternate director can be appointed for any director. Hence, an alternate director
can be appointed for Executive director/ Whole Time Directors / Managing Director however, not by them but by the Board
of Directors.

(10) Mr. 'R' holds directorship in 10 Public Companies and 11 Private Companies as on 31.05.2019. One of
the above Private Company is a dormant Company. Apart from the dormant Company, on 30.06.2019 a Private
Company (in which Mr. R is holding directorship) has become a subsidiary of a Public Company.
In the light of the provisions of the Companies Act, 2013 examine and decide:
(i)The validity of holding directorship of Mr.'R' with reference to number of directorship as on 31.05.2019
and as on 30.06.2019.
(ii)Whether a Company has power to specify any lesser number of Companies in which a director of the
Company may act as a director?
Ans 10: (i)According to Section 165 of the Companies Act, 2013, no person shall hold office as a director, including
any alternate directorship, in more than twenty companies at the same time. Whereas that the maximum number of public
companies in which a person can be appointed as a director shall not exceed ten.
For reckoning the limit of public companies in which a person can be appointed as director, directorship in private
companies that are either holding or subsidiary company of a public company shall be included.
For reckoning the limit of directorships of twenty companies, the directorship in a dormant company shall not be
included.
In the instant case, holding of directorship of Mr. R as on 31.05.2019 is valid as he is holding directorship in 10 public
companies and in 11 private companies out of which one company is dormant company. So, maximum directorship
he is holding in 20 companies.
Holding of directorship of Mr. R as on 30.06.2019 is not valid, as on 30.06.2019 a private company (in which Mr.
R is holding directorship) has become a subsidiary ofa public company. Accordingly, it means that this private
company shall deemed to be included in the limit of public companies and thereby increasing the number of public
companies in which he is holding directorship to 11 and making it in valid.
(ii)According to section 165(2), Subject to the provisions of sub-section (1), the members of a company may, by special
resolution, specify any lesser number of companies in which a director of the company may act as directors.

12 | P a g e By CA Sanidhya Saraf
 2.Appointment and Remuneration of Managerial Personnel
Section A- Test Your Knowledge
(1)Due to non-compliance of certain requirements under the Companies Act, 2013 not amounting to fraud, Shikha Super-
Market Limited was required to re-state its financial statements for the financial year 201718 during the current year. After
the financial statements were restated, it was found that Mr. Kumar, the Managing Director (MD) of that period, who is
now retired, was paid excess remuneration to the extent of 5,00,000. In the given situation, choose the correct option out
of those given below, which indicates whether such excess remuneration paid to ex-MD Mr. Kumar is recoverable or
not.
a) Excess remuneration of 5,00,000 paid to Mr. Kumar, ex-MD of Shikha Super-Market Limited, cannot be
recovered since such recovery after retirement is invalid.
b) Excess remuneration of 5,00,000 paid to Mr. Kumar, ex-MD of Shikha Super-Market Limited, shall be recovered
irrespective of his retirement from the company.
c) Only 2,50,000, being 50% of excess remuneration of 5,00,000, paid to Mr. Kumar, ex- MD of Shikha Super-
Market Limited, is validly recoverable because no fraud implicating him is involved.
d) Only 1,25,000, being 25% of excess remuneration of 5,00,000, paid to Mr. Kumar, ex- MD of Shikha Super-
Market Limited, is validly recoverable because no fraud implicating him is involved.
Ans 1: (b)

(2) The Board of Directors of Capable Hospitality Services Limited has entrusted Mr. Vikas, the newly appointed Managing
Director (MD) of the company, with some powers. However, Mr. Vikas is not interested in discharging administrative functions
as authorised by the Board of Directors, sincehe is of the view that he should have been entrusted with substantial powers
of the management. Out of the following four options, which one is correctly applicable in relation to the functions Bank
Limited, the main banker of the company.
a) To draw and endorse any cheque on the account of Capable Hospitality Services Limited maintaine with National
Commercial Bank Limited, the main banker of the company.
b) To sign the financial statements of Capable Hospitality Services Limited.
c) To draw and endorse any bill of exchange when it exceeds 1,00,000.
d) To draw and endorse any bill of exchange when it exceeds 5,00,000.
Ans 2: (b)

(3) Mr. Joseph Daniel, holding the office of Whole-time Director (WTD) in Tasty Choco-Chips Limited, is desirous of
appointing Mr. Vanilla Sequera, who has attained the age of 72 years, as the Managing Director (MD) of the company.
However, the Board of Directors is of the opinion that no company shall appoint or continue the employment of any
person as Managing Director, Whole-time Director or Manager who is below the age of twenty-one years or has attained
the age of seventy years. From the following four options, select the one which is applicable in relation to the validity or
invalidity of appointing Mr. Vanilla Sequera as the Managing Director (MD) of Tasty Choco-Chips Limited:

13 | P a g e By CA Sanidhya Saraf
 a) In spite of the fact that Mr. Vanilla Sequera has attained the age of 72 years, he can be validly appointed as
Managing Director by the Board of Directors of Tasty Choco-Chips Limited when the recommendation has been
made by Mr. Joseph Daniel, the Whole -time Director.
b) Since Mr. Vanilla Sequera has attained the age of 72 years, he cannot be validly appointed as Managing Director
of Tasty Choco-Chips Limited.
c) In spite of the fact that Mr. Vanilla Sequera has attained the age of 72 years, he can be validly appointed as Managing
Director by the shareholders of Tasty Choco-Chips Limited through passing a Special Resolution in general meeting.
d) In spite of the fact that Mr. Vanilla Sequera has attained the age of 72 years, he can be validly appointed as
Managing Director of Tasty Choco-Chips Limited if an application is made to the jurisdictional National Company
Law Tribunal (NCLT) and its permission is received for such appointment.
Ans 3: (c)

(4) On June, 20, 2019, Mr. Anil Mehra was appointed as Manager of PQR Music Systems Limited for a period of five
years. Considering his performance and dedication towards the company, the management of PQR Music Systems Limited
decided to re-appoint him as Manager before the completion of his tenure. Out of the following four options, choose the
one which indicates the date on which his re-appointment will be considered valid?
a) June 24, 2023
b) February 1, 2023
c) March 12, 2022
d) September 10, 2022
Ans 4: (a)

(5) Lockworth Safety Gears Limited which pays remuneration to its Directors on yearly basis, has Harsha as Whole-time
Director (WTD). Recently, the company appointed Mr. Raviyansh as Managing Director (MD). While paying
remuneration, Lockworth Safety Gears Limited needs to keep in view that the overall remuneration payable to the Directors
including Managing Director, Whole-time Director and Manager shall not exceed maximum limit prescribed under the
relevant provisions. After the appointment of Mr. Raviyansh as Managing Director, since the company has both Whole-time
Director as well as Managing Director, select the appropriate option from those given below which indicates the maximum
remuneration that is allowed in a Financial Year:
a) 3% of net profits.
b) 5% of net profits.
c) 10% of net profits.
d) 11% of net profits.
Ans 5: (c)

(6) Mr. Abhishek has been in full time employment at F&I Limited (a listed company) working as Chief Financial Officer (CFO).
He has been given the offer to hold the office of Whole-time Director at M&N Limited whose more than 51% of the paid-
up share capital is held by F&I Limited. After considering the applicable provisions, you are required to choose the correct

14 | P a g e By CA Sanidhya Saraf
option from the following four which indicates whether Mr. Abhishek can validly proceed or not with the offer of Whole-
time Director extended by M&N Limited while also continuing as Chief Financial Officer (CFO) of F&I Limited:
a) Mr. Abhishek can validly proceed with the offer of Whole-time Director at M&N Limited while also continuing
as Chief Financial Officer (CFO) because being a Key Managerial Personnel he shall not be disentitled from
accepting the offer of Whole-time Director in any other company after obtaining the permission of Board of
Directors of his parent company i.e., F&I Limited.
b) Mr. Abhishek will not be able to proceed with the offer of Whole-time Director at M&N Limited since a whole
time Key Managerial Personnel cannot hold office in more than one company at the same time.
c) Mr. Abhishek can proceed with the offer of Whole-time Director at M&N Limited while also continuing as Chief
Financial Officer (CFO) since M&N Limited is a subsidiary of F&I Limited.
d) Mr. Abhishek will not be able to proceed with the offer of Whole-time Director at M&N Limited since a whole
time Key Managerial Personnel cannot hold office in more than one company at the same time including its
subsidiary company.
Ans 6: (c)

(7) Hasmukh Entertainment Limited, incorporated under the Companies Act, 2013, appointed Mr. Ram Kishore, a well-
qualified and experienced person, as Whole-time Director (WTD) for a period of five years in the Annual General Meeting
(AGM) held on August 28, 2019. In order that Mr. Ram Kishore continues with the company as whole time Director
(WTD), he was re-appointed in advance as Whole-time Director (WTD) for another term of five years in the Annual
GeneralMeeting which was held on September 28, 2021. The second term of five years will start after the expiry of first term
in August, 2024. From the following alternatives, choose the one which indicates the validity or otherwise of re-
appointment of Mr. Ram Kishore for the second term of five years by the company:
a) The re-appointment of Mr. Ram Kishore in advance as Whole-Time Director (WTD) for another term of five
years is valid because re-appointment can be made for a period not exceeding 5 years at any time provided the
Articles of Association of the company provide for such re-appointment before one year from the completion of
his ‘yet-to-expire’ term.
b) The re-appointment of Mr. Ram Kishore in advance as Whole-Time Director (WTD) for another term of five
years is invalid because his re-appointment as Whole-time Director (WTD) cannot be made earlier than one year
before the expiry of his first term.
c) The re-appointment of Mr. Ram Kishore in advance as Whole-Time Director (WTD) for another term of five
years is valid provided the resolution for such re-appointment had earlier been passed with the consent of all the
Directors present at the Board Meeting and thereafter, such re-appointment was taken up at the Annual General
Meeting for approval.
d) The re-appointment of Mr. Ram Kishore in advance as Whole-Time Director (WTD) for another term of five
years is invalid because no special resolution for his re-appointment was passed at the Annual General Meeting
for approval.
Ans 7: (b)

15 | P a g e By CA Sanidhya Saraf
 Section B- Descriptive Questions

(1)Advise Super Specialties Ltd. in respect of the following proposals under consideration of its Board of
Directors:
(i)Payment of commission of 4% of the net profits per annum to the directors of the company;
(ii)Payment of remuneration of rupees 40,000 per month to the whole-time director of the company which is
running in loss and having an effective capital of rupees 95 lacs.
Ans 1: (i) Under section 197 (1) the limit of total managerial remuneration payable by a public company, to its
directors, including managing director and whole-time director, and its manager in respect of any financial year shall
not exceed eleven per cent of the netprofits of that company for that financial year computed in the manner laid
down in section 198. Further, the third proviso to section 197 (1) provides that except with the approval of the company in
general meeting by a special resolution, the remuneration payable to directors who are neither managing directors nor
whole-time directors shallnot exceed one per cent. of the net profits of the company, if there is a managing or whole-
time director or manager. Whereas in any other case, the remuneration payable to directors shall not exceed three
percent of the net profits.
Therefore, in the given case, the commission of 4% is beyond the limit specified, and the same should be approved
by the members by passing a special resolution.
(ii)As per section 197(3) of the Companies Act, 2013, if, in any financial year, a company has no profits or its profits are
inadequate, the company shall not pay to its directors, including managing or whole time director or manager or any
other non-executive director, including an independent director, any remuneration exclusive of any fees
payable to directors except in accordance with the provisions of Schedule V. Section II of Part II of Schedule V provides
that where in any financial year during the currency of tenure of a managerial person or other director, a company has
no profits or its profits are inadequate, it may pay remuneration to the managerial person not exceeding ₹ 60 lakhs for the
year if the effective capital of the company is negative or upto ₹ 5 crore.
In the given situation, the proposed remuneration of 40,000 rupees per month (i.e. 4,80,000 rupees per annum) can be
paid to the whole-time director of the company which is running in loss because the remuneration is within the
permissible limit of ₹ 60 lakhs.

(2) Mr. X, a Director of MJV Ltd., was appointed as Managing Director on 1st April 2017. One of the terms
of appointment was that in the absence of adequacy of profits or if the company had no profits in a particular
year, he will be paid remuneration in accordance with Schedule
For the financial year ended 31st March 2019, the company suffered heavy losses. The company was not in a position
to pay any remuneration but he was paid ₹ 50 lakhs for the year. The effective capital of the company is ₹ 150
crores. Referring to the provisions of the Companies Act, 2013, as contained in Schedule V, examine the validity
of the above payment of remuneration to Mr. X.
Ans 2: Under Section II of Part II of Schedule V to the Companies Act, 2013, the remuneration payableto managerial
personnel is linked to the effective capital of the company. Schedule V states that where in any financial year during the
currency of tenure of a managerial person or other director, a company has no profits or its profits are inadequate, it may pay

16 | P a g e By CA Sanidhya Saraf
remuneration to the managerial person not exceeding ₹ 120 Lakhs in the year in case the effective capital of the company is
between ₹ 100 crores and ₹ 250 crores. However, the remuneration in excess of ₹ 120 Lakh may be paid if the resolution
passed by the shareholders is a special resolution.
From the foregoing provisions as contained in Schedule V, the payment of ₹ 50 lakh in the year of loss as remuneration
to Mr. X is less than ₹ 120 lakhs which is otherwise permissible when the effective capital of the company is
between ₹ 100 crores and ₹ 250 crores. Thus, payment of ₹ 50 lakhs being made to Mr. X is within the prescribed
limit and can be validly made to him.

(3)Mr. Doubtful was appointed as Managing Director of Carefree Industries Ltd. for a period of five years
with effect from 1.4.2016 on a salary of ₹ 12 lakhs per annum with other perquisites. The Board of Directors of
the company came to know about certain questionable transactions entered into by Mr. Doubtful and therefore,
terminated his services as Managing Director from 1.3.2019. Mr. Doubtful termed his removal as illegal and claimed
compensation from the company. Meanwhile the company paid a sum of ₹ 5 lakhs on adhoc basis to Mr. Doubtful
pending settlement of his dues. Discuss whether:
(i)The company is bound to pay compensation to Mr. Doubtful and, if so, how much.
(ii)The company can recover the amount of ₹ 5 lakhs paid on the ground that Mr. Doubtfulis not entitled to
any compensation, because he is guided by corrupt practices.
Ans 3: According to Section 202 of the Companies Act, 2013, compensation can be paid only to a Managing Director,
Whole-time Director or Manager. The amount of compensation cannot exceed the remuneration which he would have
earned if he would have been in the office for the unexpired term of his office or for 3 years whichever is shorter. No
compensation shall bepaid, if the director has been found guilty of fraud or breach of trust or gross negligence inthe
conduct of the affairs of the company.
In light of the above provisions of law, the company is not liable to pay any compensation to Mr. Doubtful, if he has
been found guilty of fraud or breach of trust or gross negligence in the conduct of affairs of the company. But it is not
proper on the part of the company to withhold the payment of compensation on the basis of mere allegations. The
compensation payable by the company to Mr. Doubtful would be 25 Lakhs calculated at the rate of 12 Lakhs per
annum for unexpired term of 25 months.
Regarding ad-hoc payment of 5 Lakhs, it will not be possible for the company to recover the amount from Mr. Doubtful in
view of the decision in case of Bell vs. Lever Bros. (1932) AC 161 where it was observed that a director was not
legally bound to disclose any breach of his fiduciary obligations so as to give the company an opportunity to dismiss
him. In that case the Managing Director was initially removed by paying him compensation and later on it was discovered
that he had been guilty of breaches of duty and corrupt practices and that he could have been removed without
compensation.

(4) International Technologies Limited, a listed company, being managed by a Managing Director proposes to pay the
following managerial remuneration:
(i)Commission at the rate of five percent of the net profits to its Managing Director,Mr. Kamal.

17 | P a g e By CA Sanidhya Saraf
(ii)The directors other than the Managing Director are proposed to be paid monthly remuneration of rupees
50,000 and also commission at the rate of one percent of net profits of the company subject to the condition that
overall remuneration payable to ordinary directors including monthly remuneration payable to each of them
shall not exceed two percent of the net profits of the company. The commission is to be distributed equally among all
the directors.
(iii)The company also proposes to pay suitable additional remuneration to Mr. Bhatt, a director, for professional
services rendered as software engineer, whenever such services are utilized.
You are required to examine with reference to the provisions of the Companies Act, 2013 the validity of the above
proposals.
Ans 4: International Technologies Limited, a listed company, being managed by a Managing Director proposes to pay the
following managerial remuneration:
(i) Commission at the rate of 5% of the net profits to its Managing Director, Mr. Kamal: Part (i) of
the Second Proviso to Section 197(1), provides that except with the approval of the company in general
meeting by a special resolution, the remuneration payable to any one managing director or whole time
director or manager shall not exceed 5% of the net profits of the company and if there is more than one
such director then remuneration shall not exceed 10% of the net profits to all such directors and
manager taken together.
In the present case, since the International Technologies Limited is being managed by a Managing Director, the
commission at the rate of 5% of the net profit to Mr. Kamal, the Managing Director is allowed and no approval of
company in general meeting is required.
(ii) The directors other than the Managing Director are proposed to be paid monthly remuneration of rupees
50,000 and also commission at the rate of 1 % of net profits of the company subject to the condition
that overall remuneration payable to ordinary directors including monthly remuneration payable to each
of them shall not exceed 2% of the net profits of the company: Part (ii) of the Second Proviso to Section
197(1) provides that except with the approval of the company in general meeting by a special resolution, the
remuneration payable to directors who are neither managing directors nor whole time directors shall
not exceed-
(A) 1% of the net profits of the company, if there is a managing or whole-time director or manager;
(B) 3% of the net profits in any other case.
In the present case, the maximum remuneration allowed to directors other than managing or whole-time director is 1% of
the net profits of the company because the company is managed by a managing director. Hence, if the company wants
to fix directors’remuneration at not more than 2% of the net profits of the company, the approval of the company in general
meeting is required by passing a special resolution.
(iii) The company also proposes to pay suitable additional remuneration to Mr. Bhatt, a director, for professional
services to be rendered by him as software engineer, whenever such services are utilized by the
company:
(1) According to section 197(4), the remuneration payable to the directors of a company, including any managing
or whole-time director or manager, shall be determined, in accordance with and subject to the provisions of this
section, either
i. by the articles of the company, or
ii. by a resolution or,

18 | P a g e By CA Sanidhya Saraf
 iii. if the articles so require, by a special resolution, passed by the company in general meeting, and

(2) the remuneration payable to a director determined aforesaid shall be inclusiveof the remuneration payable
to him for the services rendered by him in any other capacity.
(3) Any remuneration for services rendered by any such director in other capacity shall not be so included if—
i. the services rendered are of a professional nature; and
ii. in the opinion of the Nomination and Remuneration Committee, if the company is covered under sub-section
(1) of section 178, or the Board of Directors in other cases, the director possesses the requisite qualification
for the practice of the profession.
Hence, in the present case, the additional remuneration payable to Mr. Bhatt,a director, for professional services
rendered by him as software engineer will not be included in the maximum managerial remuneration. Accordingly, such
additional remuneration shall be allowed but opinion of Nomination and Remuneration Committee needs to be
obtained.
Also, the International Technologies Limited (a listed company) shall disclose in the Board’s report, the ratio of the
remuneration of each director to the median employee’s remuneration and such other details as are prescribed under
Rule 5 of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014.

(5) The following particulars are extracted from the statement of profit and loss of Surya Cement Limited for the
year ended 31st March 2023:
Sr. No Particulars Amount
1) Gross Profit 60,00,000
2) Profit on sale of building (Cost 10,00,000 and written down value 5,00,000
6,00,000)
3) Salaries & wages 2,50,000
4) Sundry Repairs to Fixed Assets 1,00,000
5) Subsidy from the government 3,00,000
6) Compensation for breach of contract 1,00,000
7) Depreciation 1,40,000
8) Loss on sale of investments 2,00,000
9) Interest on unsecured loans 50,000
10) Interest on debentures issued by the company 1,00,000
11) Repair Expenses to fixed assets (Capital in nature) 2,00,000
12) Net Profit 13,00,000

19 | P a g e By CA Sanidhya Saraf
You are required to calculate the overall managerial remuneration payable under section 197 of the Companies
Act, 2013 subject to the provisions under Schedule V.
Ans 5: The managerial remuneration shall be computed in accordance with the provisions laid downin section 198
of the Companies Act 2013
Particulars Amount
Net profit 13,00,000
Less: Capital profits on sale of building (Note 1) 1,00,000
Salaries & Wages (Note 2) -
Sundry repairs to fixed Assets (Note 2) -
Subsidy from the government (Note 3) -
Compensation from breach of contract (Note 2) -
Depreciation (Note 2) -
Loss on Sale of Investments (Note 4) -
Interest on unsecured loans (Note 2) -
Interest on debentures (Note 2) -
Add: Repair expenses to fixed assets (Capital in Nature) (Note 5) 2,00,000
Net profits as per section 198 14,00,000

Therefore, the overall maximum managerial remuneration shall be 11% of the Net profits computed in accordance with
section 198 i.e. 11% x 14,00,000 = ₹1,54,000. It is assumed that the net profit given in the question is arrived after
giving effect to all the line items given therein.
Notes:
1) As per section 198(3), credit shall not be given for profits from the sale of any immovable property or fixed
assets of a capital nature comprised in the undertaking or any of the undertakings of the company, unless
the business of the company consists, whether wholly or partly, of buying and selling any such property or
assets; provided that where the amount for which any fixed asset is sold exceeds the written-down value thereof,
credit shall be given for so much of the excess as is not higher than the difference between the original cost
of that fixed asset and its written- down value.
Accordingly, the calculation of capital profit is computed as under: Profit = Selling Price – Written down value
5,00,000 = Selling Price – 6,00,000. Therefore, Selling Price = 11,00,000. Capital profit = 11,00,000 – 10,00,000
(original cost) = ₹ 1,00,000
2) According to section 198 (4), the following sums shall be deducted:
a) All the usual working charges – salaries and wages are considered as usual working charges

20 | P a g e By CA Sanidhya Saraf
 b) expenses on repairs, whether to immovable or to movable property, provided the repairs are not of a capital
nature
c) any compensation or damages to be paid in virtue of any legal liability including a liability arising from a
breach of contract
d) interest on debentures issued by the company
e) interest on unsecured loans and advances
f) depreciation to the extent specified in section 123
Since all of the above charges are already deducted while arriving at net profit, no effect will be given.
3) According to section 198 (1), credit shall be given for bounties and subsidies received from any government, or
any public authority constituted or authorised in this behalf, by any government, unless and except in so far
as the Central Government otherwise directs.
4) According to section 198(5), Loss of a capital nature including loss on sale of the undertaking or any of the
undertakings of the company or any part thereof shall not be deducted. In the given question, in the absence of
the specific information about the nature of investments, the said investments are considered as current
investments and revenue in nature and accordingly no effect is given as it is already deducted while arriving at
net profit.
5) According to section 198(4), expenses on repairs, whether to immovable or to movable property is deducted only
for repairs which are not capital in nature. Accordingly, wehave added back to the net profit.

(6) You are provided with the relevant extract of the financials of Tribhuke Limited for the financial year ended as
on 31st March 2023 as below:

Sr.No Particulars Amount

1 Authorised Share Capital 10,00,00,00,000

2 Issued and Paid up Share Capital 5,00,00,000
3 Share Premium Account 25,00,000
4 Reserves and Surplus (Amount of 25,00,000 is included as35,00,000
Revaluation Reserve)
5 Term loan repayable after 1 year 12,00,000
6 Current Borrowings (Cash Credit Loan from Banks) 20,00,000
7 Non-Current Investments 10,00,000
8 Accumulated Losses 5,00,000
9 Preliminary expenses not written off 3,00,000

21 | P a g e By CA Sanidhya Saraf
The company has three managerial persons in its Board of Directors – Mr. A – Managing Director, Mr. B –
Whole Time Director and Mr. C – Director-. According to their terms of appointment, in case the company has
no or inadequate profits, the managerial remuneration payable to them shall be in accordance with Schedule V.
You are required to compute the total managerial remuneration payable considering the provisions of Schedule
V.
Ans 6: Section II of Part II of Schedule V states the provisions applicable for the payment of managerial
remuneration in case where the company has no profits or its profits are inadequate. In such a case, managerial
remuneration is payable on the basis of the effective capital as on the last date of the financial year for which the
remuneration is payable. Accordingly, to compute the total managerial remuneration payable, effective capital is
calculated as:
Particulars Amount
Issued and Paid up Capital 5,00,00,000
Add: Share Premium Account 25,00,000
Add: Reserves and surplus excluding revaluation reserve 10,00,000
Add: Term Loan repayable after 1 year (excluding working capital loans) 12,00,000
Less: Non-Current Investments 10,00,000
Less: Accumulated Losses 5,00,000
Less: Preliminary Expenses 3,00,000
Effective Capital 5,29,00,000

Explanation 1 to Section II of Part II of Schedule V states effective capital means the aggregate of the paid-up share
capital (excluding share application money or advances against shares); amount, if any, for the time being standing to
the credit of share premium account; reserves and surplus (excluding revaluation reserve); long-term loans and deposits
repayable after one year (excluding working capital loans, over drafts, interest due on loans unless funded, bank guarantee,
etc., and other short-term arrangements) as reduced by the aggregate of any investments (except in case of investment by an
investment company whose principal business is acquisition of shares, stock, debentures or other securities),
accumulated losses and preliminary expenses not written off.
Section II of Part II of Schedule V states that where the effective capital is 5 crores and above but less than 100
crores, the remuneration payable shall not exceed Rs. 84 lakhs. Accordingly, the total managerial remuneration
payable by the Companies to three managerial personnel for the year ended 31st March, 2023 shall not
exceed 252 lakhs (84 lakhs x 3 managerial personnel).
Note: As nothing is specified about Mr. C, whether he is part-time or non-executive or Independent director, he
may be considered as director in whole time employment.

22 | P a g e By CA Sanidhya Saraf
 3.Meeting of Board and its Powers
Section A- Test Your Knowledge
(1)Chetan Motorboats Limited, incorporated on 25th June, 2019 is desirous of making donations to a reputed
political party. Out of the following options, choose the one which correctly depicts as to when Chetan Motorboats
Limited shall be eligible to make such donations to a political party:
a) Chetan Motorboats Limited shall be eligible to make donations to a political party after one year from the
date of its incorporation.
b) Chetan Motorboats Limited shall be eligible to make donations to a political party after two years from the
date of its incorporation.
c) Chetan Motorboats Limited shall be eligible to make donations to a political party after three years from the
date of its incorporation.
d) Chetan Motorboats Limited shall be eligible to make donations to a political party after five years from the
date of its incorporation.
Ans 1: (c)

(2) Out of the total strength of six Directors of SQ Transformers Limited, five are attending a Board Meeting to consider
the investment of funds of the company. The resolution relating to investment shall be taken as passed in which of the
following cases:
a) When all the five Directors of SQ Transformers Limited attending the meetingconsent to such
investment of funds.
b) When any four Directors of SQ Transformers Limited out of five attending themeeting consent to
such investment of funds.
c) When any three Directors of SQ Transformers Limited out of five attending themeeting consent to
such investment of funds.
d) Investment proposal must be consented to by the total strength of six Directors of SQ Transformers Limited.

Ans 2: (a)

(3)The Board of Directors of Shanta Hospitality Services Limited is desirous of contributing certain amount to
Ashirwad Dharmarth Sansthan, a bona fide charitable organization operating in the National Capital Region, during
the financial year 2021-2022. The profits and losses of the earlier five financial years are as under:

Year Profit/ (Loss)

2020-2021 (30,00,000)
2019-2020 1,80,00,000

23 | P a g e By CA Sanidhya Saraf
 2018-2019 2,10,00,000
2017-2018 1,85,00,000
2016-2017 1,40,00,000

From the following four options, select the appropriate one which indicates the amount that the Board of Directors
of Shanta Hospitality Services Limited can contribute to Ashirwad Dharmarth Sansthan:
a) The Board of Directors of Shanta Hospitality Services Limited cannot contribute any amount to Ashirwad
Dharmarth Sansthan in the financial year 2021-2022 since it suffered losses of Rs. 30,00,000 in the
immediate previous financial year 2020-2021.
b) The Board of Directors of Shanta Hospitality Services Limited can contribute maximum of Rs. 9,00,000 to
Ashirwad Dharmarth Sansthan in the financial year 2021-2022.
c) The Board of Directors of Shanta Hospitality Services Limited can contribute maximum of Rs. 6,00,000 to
Ashirwad Dharmarth Sansthan in the financial year 2021-2022.
d) The Board of Directors of Shanta Hospitality Services Limited can contribute maximum of Rs. 3,00,000 to
Ashirwad Dharmarth Sansthan in the financial year 2021-2022.
Ans 3: (c)

(4)A seven days’ notice of the Board Meeting was served on all the ten directors of Goodluck Publishers Limited by sending
it on their registered postal addresses. However, before the holding of scheduled Board Meeting, some unavoidable
happenings took place. Mr. M was hospitalised because of serious stomach pain just two days before the Meeting. Mr.
Y proceeded to London since his son met with an accident and the incidence required his immediate presence. As
scheduled earlier, Mr. X and Mr. B went to Australia for attending a technical seminar that would help improving the
existing publishing techniques. Mr. A, extremely busy in finalizing the arrangements relating to his daughter’s marriage,
was also unable to attend the impending board meeting. A day before the board meeting, Mr. E’s grand-mother got
hospitalised and therefore, he was involved in taking care of her but he assured to attend the meeting through video
conferencing. Mr. P was scheduled to arrive for the meeting by 2 p.m. on the same day of the meeting but his flight
got delayed by eight hours. Mr. D, Mrs. G and Mr. H were in the town and were available for the Board Meeting.
Could the Board Meeting be held as per the scheduled time?
a) The Board Meeting cannot be held because minimum sixty percent directors (i.e. 6 outof 10) must attend it
at the scheduled time to complete the quorum.
b) The Board Meeting cannot be held because minimum fifty percent directors (i.e. 5 out of 10) must attend
it at the scheduled time to complete the quorum.
c) Since the quorum is complete, the available directors can hold the Board Meeting as per the schedule.
d) The Board Meeting cannot be held because minimum seventy percent directors (i.e. 7out of 10) must attend
it at the scheduled time to complete the quorum.
Ans 4: (c)

(5)Seafood Market.ing Limited, incorporated on 1st April, 2019, conducted four Board Meetings during the Financial
Year 2019-20 i.e. on 6th April, 2019, 28th August, 2019, 30thSeptember, 2019 and 30th March, 2020. Select the

24 | P a g e By CA Sanidhya Saraf
correct opti.on from those given below as to whether there is contravention of provisions or not regarding frequency
of holding the Board Meetings by Seafood Marketing Limited:
a) There is no contravention of the provisions relating to holding of Board Meetings because four Board Meetings
have been held by Seafood Marketing Limited during the Financial Year 2019-20.
b) There is no contravention of the provisions relating to holding of Board Meetings by Seafood Marketing Limited
because the first Board Meeting was held within 30 days ofthe incorporation of the company.
c) There is contravention of provisions in respect of conduct of the Board Meetings by Seafood Marketing
Limited because gap between initial two consecutive Board Meetings (held on 6th April, 2019 and 28th August,
2019) is 143 days and further, gap betweennext two consecutive Board Meetings (held on 30th September,
2019 and 12th March, 2020) is 163 days.
d) There is contravention of provisions in respect of conduct of the Board Meetings by Seafood Marketing
Limited because gap between initial two consecutive Board Meetings (held on 6th April, 2019 and 28th August,
2019) is 123 days and further, gap betweennext two consecutive Board Meetings (held on 30th September,
2019 and 12th March, 2020) is 143 days.
Ans 5: (c)

Section B- Descriptive Questions

1.(i) What is the procedure to be followed, when a board meeting is adjourned for want of quorum?
(ii) How is a resolution by circulation passed by the Board or its Committee?
Ans 1: (i) Section 174(4) of the Companies Act, 2013 provides that, if a Board meeting could not be held for want
of quorum, then, unless the articles otherwise provide, the meeting shall automatically stand adjourned to the same
day in the next week, at the sametime and place, or if that day is a national holiday, till the next succeeding day
which is not a national holiday, at the same time and place..
(ii)(a) The Companies Act, 2013 permits a decision of the Board of Directors to be taken by means of a resolution
by circulation. Board’s approvals can be taken in two ways - one, by a resolution passed at a Board Meeting and the
other, by means of a resolution passed by circulation.
In terms of Section 175(1) of the Companies Act, 2013 no resolution shall be deemed to have been duly passed by the
Board or by a committee thereof by circulation, unless the following provisions have been complied with:
(1) the resolution has been circulated in draft, together with the necessarypapers, if any,
(2) the draft resolution has been circulated to all the directors, or membersof the committee, as the case may
be;
(3) the Draft resolution has been sent at their addresses registered with the company in India;
(4) such delivery has been made by hand or by post or by courier, or throughprescribed electronic means;
Rule 5 of the Companies (Meetings of Board and its Powers) Rules, 2014 provides that a resolution in draft form
may be circulated to the directors together with the necessary papers for seeking their approval, by electronic means
which may include E-mail or fax.

25 | P a g e By CA Sanidhya Saraf
 (5) such resolution has been approved by a majority of the directors or members, who are entitled to vote on
the resolution;

(b) However, if at least 1/3rd of the total number of directors of the company for the time being require that any resolution
under circulation must be decided at a meeting, the Chairperson shall put the resolution to be decided at a meeting of
the Board (instead of being decided by circulation).
(c) A resolution that has been passed by circulation shall have to be necessarilynoted in the next meeting of Board or the
Committee, as the case may be, and made part of the minutes of such meeting.

(2) Mr. P and Mr. Q who are the directors of C-Tech Limited informed the company about their inability to attend
the Board meeting because the notice thereof was not served on them.
Discuss whether there is any default on the part of C-Tech Limited and the consequences thereof.
Ans 2: Under section 173(3) of the Companies Act, 2013 a meeting of the Board shall be called by giving not less
than seven days’ notice in writing to every director at his address registered with the company and such notice shall
be sent by hand delivery or by post or by electronic means.
Section 173(4) further provides that every officer of the company whose duty is to give notice under this section and
who fails to do so shall be liable to a penalty of 25,000.
In the given case, as no notice was served on Mr. P and Mr. Q who are the directors of C- Tech Limited, every officer
responsible for such default in serving notice shall be punishable with fine of 25,000 as required by Section 173
(4).
Neither the Companies Act, 2013 nor the Companies (Meetings of the Board and its Powers) Rules, 2014 lay down any
specific provision regarding the validity of a resolution passed by the Board of Directors in case notice was not
served to all the directors. The Companies Act, 2013 clearly provide for the notice to be sent to every director. The
Supreme Court, in case of Parmeshwari Prasad vs. Union of India (1974) has held that the resolutions passed in the
board meeting shall not be valid, since notice to all the Directors was not given in writing. Hence, even though the
directors concerned knew about the Board meeting, the meeting shall not be valid and resolutions passed thereat
also shall not be valid.

(3)A director goes abroad for a period of more than 3 months and an alternate director has been appointed in his
place under Section 161(2). During the period of absence of the original director, a board meeting was called.
In this connection, with reference to the provisions of the Companies Act, 2013, advise who should be given the
notice of Board meeting i.e. the “original director” or the “alternate director”?
Ans 3: According to Section 161(2) of the Companies Act, 2013, the Board of Directors of a company may, if so authorised
by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding
any alternate directorship for any other director in the company or holding directorship in the same company, to act as an
alternate director for a director during his absence for a period of not less than three months from India.

26 | P a g e By CA Sanidhya Saraf
According to Section 173(3), a meeting of the Board may be called by giving at least 7 days’ notice in writing to
every director at his address registered with the company and such noticeshall be sent by hand delivery or by post
or by electronic means.
There is no legal precedence whether the notice of the meeting is to be sent to the original director or the alternate director.
But as a matter of prudence such notice may be served to both the alternate director as well as the original director
who is for the time being outside India.

(4) Examine with reference to the provisions of the Companies Act, 2013 whether notice of a Board Meeting
is required to be sent to the following persons:
(i)An interested Director;
(ii)A Director who has expressed his inability to attend a particular Board Meeting;
(iii)A Director who has gone abroad (for less than 3 months).
Ans 4: Notice of Board Meeting
(i) Interested director: Section 173(3) of the Companies Act, 2013 makes it mandatory that every director needs
to be given proper notice of every board meeting. It is immaterial whether a director is interested or not. In case
of an interested director, notice must be given to him even though in terms of Section 184 (2) he is precluded
from participation i.e. engaging himself in discussion or voting at the meeting on the business in which he is
interested.
(ii) A Director who has expressed his inability to attend a particular Board Meeting: In terms of section
173(3) even if a director states that he will not be able to attend the next Board meeting, notice must be given
to that director also.
(iii) A director who has gone abroad: A director who has gone abroad is still a director. Therefore, he is entitled to
receive notice of board meetings during his stay abroad. The Companies Act, 2013, allows delivery of notice
of meeting by electronic means also i.e. through e-mail. This factor carries weight because the Companies Act, 2013
permits a director to participate in a meeting by video conferencing or any other audio- visual means also, in
addition to physical presence.

(5)Out of the powers exercisable by the Board under Section 179 of the Companies Act, 2013, the Board of
MN Limited wants to delegate the power to borrow monies otherwise than on debentures to the Managing Director.
Advise whether such a delegation is possible? Would your answer be different, if the delegation is made to the
manager or any other principal officer including a branch officer of the company?
Ans 5: Under section 179(3) of the Companies Act, 2013, the Board of Directors of a company shall exercise the following
powers on behalf of the company by means of resolutions passed at meetings of the Board:
(a) To make calls on shareholders in respect of money unpaid on their shares;
(b) To authorise buy-back of securities under section 68;
(c) To issue securities, including debentures, whether in or outside India;
(d) To borrow monies;
(e) To invest the funds of the company;

27 | P a g e By CA Sanidhya Saraf
 (f) To grant loans or give guarantee or provide security in respect of loans;
(g) To approve financial statement and the Board’s report;
(h) To diversify the business of the company;
(i) To approve amalgamation, merger or reconstruction;
(j) To take over a company or acquire a controlling or substantial stake in another company;
(k) Any other matter which may be prescribed.
Provided that the Board may, by a resolution passed at a meeting, delegate to any Committee of Directors, the Managing
Director, the manager or any other principal officer of the company or in the case of a branch office of the company, the
principal officer of the branch office, the powers specified in clauses (d) to (f) on such conditions as it may specify.
From the foregoing provisions, it is clear that the Board of MN Limited shall be perfectly in order if it delegates the
power to borrow monies under clause (d) of Section 173 (3) to the Managing Director or to the manager or any other
principal officer.

(6)Advise the Board of Director of Spectra Papers Ltd. regarding validity and extent of its powers, under the
provisions of the Companies Act, 2013 in relation to the following matters:
(i)Buy-back, for the first time, the shares of the Company upto 10% of the paid-up equity share capital without
passing a special resolution.
(ii)Delegation of power to the Managing Director so that he can invest surplus funds of the company in the
shares of some other companies.
Ans 6: (i) According to clause (b) of Section 179(3), The Board of Directors of a company shall exercise the power to
authorize buy-back of securities under section 68, on behalf of the company by means of resolutions passed at
meetings of the Board.
According to Section 68(2), no company shall purchase its own shares or other specified securities, unless—
a) the buy-back is authorised by its articles;
b) a special resolution has been passed at a general meeting of the company authorising the buy-back:
However, nothing contained in this clause shall apply to a case where—
(1) the buy-back is, 10% or less of the total paid-up equity capital and free reserves of the company; and
(2) such buy-back has been authorised by the Board by means of a resolution passed at its meeting,
From the foregoing provisions, it is clear that in case a company, for the first time, resorts to buy-back of its own
shares, when the buy-back is limited to 10% of its paid- up share capital, a special resolution will not be required if such
buy-back has been authorised by the Board by means of a resolution passed at its meeting. Thus, the Board of Director
of Spectra Papers Ltd. is empowered to buy-back the sharesbecause the buy-back is limited to 10% of the paid-up
share capital, by means of a resolution passed at the Board meeting.
(ii) According to clause (e) of Section 179(3), the Board of Directors of a company shall exercise the power to invest the
funds of the company, on behalf of the company by means of resolutions passed at the meetings of the Board.
The Board may, under the Proviso to Section 179(3), delegate the power to invest the funds of the company through a
board resolution passed at a duly convened Board Meeting. However, the investment in shares of other companies will

28 | P a g e By CA Sanidhya Saraf
also be governed by a specific provision contained in Section 186(5), according which no investment shall be made
or loan or guarantee or security given by the company unless the resolution sanctioning it is passed at a meeting of the
Board with the consent of all the directors present at the meeting and the prior approval of the public financial institution
concerned where any term loan is subsisting, is obtained.
Thus, a unanimous resolution of the Board is required. Further, Section 186 does not provide for delegation. Hence, the
proposed delegation of power to the Managing Director to invest surplus funds of the company in the shares of some
other companies, is not in order.

(7) An Audit Committee of a listed company constituted under Section 177 of the Companies Act, 2013, submitted
its report containing the recommendations in respect of certain matters to the Board. The Board, however,
did not accept the recommendations. In the light of the situation, analyze whether:
(a)The Board is empowered not to accept the recommendations of the Audit Committee.
(b)If so, what alternative course of action, would the Board resort to?
Ans 7: a) According to Section 177(8) of the Companies Act, 2013, the Board’s Report shall, under the provisions
of Section 134 (3) which is laid before the general meeting wherethe financial statements of the company are placed
before the members, disclose the composition of the Audit Committee and where the Board has not accepted any
recommendations of the Audit Committee, the same shall also be disclosed along with the reasons therefor. Hence,
the Board is empowered not to accept the recommendations of the Audit Committee but only under genuine
circumstances and supported by legitimate reasons for non-acceptance.
(b) If the Board does not accept the recommendations of the Audit Committee, it shall disclose the same in its report
under section 134 (3) which is placed before the general meeting of the company.

(8) MNC Ltd., a company, whose paid up capital was ` 8.00 crore, has issued right shares in the ratio of 1:1.
The said company is listed with Mumbai Stock Exchange. Whether the company is required to appoint any
Audit Committee and if yes, draft a suitable Board Resolution to appoint an Audit committee covering the
aspects as provided in the Companies Act, 2013.
Ans 8: Under section 177(1) of the Companies Act, 2013 the Board of Directors of every listed public company and such
other class or classes of companies, as may be prescribed, shall constitute an Audit Committee. Therefore, MNC Ltd.
being a listed company will be bound to constitute an Audit Committee under the Act.
Further under section 177(2) the Audit Committee shall consist of a minimum of threedirectors with
independent directors forming a majority.
Further, majority of the members of Audit Committee including its Chairperson shall be persons with ability
to read and understand the financial statement.
The draft Board Resolution for the constitution of an Audit Committee may be as follows:
“Resolved that pursuant to the provision contained in section 177 of the Companies Act 2013and the applicable clause
of Listing Agreement with the Mumbai Stock Exchange, an Audit Committee of the Company be and is hereby
constituted with effect from the conclusion of this meeting, with members as under:

29 | P a g e By CA Sanidhya Saraf
 1. Mr. A -- An Independent Director.
2. Mr. B -- An Independent Director
3. Mr. C – An Independent Director
4. Mr. D -- An Independent Director
5. Mr. FE -- Financial Executive
6. Mr. MD -- Managing Director
Further resolved that the Chairman of the Committee, who shall be an Independent Director, be elected by the
committee members from amongst themselves.
Further resolved that the quorum for a meeting of the Audit Committee shall be the chairman of the Audit Committee
and 2 other members (other than the Managing Director),
Further resolved that the terms of reference of the Audit Committee shall be in accordance with the provisions
of section 177(4) of the Companies Act, 2013.
Further resolved that the Audit committee shall conduct discussions with the auditors periodically about internal control
system, the scope of audit including the observations of the auditors.
Further resolved that the Audit Committee shall review the quarterly and annual financial statements and submit the
same to the Board with its recommendations, if any.
Further resolved that the recommendations made by the Audit Committee on any matter relating to financial management
including the audit report shall be binding on the Board. However, where such recommendations are not accepted by the
Board, the reasons for the same shall be recorded in the minutes of the Board meeting and communicated to the
shareholders.
Further resolved that the Company Secretary of the Company shall be the Secretary to the Audit Committee.
Further resolved that the Chairman of the Audit Committee shall attend the annual general meeting of the Company to
provide any clarifications on matters relating to audit as may be required by the members of the company.
Further resolved that the Board’s Report/Annual Report to the members of the Company shall include the particulars of the
constitution of the Audit Committee and the details of the non- acceptance of any recommendations of the Audit
Committee with reasons therefor.”

(9) The Balance Sheets of last three years of PTL Ltd., contain the following information and figures:
As at 31.03.2017 As at 31.03.2018 As at 31.03.2019

Paid up capital 50,00,000 50,00,000 75,00,000

General Reserve 40,00,000 42,50,000 50,00,000
Credit Balance in 5,00,000 7,50,000 10,00,000

30 | P a g e By CA Sanidhya Saraf
 Profit & Loss Account

Debenture Redemption 15,00,000 20,00,000 25,00,000

Reserve
Securities Premium 2,00,000 2,00,000 2,00,000
Secured Loans 10,00,000 15,00,000 30,00,000

On going through other records of the Company, the following is also determined:

Net Profit for the year (as 12,50,000 19,00,000 34,50,000

calculated in accordance with
the provisions of the
Companies Act, 2013)

In the ensuing Board Meeting scheduled to be held on 5thSeptember, 2019, among other items of agenda,
following items are also appearing:
(i)To decide about borrowing from financial institutions on long-term basis.
(ii)To decide about contributions to be made to charitable funds.
Based on above information, you are required to find out as per the provisions of the Companies Act, 2013,
the amount upto which the Board can borrow from Financial institution and the amount upto which the Board
of Directors can contribute to Charitable funds during the financial year 2019-20 without seeking the
approval in general meeting.
Ans 9: (i) Borrowing from Financial Institutions: As per Section 180(1)(c) of the Companies Act, 2013, the Board of
Directors of a company, without obtaining the approval of shareholdersin a general meeting, can borrow money including
moneys already borrowed upto an amount which does not exceed the aggregate of paid up capital of the company, free
reserves and securities premium. Such borrowing shall not include temporary loans obtained from the company’s bankers
in the ordinary course of business. Here, free reserves do not include the reserves set apart for specific purpose.

Since the decision to borrow is to be taken in a meeting to be held on 5thSeptember, 2019, the figures relevant for
this purpose are the figures as per the Balance Sheet as at 31.03.2019. According to the above provisions, the Board
of Directors of PTL Ltd. can borrow, without obtaining approval of the shareholders in a general meeting, upto an
amount calculated as follows:

Particulars

31 | P a g e By CA Sanidhya Saraf
 Paid up Capital 75,00,000
General Reserve (being free reserve) 50,00,000
Credit Balance in Profit & Loss Account (to be treated as freereserve) 10,00,000

Debenture Redemption Reserve (This reserve is not to be considered ----

since it is kept apart for specific purpose of debenture redemption)

Securities Premium 2,00,000

Aggregate of paid-up capital, free reserves and securities premium 137,00,000
Total borrowing power of the Board of Directors of the company, i.e, 100%
of the aggregate of paid-up capital, free reserves and securities
premium 137,00,000

Less: Amount already borrowed as secured loans 30,00,000

Amount upto which the Board of Directors can further borrow without the 107,00,000
approval of shareholders in a general meeting.

(ii)Contribution to Charitable Funds: As per Section 181 of the Companies Act, 2013, the Board of Directors of a
company without obtaining the approval of shareholders in a general meeting, can make contributions to genuine charitable
and other funds upto an amount which, in a financial year, does not exceed five percent of its average net profits during the
three financial years immediately preceding, the financial year.
According to the above provisions, the Board of Directors of the PTL Ltd. can make contributions to charitable funds,
without obtaining approval of the shareholders in a general meeting, upto an amount calculated as follows:
Net Profit for the year (as calculated in accordance with the provisions of the Companies Act, 2013):

Particulars
₹
For the financial year ended 31.3.2017 12,50,000
For the financial year ended 31.3.2018 19,00,000
For the financial year ended 31.3.2019 34,50,000
TOTAL 66,00,000
Average of net profits during three preceding financial years 22,00,000

32 | P a g e By CA Sanidhya Saraf
 Five per cent thereof 1,10,000

Hence, the maximum amount that can be donated by the Board of Directors of PTL Ltd. to a genuine charitable
fund during the financial year 2019 -2020 will be limited to ₹ 1,10,000 and the said donation shall not require
seeking of approval from the shareholders at a general meeting.

(10) Following data relates to Prince Company Limited:

Authorised Capital (Equity Shares) ₹ 100 crore
Paid – up Share Capital ₹ 40 crore
General Reserves ₹ 20 crore
Debenture Redemption Reserve ₹ 10 crore
Provision for Taxation ₹ 5 crore
Securities premium ₹ 2 crore
Loan (Long Term) ₹ 10 crore
Short Term Creditors ₹ 3 crore
Board of Directors of the company by a resolution passed at its meeting decided to borrow an additional sum
of ₹ 90 crore from the company’s Bankers. Being the company’s financial advisor, you are required to advise the
Board of Directors regarding the procedure to be followed in this respect under the Companies Act, 2013.
Ans 10: Borrowing by the Company (Section 180 of the Companies Act, 2013): As per Section 180(1)(c) of the
Companies Act, 2013, the Board of Directors of a company, without obtaining the approval of shareholders in a general
meeting through a special resolution, can borrowthe funds including funds already borrowed upto an amount which
does not exceed the aggregate of the paid-up share capital, free reserves and securities premium. Such borrowing shall
not include temporary loans obtained from the company's bankers in ordinary course of business.
Free reserves do not include the reserves set apart for specific purpose.
According to the above provisions, the Board of Directors of Prince Company Limited can borrow, without obtaining
approval of the shareholders in a general meeting, upto an amount calculated as follows:

Particulars
Paid up Share Capital 40 Crore
General Reserve (being free reserve) 20 Crore
Debenture Redemption Reserve (This reserve is not to be consideredsince it is ----
kept apart for specific purpose of debenture redemption)
Securities Premium 2 Crore

33 | P a g e By CA Sanidhya Saraf
 Aggregate of paid-up share capital, free reserve and securities premium 62 Crore
Total borrowing power of the Board of Directors of the company, i.e, 100%of 62 Crore
the aggregate of paid-up share capital, free reserves and securities premium

(Less: Amount already borrowed as Long term loan) (10 Crore)

Amount upto which the Board of Directors can further borrow without the 52 Crore
approval of shareholders in a general meeting.

In the present case, the directors of Prince Company Limited by a resolution passed at its meeting have decided to borrow
an additional sum of ₹ 90 Crore from the company ’s bankers. Apparently,the proposed borrowing will be beyond the powers
of the Board of Directors.
The management of Prince Company Limited, therefore, should take steps to convene the general meeting and pass a
special resolution by the members in the meeting as stated in Section 180(1)(c) of the Companies Act, 2013. Then only,
the proposed borrowing of ₹ 90 crore will be valid and binding on the company and its members.

(11) One of the Objects Clauses of the Memorandum of Association of Info Limited conferred upon the company
power to sell its undertaking to another company with identical objects. Company’s Articles also conferred
upon the directors whereby power was conferred upon them to sell or otherwise deal with the property of the
company. At an Extraordinary General Meeting of the company, members passed an ordinary resolution for the
sale of its assets on certain terms and authorized the directors to carry out the sale. Directors refused to comply
with the wishes of the members whereupon it was contended on behalf of the members that they were the
principals and directors being their agents, were bound to give effect to their (members’) decisions.
Examining the provisions of the Companies Act, 2013, answer the following:
Whether the contention of members against the non-compliance of members’ decision by the directors is
tenable?
Whether it is possible for the members to usurp the powers which by the Articles are vested in the directors
by passing a resolution in the general meeting?
Ans 11: Powers of Board: In accordance with the provisions of the Companies Act, 2013, as contained under
Section 179(1), the Board of Directors of a company shall be entitled to exercise all such powers and to do all such
acts and things, as the company is authorized to exercise and do:
Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions
contained in that behalf in this Act, or in the memorandum or articles, or inany regulations not inconsistent therewith
and duly made thereunder including regulations made by the company in general meeting.
Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether
under this Act or by the members or articles of the company or otherwise to be exercised or done by the company in
general meeting.
Section 180 (1) of the Companies Act, 2013, specifies the powers which the Board of Directors of a company shall
exercise only with the consent of the company by a special resolution. Clause (a) of Section 180 (1) defines one such

34 | P a g e By CA Sanidhya Saraf
power as the power to sell, leaseor otherwise dispose of the whole or substantially the whole of the undertaking
of the company or where the company owns more than one undertaking of the whole or substantially the whole or any
of such undertakings.
Therefore, the sale of the undertaking of a company can be made by the Board of Directors only with the consent
of members of the company accorded by passing a special resolution.
Even if the power is given to the Board by the memorandum and articles of the company, the sale of the undertaking
must be approved by the shareholders in general meeting by passing a special resolution.
Therefore, the correct procedure to be followed is for the Board to approve the sale of the undertaking clearly specifying
the terms of such sale and then convene a general meeting of members to have the proposal approved by a special
resolution.
In the given case, the procedure followed is completely incorrect and violative of the provisions of the Companies
Act, 2013. The shareholders cannot on their own make out a proposal of sale and pass an ordinary resolution to
implement it through the directors.
The contention of the shareholders is incorrect in the first place as it is not within their authority to approve a proposal
independent of the Board of Directors. It is for the Board to approve a proposal of sale of the undertaking and then let
the members to approve it by a special resolution. Accordingly, the contention of the members that they were the
principals and the directors as their agents were bound to give effect to the decisions of the members is not correct.
Further, in exercising their powers the directors do not act as agent for the majority of members or even for all the
members. The members therefore, cannot by resolution passed by a majority or even unanimously supersede the
powers of directors or instruct them howthey shall exercise their powers. The shareholders have, however, the power
to alter the Articles of Association of the company in the manner they like subject to the provisions of the Companies
Act, 2013.

(12) (i)R Ltd. wants to constitute an Audit Committee. Draft a board resolution covering the following matters
[compliance with Companies Act, 2013 to be ensured].
(1)Members of the Audit Committee
(2)Chairman of the Audit Committee
(3)Any 2 functions of the said Committee
(ii)What would be the minimum likely turnover or capital of this company?
(iii)What is the role of the Audit Committee vis-a-vis the statutory auditor when the company wishes to
engage them to perform certain engagements which are not restricted under Section 144?
Ans 12: (i) Audit Committee – Board’s Resolution:
“Resolved that pursuant to Section 177 of the Companies Act, 2013, an AuditCommittee consisting of the following
Directors be and is hereby constituted.
1) Mr. Independent Director
2) Mr. Independent Director

35 | P a g e By CA Sanidhya Saraf
 3) Mr. Independent Director
4) Mr. Independent Director
5) Mr. Managing Director.
6) Mr. Chief Financial Officer”
“Further resolved that the Chairman of the Audit Committee shall be elected by its members from amongst themselves
and shall be an independent director”.
“Further resolved that the quorum for a meeting of the Audit committee shall be three directors (other than the Managing
Director), out of which at least two must be independent directors”.
“Resolved further that the Audit Committee shall perform all the functions as laid down in section 177(4) of the
Companies Act, 2013 including but not limited to:
(a) make the recommendation for appointment, remuneration and terms of appointment of the auditors of
the company;
(b) review and monitor the independence and performance of auditors of the company and the effectiveness
of the audit process”.
“Further resolved that the Audit Committee shall review the quarterly and annual financial statements and submit the
same to the Board with its recommendations if any”.
(ii)Rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014 states that every listed public company
and a company covered under Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 shall
constitute an Audit Committee. Rule 4 has prescribed the following classes of companies to constitute an Audit
Committee:
a) public companies having a paid-up share capital of 10 crore rupees or more;
b) public companies having turnover of 100 crore rupees or more;
c) public companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding 50
crore rupees.
Hence, in the given case, the likely turnover of R Ltd. shall be ₹ 100 crore or more orcapital shall be ₹ 10 crore
or more.
(iii)According to section 177(5), the Audit Committee is empowered to:
(1) call for the comments of the auditors about:

(A) internal control systems,

(B) the scope of audit, including the observations of the auditors,
(C) review of financial statement before their submission to the Board,

(2) discuss any related issues with the internal and statutory auditors and themanagement of the company.

36 | P a g e By CA Sanidhya Saraf
 4.Inspection, Inquiry and Investigation
Section A- Test Your Knowledge
(1)At an Extra-ordinary General Meeting of Ravi Share-brokers Limited, held at its Registered Office situated at
Rajendra Place, New Delhi, the shareholders passed a special resolution to the effect that the affairs of the company
ought to be investigated. Ravi Share-brokers Limited, thereafter, submitted the special resolution so passed to the Central
Government for further action. Under the given situation, you are required to select the appropriate option from
those given below:
a) Power of the Central Government to order an investigation into the affairs of Ravi Share-brokers Limited as
requested in the special resolution so submitted by the company is discretionary and therefore, it may or may
not order an investigation.
b) Power of the Central Government to order an investigation into the affairs of Ravi Share-brokers Limited as
requested in the special resolution so submitted by the company is mandatory and therefore, it shall order
an investigation.
c) Central Government is not empowered to pass order of investigation in case of non- government companies and
therefore, no order of investigation into the affairs of Ravi Share-brokers Limited as requested in the special
resolution so submitted by the company shall be ordered.
d) Power of the Central Government to order an investigation into the affairs of Ravi Share-brokers Limited
can be initiated just on request by the company.
Ans 1: (a)

(2)Sanchita Tech Mart Limited is in the grip of serious apprehensions that its shares might be cornered by a group of
unscrupulous persons and if it happens, it would certainly result in change in the Board of Directors which might be
prejudicial to the public interest. With a view to impose restrictions, Ramneek, one of the directors of Sanchita
TechMart Limited, seeks your advice as to how the company can impose restrictions on the transfer of shares of the
company. Choose the correct option from those given below:
a) Sanchita Tech Mart Limited can make an application to the National Company Law Tribunal (NCLT) under
Section 222 for imposition of restrictions on securities.
b) Sanchita Tech Mart Limited can make an application to the Central Government under Section 222 for
imposition of restrictions on securities.
c) Sanchita Tech Mart Limited can make an application to the National Company Law Tribunal (NCLT) under
Section 216 for investigation into the ownership of company.
d) Sanchita Tech Mart Limited can make an application to the Central Government under Section 216 for
investigation into the ownership of the company.
Ans 2: (a)

(3)After perusal of the inspector’s report made under Section 223 of the Companies Act, 2013, it appears to the
Central Government that some action is required to be taken against a company, it may cause to be presented to
the Tribunal:

37 | P a g e By CA Sanidhya Saraf
 a) A petition for the winding up of the company on the ground that it is just and equitable that it should be
wound up.
b) An application under Section 241 of the Companies Act, 2013.
c) Both (a) and (b)
d) A petition for the merger of the company on the ground that it is just and equitable that it should be merged.
Ans 3: (c)

(4)Under the garb of cement business, some of the directors of Royal Cement Limited, a company incorporated in
the year 2001 and having its factories at Rohtak and Bhiwani, were involved in several illegal activities. In such a
situation, on receipt of a report of the Registrar of Companies or inspector under Section 208 or in the public interest or
on request from any Department of the Central Government or a State Government, the Central Government may,by
order, assign the investigation into the affairs of Royal Cement Limited to the Serious Fraud Investigation Office
(SFIO). In addition to the above bases, there is one more basis which may prompt the Central Government to assign
the investigation to the Serious Fraud Investigation Office (SFIO). From the following four options, choose such
appropriate basis for assigning the investigation to the SFIO.
a) On intimation through an Ordinary Resolution passed by the shareholders of Royal Cement Limited that the
affairs of the company are required to be investigated.
b) On intimation through a Special Resolution passed by the shareholders of RoyalCement Limited that
the affairs of the company are required to be investigated.
c) On an intimation received from certain senior employees of Royal Cement Limited that the affairs of the
company are required to be investigated.
d) On an intimation received from certain ex-directors of Royal Cement Limited that the affairs of the
company are required to be investigated.
Ans 4: (b)

(5)Mr. Raman, an Inspector appointed under Section 212 of the Companies Act, 2013, started investigations into the
affairs of C-Tech Innovative Solutions Ltd. During the process of investigation, Mr. Raman noticed certain unusual
facts and information regarding the transactions made by C-Tech Innovative Solutions Ltd. with its subsidiary company
Shyamala InfoTech Solutions Ltd. Based on the information so collected from the investigation, Mr. Raman wanted to
investigate the affairs of Shyamala InfoTech Solutions Ltd. also. Out of the following options, which one correctly
indicates whether Mr. Raman can proceed with the investigation of the affairs of subsidiary company Shyamala InfoTech
Solutions Ltd. or not in the light of the applicable provisions of the Companies Act, 2013.
a) Mr. Raman shall be able to proceed with the investigation of the affairs of subsidiary company Shyamala
InfoTech Solutions Ltd. after obtaining the prior approval of the Director, Serious Fraud Investigation
Office (SFIO).
b) Mr. Raman shall not be able to proceed with the investigation of the affairs of subsidiary company
Shyamala InfoTech Solutions Ltd. since it is not within his powersto undertake investigation of any
other entity.
c) Mr. Raman shall be able to proceed with the investigation of the affairs of subsidiary company Shyamala
InfoTech Solutions Ltd. after obtaining the prior approval of the National Company Law Tribunal in whose
jurisdiction the registered office of the subsidiary company is located.

38 | P a g e By CA Sanidhya Saraf
 d) Mr. Raman shall be able to proceed with the investigation of the affairs of subsidiary company Shyamala
InfoTech Solutions Ltd. after obtaining the prior approval of the Central Government.
Ans 5: (d)

(6)Sunder Cosmetics Limited was served a notice by the jurisdictional Registrar of Companies to produce at his
office for inspection of certain more books of accounts, other books, papersand explanations, etc. at 11 A.M. on January
5, 2022. Choose the applicable option from those given below that indicates the reason for such inspection by the
concerned Registrar of Companies:
a) Since no information or explanation was furnished by Sunder Cosmetics Limited to the Registrar of Companies
within the time specified in the earlier notice issued by him.
b) Since Registrar of Companies, on an examination of the documents furnished by Sunder Cosmetics Limited,
was of the opinion that the information or explanation furnished by the company was inadequate.
c) Since Registrar of Companies was satisfied on a scrutiny of the documents furnished by Sunder
Cosmetics Limited, that an unsatisfactory state of affairs existed in the company and the information or
documents so furnished did not disclose a full and fair statement of the information required.
d) In all of the situations given above in option (a), (b) and (c), inspection can be preferred.
Ans 6: (d)

Section B- Descriptive Questions

(1)Provide various grounds on which the investigation is assigned to Serious Fraud Investigation Office?
Ans 1: As per section 212 of the Companies Act, 2013, the Central Government may assign the investigation into affairs
of a company to the Serious Frauds Investigation Office on the basis of an opinion formed from the following:
a) After the inspection of books of account or papers or inquiry the Registrar shall submit a written report to
the Central Government. The report may recommend the need for further investigation along with reasons in
support. The Central Government on receipt of such report can order an investigation under Serious Frauds
Investigation Office.
b) The company may pass a special resolution and can request Central Government to investigate into the
affairs of the company.
c) The Central Government can order investigation under Serious Frauds Investigation Office, in public
interest.
d) The departments Central Government and State Governments can request for investigation under
Serious Frauds Investigation Office.

(2)Discuss the powers of Inspectors regarding investigation into affairs of related companies.

39 | P a g e By CA Sanidhya Saraf
Ans 2: Section 219 states that, if the inspector appointed under Sections 210, 212 or 213 to investigate into the
affairs company considers it necessary for the purposes of the investigation to investigate, he can do the investigation
of the affairs of other related companies or body corporate with the prior approval of the Central Government.
• Holding or Subsidiary Company: which is or has been at the relevant time been the company’s subsidiary or
holding or subsidiary of its holding company;
• Related Party: which is or has been at the relevant time been managed by any person as a managing director
or manager who is or was at the relevant time the managing director or the manager of the company;
• Deemed Control: whose Board of Directors’ comprises nominees of the company or is accustomed to
act in accordance with the directions of the company or any of its directors; or
• In Employment of Company: in case any person is or has at any relevant time been the company’s
managing director or manager or employee.
The results of the investigation are relevant to the investigation of the affairs of the company for which he is
appointed.

(3)A group of creditors of XYZ Limited makes a complaint to the Registrar of Companies, Gujarat alleging that the
management of the company is indulging in destruction and falsification of the accounting records of the
company. The complainants request the Registrar to take immediate steps to seize the records of the company so
that the management may not be allowed to tamper with the records. The complaint was received at 11 A.M.
on 06th June, 2018 and the registrar has attempted to enter the premise of company but has been denied by
the company, due to not having order from special court.
Is the contention of company being valid in terms of Companies Act, 2013?
Ans 3: Section 209, of the Companies Act, 2013 states that, if the Registrar has reasonable ground to believe that
the books and papers of
• A company or
• relating to the key managerial personnel or
• any director or
• auditor or
• company secretary in practice if the company has not appointed a company secretary are likely to be
destroyed, mutilated, altered, falsified or secreted he may, after obtaining an order from the special court
for the seizure of such books and papers,
(a) enter with such assistance as may be required and search the place where such books or papers are kept; and
(b) seize such books and papers as he considers necessary after allowing the company to take copies or
extracts there from.
According the above provisions the registrar may enter, search and seize the books only after obtaining an order from
the Special Court.
In the given scenario, the registrar has failed to obtain permission from the special court so, he is not authorized to
enter the premises of the company and seize the books of accounts of XYZ Limited. Hence, the contention of the
XYZ Limited is valid in law.

40 | P a g e By CA Sanidhya Saraf
(4)Mr. Atul is an employee of the company ABC Limited and investigation is going on him under the provisions
of Companies Act, 2013. The company wants to terminate the employee on the ground of investigation is going
against him. They have filed the application to tribunal for approval of termination. Company has not received any
reply from the tribunal within 30 days of filling an application. The company consider it as a deemed approval
and terminated Mr. Atul.
(a)Is the contention of company being valid in law?
(b)What is remedy available to Mr. Atul?
(c)What is remedy available to Mr. Atul, if reply of Tribunal has been received within 30 days of application?
Ans 4: The provision of Section 218 states that, the company shall require to take approval of the tribunal before taking
action against the employee if there is any pendency of any proceedings against any person concerned in the conduct and
management of the affairs of the company.
The company shall require approval in the following circumstances:
• discharge or suspension of an employee; or
• punishment to an employee by dismissal, removal, reduction in rank or otherwise; or
• change in the terms of employment to the disadvantage of employee(s); The Tribunal shall notify its
objection to the action proposed in writing.
In case, the company, other body corporate or person concerned does not receive the approval of the Tribunal within
30 days of making the application, it may proceed to take the action proposed against the employee. That means it can
be consider as a deemed approvalby the tribunal.
Appeal to the Appellate Tribunal
If the company, other body corporate or person concerned is dissatisfied with the objection raised by the Tribunal, it
may, within a period of 30 days of the receipt of the notice of the objection, refer an appeal to the Appellate Tribunal
in such manner and on payment of fees of INR 1,000 as per the schedule of Fees.
The decision of the Appellate Tribunal on such appeal shall be final and binding on the Tribunal and on the company,
other body corporate or person concerned.
a) Yes, the termination of Mr. Atul made by the company is totally valid in law and company can do so by
considering deemed approval of tribunal.
b) In this scenario, Mr. Atul has not any remedy available. As per the provision of the law appeal to the
appellate tribunal can be made only if the person is dissatisfied with the objection raised by the tribunal.
Hence, in this case the tribunal has not replied Mr. Atul cannot refer an appeal to Appellate Tribunal.
c) In this case, Mr. Atul can refer and appeal to appellate tribunal within 30 days of the receiving letter of objection
raised by the tribunal and with payment of Fees of Rs. 1,000 as per schedule of Fees.

5.A group of shareholders of FMG Limited made a complaint to the concerned Registrar of Companies (ROC) that
the business of the Company is being carried on for unlawful and fraudulent purposes and filed an application
to enquire into the affairs of the Company. Referring to and analyzing the provisions of the Companies Act,
2013, decide:

41 | P a g e By CA Sanidhya Saraf
(i)Whether the ROC has the power to order for an inquiry into the affairs of the Company?
(ii)If yes, state the procedure to be followed by the ROC.
(iii)Whether the inquiry should be pursued by the ROC in case the complaint is withdrawnby the same group
of shareholders subsequent to the Order for enquiry?
(iv)Whether the Central Government has the power to direct the ROC to carry out the inquiry?
Ans 5: (i) Yes, the ROC has the power to order for an inquiry as he deems fit after providing the company a reasonable
opportunity of being heard, into the affairs of the company ifhe is satisfied on a representation made to him by any
person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance
with the provisions of this Act. [Section 206(4) of the Companies Act, 2013]
(ii)Procedure followed by ROC: The Registrar may, after informing the company of the allegations made against it by a
written order, call on the company to furnish in writing any information or explanation on matters specified in the order
within such time as he may specify therein and carry out such inquiry as he deems fit after providing the company
a reasonable opportunity of being heard.
(iii)The inquiry can be pursued by the ROC in case the complaint is withdrawn by same group of shareholders
subsequent to the order for inquiry in terms of section 206(4).
(iv)Yes, the Central Government may, if it is satisfied that the circumstances so warrant, direct the Registrar for the
purpose to carry out the inquiry under section 206(4).

42 | P a g e By CA Sanidhya Saraf
 5.Compromises, Arrangements and Amalgamations
Section A- Test Your Knowledge

(1)Sectoral Regulators shall make representation, if any, within _________from the date of receipt of Notice of the
Meeting to be called, held and conducted by the National Company Law Tribunal(NCLT) in respect of a scheme of
compromise or arrangement.
a) 45 days.
b) 30 days.
c) 60 days.
d) 90 days.
Ans 1: (b)

(2)It is imperative that the Scheme of Compromise or Arrangement needs to be approved by the members or class of
members or creditors or class of creditors. From the given options, select the one which correctly indicates the minimum
requirement for such approval:
a) The Scheme of Compromise or Arrangement shall be approved by more than 50% majority in number of members
or class of members or creditors or class of creditors, as the case may be, who are present and voting at the
meeting.
b) The Scheme of Compromise or Arrangement shall be approved by more than 75% majority in value of members
or class of members or creditors or class of creditors, as the casemay be, who are present and voting at the
meeting.
c) The Scheme of Compromise or Arrangement shall be approved by more than 75% majority in number of members
or class of members or creditors or class of creditors, as the case may be, who are present and voting at the
meeting.
d) Both (a) and (b) together.
Ans 2: (d)

(3)Mr. Aman is a registered holder of 15,000 equity shares of Kanha Textiles Limited whose issued capital is ₹ 1,00,00,000
divided into 10,00,000 equity shares of ₹ 10 each. He was offered a price, as determined by the registered valuer, for
purchase of his shares by the majority shareholders. Since he has agreed to the proposal of selling his shares at the offered
price, you are required to select the correct option from those given below that indicates the period within which such
amount shall be disbursed to him:
a) Maximum within 15 days, such offered amount shall be disbursed to him.
b) Maximum within 30 days, such offered amount shall be disbursed to him.
c) Maximum within 60 days, such offered amount shall be disbursed to him.
d) Maximum within 90 days, such offered amount shall be disbursed to him.
Ans 3: (c)

43 | P a g e By CA Sanidhya Saraf
(4)Navneet Textiles Limited, with a view to save itself from the looming liquidation, proposed a scheme of compromise
to its creditors which valued 75,00,000. In the process, the company filed the said Scheme with the jurisdictional National
Company Law Tribunal (NCLT). From the following options, select the one which correctly depicts the minimum strength
of creditors in value that must confirm to the scheme of compromise so that Tribunal may dispense with calling of a meeting
of the creditors:
a) The strength of creditors in value of Navneet Textiles Limited that must confirm to the scheme of compromise so
that Tribunal may dispense with calling of a meeting of the creditors is minimum 70%.
b) The strength of creditors in value of Navneet Textiles Limited that must confirm to the scheme of compromise so
that Tribunal may dispense with calling of a meeting of the creditors is minimum 80%.
c) The strength of creditors in value of Navneet Textiles Limited that must confirm to the scheme of compromise so
that Tribunal may dispense with calling of a meeting of the creditors is minimum 90%.
d) The strength of creditors in value of Navneet Textiles Limited that must confirm to the scheme of compromise so
that Tribunal may dispense with calling of a meeting of the creditors is minimum 95%.
Ans 4: (c)

(5)In respect of a scheme of compromise submitted by Neon Colour Prints Limited to the jurisdictional National Company Law
Tribunal (NCLT), a meeting of the shareholders was held on the specified date and time and at the designated place. The
company had 1200 shareholders holding equity shares of ₹ 1,20,00,000 (12,00,000 equity shares of ₹ 10 each) who all
voted using the prescribed modes. However, 100 shareholders holding ₹ 36,00,000 worth of shares voted against the
approval of the scheme of compromise. Choose the correct option from those stated below as to whether the scheme of
compromise submitted by Neon Colour Prints Limited to the jurisdictional National Company Law Tribunal (NCLT) is to
be considered as approved or not:
a) The scheme of compromise submitted by Neon Colour Prints Limited to the jurisdictional National Company
Law Tribunal (NCLT) is to be considered as approved sinceshareholders holding more than one-half worth of
shares in value voted in favour of the scheme.
b) The scheme of compromise submitted by Neon Colour Prints Limited to the jurisdictional National Company
Law Tribunal (NCLT) is to be considered as approved sinceshareholders holding more than fifty-five percent
worth of shares in value voted in favour of the scheme.
c) The scheme of compromise submitted by Neon Colour Prints Limited to the jurisdictional National Company
Law Tribunal (NCLT) is to be considered as approved since shareholders holding more than sixty percent
worth of shares in value voted in favour ofthe scheme.
d) The scheme of compromise submitted by Neon Colour Prints Limited to the jurisdictional National Company
Law Tribunal (NCLT) is not to be considered as approved by the shareholders.
Ans 5: (d)

(6)Orange Communications Limited is planning to merge with itself its Wholly-owned Subsidiary (WoS) Vaartalaap Tech
Limited under the scheme of fast track merger. After due approval of the Merger Scheme, the same was filed with the
Central Government for its approval. However, the Central Government is of the opinion that the said Merger Scheme is
not in the public interest. In case such an opinion is formed, then with which authority the Central Government can file an
application stating its objections?

44 | P a g e By CA Sanidhya Saraf
 a) The Central Government cannot file an application in this respect except to decide thematter on its own.
b) The Central Government can file an application before the National Company Law Tribunal (NCLT) stating its
objections.
c) The Central Government can file an application before the Delhi High Court stating itsobjections.
d) The Central Government can file a ‘Special Leave Petition’ before the Hon’ble Supreme Court stating its
objections.
Ans 6: (b)

(7)Abhik Trading and Marketing Company Limited is wholly owned subsidiary (WOS) of Eternal Cosmetics Limited.
Keeping in view the expansion plans, Swapna and Shilpa, the two Directorsof latter company are contemplating to make
an application before the appropriate forum for merger of the subsidiary company Abhik Trading and Marketing Company
Limited with holding company Eternal Cosmetics Limited under Section 232 of the Companies Act, 2013. However, Vibha
Kumar, the Company Secretary of Eternal Cosmetics Limited is of the opinion that the merger between a holding and
subsidiary company should have been undertaken as per the provisions of Section 233 which state procedure for fast track
merger and not under Section 232. Which statement, out of the four given below, is applicable in the above stated situation:
a) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, holds ground since merger
between a holding and subsidiary company should have been undertaken as per the provisions of Section 233 of
the Companies Act, 2013 which states procedure for fast track merger.
b) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, does not hold ground since
merger between a holding and subsidiary company is validly possible only as per Section 232 of the Companies
Act, 2013.
c) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, does not hold ground since the
provisions given for fast track merger under Section 233 of the Companies Act, 2013 are of the optional nature.
d) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, does not hold ground since the
provisions given for fast track merger under Section 233 of the Companies Act, 2013 can be applied for merging
only small companies.
Ans 7: (c)

Section B- Descriptive Questions

(1)ABC Limited is a wholly owned subsidiary company of XYZ Limited. The Company wants to make
application for merger of Holding and Subsidiary Companies under Section 232. The Company Secretary of the
XYZ Limited is of the opinion that company cannot apply for merger as per section 232. The company shall have
to apply for merger as per section 233 i.e. Fast Track Merger. Is it a valid contention expressed by the Company
Secretary?
Ans 1: As per section 233 (1), notwithstanding the provisions of section 230 and section 232, a scheme of merger or
amalgamation may be entered between,
• Two or more small companies

45 | P a g e By CA Sanidhya Saraf
 • A holding company and its wholly-owned subsidiary company. If 100% of share capital of subsidiary company
is held by the holding company, the latter company may hold the shares of subsidiary company in the name
of any nominee or nominees with a view to ensure that the number of members of subsidiary company is
not reduced below the statutory limit as mentioned in section 187.
• such other class or classes of companies as may be prescribed.
The provisions given for fast track merger in the section 233 are optional in nature and not mandatorily applicable to the
company. If a company wants to make application for merger as per section 232, it can do so.
Hence, here the Company Secretary of the XYZ limited has erred in the law and his contention is not valid. The
company shall have an option to choose between normal process of merger and fast track merger.

(2)A meeting of members of ABC Limited was convened under the orders of National Company Law Tribunal
(NCLT) to consider a scheme of compromise and arrangement. Notice of the meeting was sent in the prescribed
manner to all the 600 members holding in the aggregate 25,00,000 shares. The meeting was attended by 450
members holding 15,00,000 shares. 210 members holding 11,00,000 shares voted in favour of the scheme. 180
members holding 3,00,000 shares voted against the scheme. The remaining members abstained from voting.
Examine with reference to the relevant provisions of the Companies Act, 2013 whether the scheme was approved
by the requisite majority.
Ans 2: As per section 230 (6), of the Companies Act, 2013 where majority of persons at a meeting held shares
representing 3/4th in value, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement
and further such compromise or arrangement was sanctioned by the Tribunal by an order. The majority of persons
representing 3/4th in value shall be counted considering the following:
• the creditors, or
• class of creditors or
• members or
• class of members, as the case may be,
The majority is dual, in number and in value. A simple majority of those voting is sufficient; whereas the ‘three-fourths’
requirement relates to value. The three-fourths value is to be computed with reference to paid-up capital held by
members present and voting at the meeting.
In this case out of 600 members, 450 members attended the meeting, but only 390 members voted at the meeting. As 210
members voted in favour of the scheme the requirement relating to majority in number (i.e. 196) is satisfied. 390
members who participated in the meeting held 14,00,000, three-fourth of which works out to 10,50,000 while 210
members who voted for the scheme held 11,00,000 shares. As both the requirements are fulfilled, the scheme is approved
by the requisite majority.

(3)A meeting of members of DEF Limited was convened under the orders of the Court for the purpose of
considering a scheme of compromise and arrangement. The meeting was attended by 300 members holding
10,00,000 shares. 120 members holding 7,00,000 shares in the aggregate voted for the scheme. 140 members
holding 2,00,000 shares in aggregatevoted against the scheme. 40 members holding 1,00,000 shares abstained

46 | P a g e By CA Sanidhya Saraf
from voting. Examine with reference to the relevant provisions of the Companies Act, 2013 whether the scheme
was approved by the requisite majority?
Ans 3: As per section 230 (6), of the Companies Act, 2013 where majority of persons at a meeting held shares
representing 3/4th in value, voting in person or by proxy or by postal ballot, agree to any compromise or
arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order. The majority of
persons representing 3/4th in value shall be counted considering the following:
• the creditors, or
• class of creditors or
• members or
• class of members, as the case may be,
The majority is dual, in number and in value. A simple majority of those voting is sufficient; whereas the ‘three-fourths’
requirement relates to value. The three-fourths value is to be computed with reference to paid-up capital held by
members present and voting at the meeting.
In this case 300 members attended the meeting, but only 260 members voted at the meeting. As 120 members voted
in favor of the scheme the requirement relating to majority in number (i.e. 131) is not satisfied.
260 members who participated in the meeting held 9,00,000 shares, three-fourth of which works out to 6,75,000 while
120 members who voted for the scheme held 7,00,000 shares.The majority representing three-fourths in value
is satisfied.
Thus, in the instant case, the scheme of compromise and arrangement of DEF Limited is not approved as though the value
of shares voting in favor is significantly more, the number of members voting in favor do not exceed the number of
members voting against.

(4)At the meeting of the members of QRS Limited, a scheme of compromise and arrangement was approved
by requisite majority. The National Company Law Tribunal (NCLT) after complying with the provisions, issued
an Order, approving the scheme of compromise and arrangement.
List the matters to be provided in the Order issued by NCLT under Section 230 (7) of the Companies Act,
2013. Also state as to when shall the Order be filed with ROC?
Ans 4: According to section 230(7) of the Companies Act, 2013, an order made by the Tribunal under sub-section (6) shall
provide for all or any of the following matters, namely:—
a) where the compromise or arrangement provides for conversion of preference shares into equity shares, such
preference shareholders shall be given an option to either obtain arrears of dividend in cash or accept equity
shares equal to the value of the dividend payable;
b) the protection of any class of creditors;
c) if the compromise or arrangement results in the variation of the shareholders' rights, it shall be given
effect to under the provisions of section 48;
d) if the compromise or arrangement is agreed to by the creditors under sub-section (6), any proceedings
pending before the Board for Industrial and Financial Reconstruction established under section 4 of the Sick
Industrial Companies (Special Provisions) Act, 1985 shall abate;

47 | P a g e By CA Sanidhya Saraf
 e) such other matters including exit offer to dissenting shareholders, if any, as are in the opinion of the Tribunal
necessary to effectively implement the terms of the compromise or arrangement.
The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt
of the order. [Section 230(8)]

5. A Ltd. (transferee company) decides to acquire B Ltd. (transferor company) by acquiring its shares via a process
of takeover u/s 235 of the Companies Act, 2013. A Ltd. prepared a scheme by which an offer was made to the
shareholders of B Ltd. The offer was made on 1st August, 2019. The offer remained open for four months.
Such offer was approved byshareholders having 92% value of the shares. Subsequently A Ltd. gave a notice
to the remaining dissenting shareholders that it desires to acquire their shares. Such notice was given on 5th
January, 2019. Certain dissenting shareholders made an application to the Tribunal that acquisition of their
shares should not be permitted. However, their application was dismissed by the Tribunal. Hence A Ltd.
acquired shares of 5% of the dissenting shareholders (out of balance 8%). The shareholding of balance 3%
shareholders continued to remain with them. Comment on the validity of such a takeover by A Ltd.
Ans 5: The basic requirements as to acquisition of shares mentioned in Section 235 of the Companies Act, 2013
are as follows:-
1. The scheme or contract involving the transfer of shares in a company (transferor company) to another
company (transferee company) has been approved by theholders of not less than 9/10th (90%) in value of
the shares whose transfer is involved.
2. The approval of 9/10th shareholders in value shall be received within 4 months after making of an offer in that
behalf by the transferee company.
3. The transferee company shall express his desire to acquire the remaining shares of dissenting shareholder in 2
months after the expiry of the said 4 months and shall give notice in the prescribed manner to any dissenting
shareholder that it desires to acquire his shares.
The transferee company shall be entitled as well as bound to acquire the shares of the dissenting shareholders where
no application is made by any dissenting shareholders to the tribunal in 1 month of receipt of notice of acquisition of
shares or where an application is made by any dissenting shareholder but such application is dismissed by the
Tribunal.
In the given case, since application made by the dissenting shareholders has been dismissedby the Tribunal, A Ltd is
bound to acquire all the shares of the dissenting shareholders i.e. entire 8% shareholding.
Since A Ltd acquired only 5% shareholding of the dissenting shareholders, this is in contravention of Section 235
of the Companies Act, 2013. Hence, the takeover of B Ltd. by A Ltd. is invalid.

48 | P a g e By CA Sanidhya Saraf
 6.Prevention of Oppression and Mismanagement
Section A- Test Your Knowledge

(1)Due to the impending recession, the profits of Super Star Car Manufacturers Limited decreased considerably for the
financial year 2020-2021 and therefore, its Board of Directors did not recommend any dividend for the year. At the
Annual General Meeting of Super Star Car Manufacturers Limited, a group of shareholders objected to the Board’s
decision of not recommending any dividend and coerced the directors to reverse such decision. On refusal bythe
Board, the disappointed members felt oppressed and filed a complaint with the National Company Law Tribunal (NCLT)
against the action of the Board. In the given scenario, which option out of the four mentioned below, is the most
appropriate:
(a) The contention of the shareholders of Super Star Car Manufacturers Limited who filed a complaint with NCLT
against the action of the Board for not recommending dividend shallbe tenable.
(b) The action of the Board of Directors of Super Star Car Manufacturers Limited, not to recommend any dividend
shall amount to oppression and mismanagement.
(c) The action of the Board of Directors of Super Star Car Manufacturers Limited who actedin the interest of the
company by not recommending any dividend shall not amount to oppression and mismanagement.
(d) Both (a) and (b).
Ans 1: (c)

(2)The shareholders of Viable Plastic Industries Limited passed a special resolution at the Extra- ordinary General (EGM)
of the company to alter the Articles of Association and empower Board of Directors to transfer the shares of any
shareholder who competes with the business of the company. Mr. Akshat, one of the minority shareholders of Viable
Plastic Industries Limited who was carrying on a competing business of manufacturing plastic bottles and containers as
well as marketing them, challenged the validity of the alteration to be made in the Articles of Association and claimed such
action as oppression against minority. Which of the option from the following four is applicable in the given
situation?
(a) The action of Mr. Akshat challenging the validity of the alteration to be made in the Articles of Association and
claiming such action as oppression against minority is not valid since the Articles are being altered after following
the due process of law.
(b) The action of Mr. Akshat challenging the validity of the alteration to be made in the Articles of Association and
claiming such action as oppression against minority is not valid since the Articles are being altered in the interest
of the company.
(c) The action of Mr. Akshat challenging the validity of the alteration to be made in the Articles of Association and
claiming such action as oppression against minority is valid since the act complained of is oppressive and
prejudicial to the interest of the company.
(d) Both (a) and (b)
Ans 2: (d)

49 | P a g e By CA Sanidhya Saraf
(3)Meenu Automotive Private Limited, whose issued and paid-up share capital is ₹ 1,00,00,000 consisting of 1,00,000 lakh
equity shares of ₹ 100 each, has 150 shareholders as per its Register of Members. Some of the shareholders are contemplating
to file an application before the National Company Law Tribunal (NCLT) alleging various acts of fraud and mismanagement.
Which of the following options correctly indicates as to who can apply to the National Company Law Tribunal (NCLT) for
relief against oppression and mismanagement happening in a company having share capital:
(a) In the above case such shareholders who are contemplating to file an application beforethe National Company
Law Tribunal (NCLT) alleging various acts of fraud and mismanagement must be minimum one hundred and
twenty five or not less than one-fifth of the total number of members, whichever is more, or any member or
members holding at least one-fifth of the issued share capital on which all the calls have been paid.
(b) In the above case such shareholders who are contemplating to file an application before the National Company
Law Tribunal (NCLT) alleging various acts of fraud and mismanagement must be minimum fifty or not less
than one-tenth of the total number of members, whichever is more, or any member or members holding at least
one-fifteenth of the issued share capital on which all the calls have been paid.
(c) In the above case such shareholders who are contemplating to file an application beforethe National Company
Law Tribunal (NCLT) alleging various acts of fraud and mismanagement must be minimum seventy five or
not less than one-fifth of the total number of members, whichever is less, or any member or members holding at
least one- twentieth of the issued share capital on which all the calls have been paid.
(d) In the above case such shareholders who are contemplating to file an application beforethe National Company
Law Tribunal (NCLT) alleging various acts of fraud and mismanagement must be minimum one hundred or
not less than one-tenth of the total number of members, whichever is less, or any member or members holding at
least one- tenth of the issued share capital on which all the calls have been paid.
Ans 3: (d)

(4)The issued and paid-up equity share capital of Golden Kalash Clothes Private Limited i s ₹ 1,00,00,000
(10,00,000 equity shares of ₹ 10 each) which is held by ten shareholders. Jasmine holds 80,000 equity shares worth ₹
8,00,000. Sensing oppression and mismanagement in the company, she is contemplating to apply to the National
Company Law Tribunal (NCLT) for relief.
Out of the following four options which one is applicable in the given situation:
(a) Jasmine being a single member cannot apply for relief against oppression andmismanagement propagated by
Golden Kalash Clothes Private Limited since at least 60% of total shareholders must apply for such relief i.e. at
least 6 shareholders in the present case.
(b) Jasmine cannot apply to the National Company Law Tribunal (NCLT) for relief against oppression and
mismanagement since she is holding 80,000 equity shares worth ₹ 8,00,000 which is less than one-tenth of
the issued and paid-up equity share capital of Golden Kalash Clothes Private Limited.
(c) Jasmine, being one-tenth of the total number of shareholders, can apply to the National Company Law Tribunal
(NCLT) for relief against oppression and mismanagement propagated by Golden Kalash Clothes Private
Limited.
(d) Jasmine, being a single member, cannot apply for relief against oppression and mismanagement propagated
by Golden Kalash Clothes Private Limited since at least 50% of total shareholders must apply for such relief i.e.
at least 5 shareholders in the present case.
Ans 4: (c)

50 | P a g e By CA Sanidhya Saraf
(5)For the past five years Mr. Rohtash was the holder 5,500 shares of Delta Software Solutions Ltd. which has issued share
capital of ₹ 5,00,000 divided into 50,000 shares of ₹ 10 each. Mr. Rohtash was in the knowledge of some material changes
that had taken place in Delta Software Solutions Ltd. and according to him they were prejudicial to the interest of members
as well as the company.To contain the directors from continuing with unjustified changes, he wanted to make an
application to the jurisdictional National Company Law Tribunal (NCLT) under Section 241 of the Companies Act, 2013.
However, before Mr. Rohtash could proceed further and file the application with NCLT, he expired within one hour because
of severe heart attack. Immediately thereafter, his only son Umang, a child specialist working in the Government Hospital,
inherited his 5,500 shares.Is it possible for Umang to file an application with the jurisdictional National Company Law Tribunal
(NCLT) highlighting the conduct of the affairs of the company in a manner which is prejudicial to the interest of members
as well as the company. Choose the correct option from those given below whether Umang can proceed further:
(a) Though Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to make an application to the
jurisdictional National Company Law Tribunal (NCLT) but his son Umang cannot file the application because he
has not yet completed six months as holder of the shares which he inherited after the death of his father Mr.
Rohtash.
(b) Though Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to makean application to the
jurisdictional National Company Law Tribunal (NCLT) but his son Umang cannot file the application because he
has not yet completed four months as holder of the shares which he inherited after the death of his father Mr.
Rohtash.
(c) Though Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to make an application to the
jurisdictional National Company Law Tribunal (NCLT) but his son Umang cannot file the application because he
has not yet completed three months as holder of the shares which he inherited after the death of his father Mr.
Rohtash.
(d) Since Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to make an application to the
jurisdictional National Company Law Tribunal (NCLT), his son Umangcan also file the application because
he has inherited the 5,500 shares after the death ofhis father Mr. Rohtash.
Ans 5: (d)

(6)Mr. Derek Jonathan, a majority shareholder, represented himself to be the Managing Director of Floyd Ceramics Ltd.,
and also discharged the functions in the capacity as Managing Director. However, he was not formally appointed as
Managing Director of Floyd Ceramics Ltd. A group of six members, holding 1/12th of the issued share capital, which
amounted to 1/10th of paid-upshare capital of the company filed an application with the National Company Law Tribunal
(NCLT) claiming that such an act of Mr. Derek Jonathan constituted oppression. The total number of members of Floyd
Ceramics Ltd. are seventy-two. Which of the following statements is the most appropriate one in the above-mentioned
situation?
(a) The group of six members cannot file an application with National Company Law Tribunal (NCLT) as the strength
of members is less than 1/10th of total number of members of Floyd Ceramics Ltd. However, after filing the
application with NCLT, it is within the discretion of NCLT to allow the application to be filed even with fewer
number of members.
(b) The group of six members cannot file an application with National Company Law Tribunal (NCLT) since the
members hold less than 1/10th of the issued share capital of the company.
(c) The group of six members cannot file an application with the National Company Law Tribunal (NCLT) since the
given fact pattern does not constitute oppression.

51 | P a g e By CA Sanidhya Saraf
 (d) Since the group of six members holds 1/10th of the paid-up share capital of the company, they can file an
application with the National Company Law Tribunal (NCLT).
Ans 6: (c)

Section B- Descriptive Questions

(1)ABC Private Limited having share capital has eight shareholders. Can a member holding less than one-tenth
of the share capital of the company apply to the Tribunal for relief against oppression and mismanagement?
Give your answer according to the provisions of the Companies Act, 2013.
Ans 1: According to Section 244 of the Companies Act, 2013, in the case of a company having share capital, the following
member(s) have the right to apply to the Tribunal under section 241:
(a) Not less than 100 members of the company or not less than one-tenth of the total number of members,
whichever is less; or
(b) Any member or members holding not less than one-tenth of the issued share capital of the company
provided the applicant(s) have paid all the calls and other sums due on the shares.
In the given case, there are eight shareholders in ABC Private Limited. As per the condition (a) above, 10% of 8 i.e.
1 member can apply to the Tribunal. Therefore, a single member can present a petition to the Tribunal, regardless of the
fact that he holds less than one-tenth of the company’s share capital.

(2)The issued and paid up capital of MNC Limited is ₹ 5 crores consisting of 5,00,000 equity shares of ₹ 100
each. The said company has 500 members. A petition was submitted before the Tribunal signed by 80 members
holding 10,000 equity shares of the company for the purpose of relief against oppression and mismanagement by
the majority shareholders. Examining the provisions of the Companies Act, 2013, decide whether the said petition
is maintainable. Also explain the impact on the maintainability of the above petition, if subsequently 40
members, who had signed the petition, withdraw their consent.
Ans 2: As per the provisions of Section 244 of the Companies Act, 2013, in the case of a company having share capital,
members eligible to apply for oppression and mismanagement shall be lower of the following:
100 members; or
1/10th of the total number of members; or
Members holding not less than 1/10th of the issued share capital of the company.
The share holding pattern of MNC Limited is as follows:
₹ 5,00,00,000 equity share capital held by 500 members
The petition alleging oppression and mismanagement has been made by some members as follows:
(i) No. of members making the petition – 80

52 | P a g e By CA Sanidhya Saraf
 (ii) Amount of share capital held by members making the petition – ₹ 10,00,000 The petition shall be valid if it
has been made by the lowest of the following:
100 members; or

50 members (being 1/10th of 500); or

Members holding ₹ 50,00,000 share capital (being 1/10th of ₹ 5,00,00,000)

As it is evident, the petition made by 80 members meets the eligibility criteria specified under section 244 of the
Companies Act, 2013 as it exceeds the minimum requirement of 50 members in this case. Therefore, the petition
is maintainable.
The consent to be given by a shareholder is reckoned at the beginning of the proceedings. The withdrawal of consent
by any shareholder during the course of proceedings shall not affect the maintainability of the petition [Rajamundhry
Electric Corporation Vs. V. Nageswar Rao A.I.R.].

(3)A group of shareholders consisting of 25 members decide to file a petition before the Tribunal for relief against
oppression and mismanagement by the Board of Directors of Fly By Night Operators Ltd. The company has a total of
300 members and the group of 25 members holds one-tenth of the total paid-up share capital accounting for one-
fifteenth of the issued share capital. The main grievance of the group is that due to mismanagement by the
Board of Directors, the company is incurring losses and the company has not declared any dividends even when
profits were available in the past years for declaration of dividend. In the light of the provisions of the
Companies Act, 2013, advise the group of shareholders regarding the success of (i) getting the petition admitted
and (ii) obtaining relief from the Tribunal.
Ans 3: Section 244 of the Companies Act, 2013 provides the right to apply to the Tribunal for relief against
oppression and mis-management. This right is available only when the petitioners hold the prescribed limit of
shares as indicated below:
(i) In the case of company having a share capital, not less than 100 members of the Company or not less than
one tenth of the total number of its members whichever is less or any member or members holding not less
than one tenth of the issued share capital of the company, provided that the applicant(s) have paid all calls
and other dues on the shares.
(ii) In the case of company not having share capital, not less than one-fifth of the total number of its members.

Since the group of shareholders do not number 100 or hold 1/10th of the issued share capital or constitute 1/10th of
the total number of members, they have no right to approach the Tribunal for relief.
However, .the Tribunal may, on an application made to it waive all or any of the requirements specified in (i) or (ii) so as
to enable the members to apply under section 241.
As regards obtaining relief from Tribunal, continuous losses cannot, by itself, be regarded as oppression (Ashok Betelnut
Co. P. Ltd. vs. M.K. Chandrakanth).
Similarly, failure to declare dividends or payment of low dividends also does not amount to oppression. (Thomas
Veddon V.J. vs. Kuttanad Robber Co. Ltd).

53 | P a g e By CA Sanidhya Saraf
Thus, the shareholders may not succeed in getting any relief from Tribunal.

(4)A group of members of XYZ Limited has filed a petition before the Tribunal alleging various acts of oppression
and mismanagement by the majority shareholders of the company. The Petitioner group holds 12% of the issued
share capital of the company. During the pendency of the petition, some of the petitioners holding about 5%
of the issued share capital of the company wish to disassociate themselves from the petition and they along with
the other majority shareholders have submitted before the Tribunal that the petition may be dismissed on the
ground of non-maintainability. Examine their contention having regard to the provisions of the Companies Act,
2013.
Ans 4: The argument of the majority shareholders that the petition may be dismissed on the groundof non-maintability
is not correct. The proceedings shall continue irrespective of withdrawal of consent by some petitioners. It has been held
by the Supreme Court in Rajmundhry Electric Corporation vs. V. Nageswar Rao, AIR (1956) SC 213 that if some of the
consenting members have subsequent to the presentation of the petition withdraw their consent, it would not affect the
right of the applicant to proceed with the petition. Thus, the validity of the petition must be judged on the facts as
they were at the time of presentation. Neither the right of the applicants to proceed with the petition nor the jurisdiction
of Tribunal to dispose it of on its merits can be affected by events happening subsequent to the presentation of the
petition.

(5)A group of members holding 380 lakh issued share capital in Zolo Tech Ltd. a listed public company having total
issued share capital of 15000 lakhs as per latest financial statements alleged that company Board of Directors is
conducting an act which is ultra vires the Articles or Memorandum of the company without altering the
Memorandum or Articles of the company. They make an application to Tribunal (NCLT) to restrain the company
from doing such ultra- vires act. With reference to the provision of Companies Act, 2013 ascertain whether the
application will be admitted by tribunal (NCLT).
Ans 5: According to section 245 of Companies Act, 2013, such number of member or members, depositor or depositors
or any class of them, as the case may be, as are indicated in sub- section (2) may, if they are of the opinion that the
management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the
company or its members or depositors, file an application before the Tribunal on behalf of the members or depositors for
seeking an order, to restrain the company from committing an act which is ultra- vires the Articles or Memorandum
of the company.
Requisite number of members to make Application under Section 245 (1) for Class Action for depositors is as prescribed
in Rule 84 (4) of the National Company Law Tribunal Rules, 2016. Accordingly, in case of a company having a share
capital the requisite number of member or members to file an application under section 245 shall be:-
(a) at least five per cent. of the total number of members of the company; or
(b) one hundred members of the company, whichever is less; or
(c) In case of a listed company, member or members holding not less than two per cent.of the issued share
capital of the company.
In the above case, members holding 2.53% (380/15000*100) of issued share capital of Zolo Tech Ltd. which is a listed
company make an application before Tribunal (NCLT). Hence as members meet condition of 2% of issued share capital,
therefore their application can be admitted by the NCLT.

54 | P a g e By CA Sanidhya Saraf
 7.Winding Up
Section A- Test Your Knowledge

(1)A petition of winding up was filed against Raman Technology Ltd. under section 272 of the Companies Act, 2013. The
Tribunal appointed a Company Liquidator and passed a windingup order on 20th of January 2023. As per the
requirement of the Companies Act, 2013, state the correct statement with respect to submission of the Liquidator’s
report to the Tribunal:
a) Liquidator shall submit its report to Tribunal within 30 days of its appointment by Tribunal.
b) Liquidator shall submit its report to Tribunal within 45 days from winding up order.
c) Liquidator shall submit its report to Tribunal within 60 days from winding up order.
d) Liquidator shall submit its report to Tribunal within 90 days of its appointment by Tribunal.
Ans 1: (c)

(2)The order for the winding up of a company shall operate in favour of:
a) All contributories of the company
b) All the creditors of the company
c) All the contributories and the creditors of the company
d) The Central/State Government
Ans 2: (c)

(3)Mr. Raghav was appointed as Provisional Liquidator for X Ltd. against which an application for winding up was
filed before the Tribunal. It is noteworthy that Mr. Raghav was having a shareholding in the same company. Enumerate the
legal position of Mr. Raghav in the said condition in the light of the provisions related to its appointment in X Ltd. as
per theCompanies Act, 2013:
a) Mr. Raghav cannot be appointed in X Ltd. because of having a shareholding in thesame company.
b) Mr. Raghav can be appointed in X Ltd. irrespective of his interest in the companybecause of his prior
shareholding in the company before appointment.
c) Mr. Raghav can be appointed in X Ltd. with the prior intimation to the Tribunal.
d) Mr. Raghav can be appointed in X Ltd. by disclosing his shareholding by filing ofdeclaration within
7 days from the date of his appointment by the Tribunal.
Ans 3: (d)

(4)State, which amongst the following grounds, is incorrect for removal of the ProvisionalLiquidator or the
Company Liquidator, as liquidator of the company:

55 | P a g e By CA Sanidhya Saraf
 a) Independent working having no conflict of interest.
b) Professional incompetence or failure to exercise due care and diligence inperformance of the powers
and functions
c) Misconduct
d) Fraud or misfeasance
Ans 4: (a)

(5)The Periodical reports made by the Company Liquidator to the Tribunal with respect to the progress of the winding
up, to be submitted at the end of each……………….., may be reviewed by ………….on an application by …………..
a) Quarter, Tribunal, Central Government
b) Half Year, Tribunal, Company Liquidator
c) Financial Year, Advisory Committee, Tribunal
d) Quarter, Tribunal, Company Liquidator
Ans 5: (d)

Section B- Descriptive Questions

(1)Info-tech Overtrading Ltd. was ordered to be wound up compulsory by an order dated 10thMarch, 2022 by
the Tribunal. The official liquidator who had taken control of the assets and other records of the company
had noticed the following:
The Managing Director of the company had sold certain properties belonging to the company to a private
company in which his son was interested causing loss to the company to the extent of INR 50 lakhs. The sale
took place on 15th October, 2021.
Examine what action the official liquidator can take in this matter, having regard to the provisions of the
Companies Act, 2013.
Ans 1: The official liquidator can invoke the provisions contained in Section 328 of the Companies Act, 2013 to
recover the assets of the company so sold. According to Section 328, if the Tribunal is satisfied that there is a
preference transfer of property, movable or immovable, or any delivery of goods, payment, execution made, taken or
done by or against a company within six months before making winding up application, the Tribunal may order as
it may think fit and may declare such transaction invalid and restore the position.

Since in the present case, the sale of immovable property took place on 15th October, 2021 and the company went
into liquidation on 10th March, 2022 i.e., within 6 months before the winding up of the company and since the sale has
resulted in a loss of INR 50 lakhs to the company.
The official liquidator will be able to succeed in proving the case under Section 328 by way of fraudulent preference
as the property was sold to a private company in which the son ofthe Managing Director was interested.

56 | P a g e By CA Sanidhya Saraf
Hence, the transaction made will be regarded as invalid and the position will be restored asif no transfer of
immovable property had been made.

(2)XYZ Limited is being would up by the Tribunal. All the assets of the company have been charged to the
company’s bankers to whom the company owes ₹ 5 crores. The company owes following amounts to others:
Dues to workers – ₹ 1,25,00,000
Taxes Payable to Government – ₹ 30,00,000
Unsecured Creditors – ₹ 60,00,000
You are required to compute with the reference to the provisions of the Companies Act, 2013 the amount each
kind of creditors is likely to get if the amount realized by the official liquidatorfrom the sale of secured assets
and available for distribution among creditors is only ₹4,00,00,000/-.
Ans 2: Section 326 of the Companies Act, 2013 talks about the overriding preferential payments to be made from
the amount realized from the assets to be distributed to various kind of creditors. According to the proviso given in
section 326 the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of
the workmen to the extent of their portion.
𝐴𝑚𝑜𝑢𝑛𝑡 𝑅𝑒𝑎𝑙𝑖𝑠𝑒𝑑∗𝑊𝑜𝑟𝑘𝑚𝑒𝑛′ 𝑠 𝐷𝑢𝑒𝑠
Workmen’s Share to Secured Assets =
𝑊𝑜𝑟𝑘𝑚𝑒𝑛′ 𝑠 𝐷𝑢𝑒𝑠+𝑆𝑒𝑐𝑢𝑟𝑒𝑑 𝐿𝑜𝑎𝑛
40000000∗12500000
Workmen’s Share to Secured Assets =
12500000+50000000

1
=40000000*
5

Workmen's Share to Secured Assets= 80,00,000

Amount available to secured creditor is ₹ 400 Lakhs – 80 Lakhs = ₹ 320 Lakhs
Hence, no amount is available for payment of government dues and unsecured creditors.

(3)Suman Info-tech Ltd. was ordered to be compulsory wound up by an order dated 10th March, 2022 by the
Tribunal. The official liquidator who had taken control of the assets and other records of the company had
noticed that:
(i)One of the contributories whose calls were pending to be paid is about to leave India to evade payment of
calls and;
(ii)A person having books of accounts of the company in his possession might abscondto avoid examination
of books of account in respect of the affairs of the company.

57 | P a g e By CA Sanidhya Saraf
Apprehending such possibilities, Tribunal detained such contributory for next 6 months disallowing him to leave
India as well as arrested and seized books of account from the person who might possibly abscond to avoid
examination of the affairs of the company.
Referring to the provisions of Companies Act, 2013, answer the following in the current scenario:
(i)What is the validity of Tribunal's order for detention of contributory disallowing him to leave India?
(ii)Is it correct on Tribunal's part to arrest and seize books of accounts from the person planning to abscond to
avoid examination of books of accounts in respect of the affairs of the company?
Ans 3: According to Section 301 of the Companies Act, 2013, at any time either before or after passing a winding
up order, if the Tribunal is satisfied that
• a contributory or
• a person having property, accounts or papers of the company in his possession
is about to leave India or otherwise to abscond, or is about to remove or conceal any of his property, for the purpose of
evading payment of calls or of avoiding examination respecting the affairs of the company,
the Tribunal may cause—
(a) the contributory to be detained until such time as the Tribunal may order; and
(b) his books and papers and movable property to be seized and safely kept until suchtime as the Tribunal
may order.
In the instant case, by considering the above provisions:
(i) The Tribunal’s order for detention of contributory for next 6 months disallowing him to leave India, is valid.
(ii) It is correct on the part of Tribunal to arrest and seize books of accounts from the person planning to abscond
to avoid examination of books of accounts in respect of the affairs of the company.

(4)Due to an unprecedented flood, all the fixed assets of a Company were damaged extensively beyond renovation
or repair. The costs of replacement of assets were huge and the sum insured on the fixed assets did not cover
all the assets. Therefore, the operations of the Company were permanently discontinued. Meanwhile, based
on a winding-up petition filed by the secured creditors, the High Court passed a winding-up order. The
workers of the Company opposed the winding-up petition and also filed an appeal against the winding-up order.
The workers were not sure whether their appeal would be heard in the winding-up proceedings. Examine,
under the provisions of the Companies Act, 2013, whether the appeal filed by the workers would succeed and
their dues / interest will be protected in priority?
Ans 4: According to section 279 of the Companies Act, 2013, when a winding up order has been passed or a provisional
liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if pending at the date of the
winding up order, shall be proceeded with, by or against the company, except with the leave of the Tribunal and
subject to such terms as the Tribunal may impose.
It is further provided that any application to the Tribunal seeking leave under this section shall be disposed of by
the Tribunal within sixty days.

58 | P a g e By CA Sanidhya Saraf
However, the above provision shall not apply to any proceeding pending in appeal before the Supreme Court or a High
Court.
According to section 325/326/327 of the Companies Act, 2013, in the winding up of a company under this Act, the
workmen's dues shall be paid in priority to all other debts ranking pari passu with secured creditors.
As per the facts of the case, the High Court has already passed a winding up order of the company. Hence, the
workmen can appeal against the winding up order but only with the leave of the Tribunal and subject to such terms
as the Tribunal may impose. Further, the dues/ interest of the workmen will be protected in priority as workmen's dues
shall be paid in priority to all other debts ranking pari passu with secured creditors.

(5)Clarks Clocks Limited, has made default in filing financial statements and annual returns fora continuous
period of four financial years ending on 31st March, 2022. The Registrar of Companies having jurisdiction
approached the Central Government to accord sanction to present a petition to Tribunal (NCLT) for the
winding up of the company in accordance with the above ground under Section 272 of the Companies
Act, 2013.
Examine the validity of the action of ROC, keeping in view the relevant provisions of the Companies Act, 2013.
State the time limit for passing an order by the Tribunal under Section 273 of the Companies Act, 2013?.
Ans 5: Validity of ROC's action: According to Section 271(d) of the Companies Act, 2013, a Company may, on a
petition under Section 272, be wound up by the Tribunal, if the Company has made a default in filing with the Registrar
its financial statements or annual returns for immediately preceding five consecutive financial years.
In the instant case, the move by RoC to present a petition to Tribunal for the winding up of Clarks Clocks Limited is
not valid as the Company has made default in filing financial statements and annual returns for a continuous period of
four financial years ending on 31st March, 2022.
Time limit for passing of an Order under section 273: An order under section 273 of the Act shall be made within
ninety days from the date of presentation of the petition.

59 | P a g e By CA Sanidhya Saraf
 8.Miscellaneous Provisions
Section A- Test Your Knowledge

(1)With an Authorised Capital of ₹ 45,00,000 (divided into 4,50,000 equity shares of ₹ 10 each) and issued and paid-
up capital of ₹ 25,00,000 (divided into 2,50,000 equity shares of ₹ 10 each), Amber Prabhat Nidhi Limited
incorporated in 2018 at Balaghat, Madhya Pradesh by Loknath, Premnath and other trusted people, wants to issue a certain
number of preference shares to its members. Being the Financial Advisor of Amber Prabhat Nidhi Limited, you are required
to advise regarding the quantum of Preference shares which can issued to the members by choosing the correct
option from those given below:
a) Amber Prabhat Nidhi Limited can issue Preference Shares equivalent to Authorised Equity Share Capital after
carrying out due amendment in the Capital Clause.
b) Amber Prabhat Nidhi Limited cannot issue Preference Shares.
c) Amber Prabhat Nidhi Limited can issue Preference Shares upto 50% of the Authorised Equity Share Capital after
carrying out due amendment in the Capital Clause
d) Amber Prabhat Nidhi Limited can issue Preference Shares upto 75% of the Authorised Equity Share Capital after
carrying out due amendment in the Capital Clause
Ans 1: (b)

(2)Who amongst the following may file an application for the restoration of the name of thecompany in the
register of company and within the period of:
a) The Company itself and within 2 years from the date of passing of the order dissolving the company
b) The authorised officials of the company and within 2 years from the date of passing of the order dissolving
the company
c) NCLT and within 3 years from the date of passing of the order dissolving the company
d) Any person aggrieved by an order of the Registrar and within 3 years from the date of passing of the order
dissolving the company
Ans 2: (d)

(3)Within how many days authority will grant certificate of registration to the applicant to carryon the activities
of a registered valuer?
a) within 30 days of the receipt of application, including the time given by the authority for presenting
additional documents, information or clarification, or appearing in person, as the case may be.
b) within 45 days of receipt of the application, including the time given by the authority for presenting
additional documents, information or clarification, or appearing in person, as the case may be.
c) within 60 days of receipt of the application, excluding the time given by the authority for presenting
additional documents, information or clarification, or appearing in person, as the case may be.

60 | P a g e By CA Sanidhya Saraf
 d) within 90 days of receipt of the application, excluding the time given by the authority for presenting
additional documents, information or clarification, or appearing in person, as the case may be
Ans 3: (c)

(4)A workman aggrieved by the company having its name struck off from the register of companies, applies to
Tribunal for after 15 years of the publication of strikeoff of the name of the company in the gazette. Comment on the
validity of filing of application by workman in the light of the companies Act, 2013:
a) Workman is not eligible to file an application for restoration of name of the company in the register of
companies.
b) Only Company is eligible to file an application for restoration of name of the company in the register of
companies but before expiry of 20 years of the notice from the publication in the Official Gazette.
c) Workman is eligible to file an application for restoration of name of the company in the register of companies but
before expiry of 20 years of the notice from the publication in the Official Gazette.
d) Company, member, creditor or a workman are eligible to file an application for restoration of name of the
company in the register of companies but after expiry of 20 years of the notice from the publication in the
Official Gazette.
Ans 4: (c)

(5)Pankaj Nidhi Limited, incorporated under section 406 of the Companies Act, 2013. Pankaj Nidhi Limited wants to enter
into an agreement for acquiring another company by purchase of its securities. Now the management of the Pankaj Nidhi
Limited is in dilemma with respect to the requirement of entering into such an agreement. Pankaj Nidhi Limited approached
you to providewith the best course of action considering the provisions of the Companies Act, 2013.
a) As per the Nidhi Rules, 2014, Nidhi company can enter into an agreement for acquiring other company by
purchase of its securities provided the Nidhi company has passed a special resolution in its general meeting and
also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi.
b) As per the Nidhi Rules, 2014, Nidhi Company can acquire or purchase securities of any other company or control
the composition of the Board of Directors of any other company in any manner whatsoever or enter into
any arrangement for the change of its management.
c) As per the Nidhi Rules, 2014, Nidhi company can enter into an agreement for acquiring other company by
purchase of its securities provided the Nidhi company has passed a special resolution in its general meeting
and have obtained the previous approval of the Registrar of Companies (ROC) having jurisdiction over such
Nidhi.
d) As per the Nidhi Rules, 2014, Nidhi company can enter into an agreement for acquiring other company by
purchase of its securities provided the Nidhi company has passed a special resolution in its general meeting or
have obtained the previous approval of the Registrar of Companies (Roc) having jurisdiction over such Nidhi.
Ans 5: (b)

61 | P a g e By CA Sanidhya Saraf
 Section B - Descriptive Questions

(1)Explain the meaning of 'Fraud' in relation to the affairs of a company and the punishment provided for
the same in Section 447 of the Companies Act, 2013.
Ans 1: As per the explanation given to section 447 of the Companies Act, 2013, ‘Fraud’ in relationto affairs of a
company or anybody corporate, includes any act, omission, concealment of any fact or abuse of position committed by
any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage
from, or injure the interests of, the company or its shareholders or its creditors or any other person, whether or not
there is any wrongful gain or wrongful loss.
“Wrongful gain” means the gain by unlawful means of property to which the person gaining is not legally entitled.
“Wrongful loss” means, the loss by unlawful means of property to which the person losing is legally entitled.
Punishment:
(i) Without prejudice to any liability including repayment of any debt under this Act or any other law for the time
being in force, any person who is found to be guilty of fraud involving an amount of at least ten lakh
rupees or one per cent of the turnover of the company, whichever is lower, shall be punishable with
imprisonment for a term which shall not be less than six months but which may extend to ten years and
shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend
to three times the amount involved in the fraud.
(ii) Where the fraud in question involves public interest, the term of imprisonment shall not be less than three
years.
(iii) However, where the fraud involves an amount less than ten lakh rupees or one per cent of the turnover of
the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be
punishable with imprisonment for a term which may extend to five years or with fine which may extend to
fifty lakh rupees or with both.

(2)JKL Research Development Limited is a registered Public Limited Company. The company has a unique
business idea emerging from research and development in a new area. However, it is a future project and the
company has no significant accounting transactions and business activities at present. The company desires to
obtain the status of a 'Dormant Company'. Advise the company regarding the provisions of the Companies Act,
2013 in this regard and the procedure to be followed in this regard.
Ans 2: The provisions related to the Dormant companies is covered under section 455 of the Companies Act, 2013.
According to provisions-
1. a company is formed and registered under this Act for the purpose of a future project or to hold an asset or
intellectual property and has no significant accounting transaction.
2. Such company or an inactive company may make an application to the Registrar in such manner as may be
prescribed for obtaining the status of a dormant company.
3. The Registrar shall allow the status of a dormant company to the applicant and issue a certificate after
consideration of the application.

62 | P a g e By CA Sanidhya Saraf
 4. The Registrar shall maintain a register of dormant companies in such form as may be prescribed.
In case of a company which has not filed financial statements or annual returns for two financial years consecutively,
the Register shall issue a notice to that company and enter the name of such company in the register maintained for
dormant companies.
A dormant company shall have such minimum number of directors, file such documents and pay such annual fee as
may be prescribed to the Registrar to retain its dormant status in the register and may become an active company on an
application made in this behalf accompanied by such documents and fee as may be prescribed. However, the
Registrar shall strike off the name of a dormant company from the register of dormant companies, which has failed to
comply with the requirements of this section.
Thus, JKL Research Development Limited may follow the above procedure to obtain the status of a ‘Dormant
Company’.

(3)Gulmohar Ltd. is a company registered in India for last 5 years. Since last 2 financial years, it has not
been carrying on any business or operations and has not filed financial statements and annual returns saying
that it has not made any significant accounting transaction during the last two financial years. Considering the
current situation, Directors of the Company is contemplating to apply to Registrar of Companies to obtain status of
dormant or inactive company. Advise them on:
Whether Gulmohar Ltd. is eligible to apply to Registrar of Companies to obtain dormant status for the company?
(i)Will your answer be different if Gulmohar Ltd is continuing payment of fees to Registrar of Companies and
payment of rentals for its office and accounting records for last two financials years?
(ii)Is special resolution in general meeting a pre-requisite to make an application to Registrar of Companies
for obtaining the status of dormant company?
(iii)What will be your answer if it is found after making an application of dormant company to Registrar of
Companies that an investigation is pending against the company which was ordered 6 months ago?
Ans 3: (i) According to section 455 of the Companies Act, 2013, an inactive company may makean application to the
Registrar in such manner as may be prescribed for obtaining the status of a dormant company.
Here, “inactive company” means a company which has not been carrying on any business or operation, or has not
made any significant accounting transaction during the last two financial years, or has not filed financial statements and
annual returns during the last two financial years.
Gulmohar Ltd., since from last two years is not carrying on business or operations and has not filed financial
statements and annual returns saying it has not made any significant accounting transaction during the last two financial
years. Thus, it falls within the definition of inactive company as stated above and hence is eligible to apply to Registrar
of Companies to obtain the status of Dormant Company.
(ii)According to Explanation to section 455, “significant accounting transaction” means any transaction other
than—
(1) payment of fees by a company to the Registrar;
(2) payments made by it to fulfill the requirements of this Act or any other law;

63 | P a g e By CA Sanidhya Saraf
 (3) allotment of shares to fulfill the requirements of this Act; and
(4) payments for maintenance of its office and records.
Thus, Gulmohar Ltd. is still eligible to apply to the Registrar of Companies to obtain the status of Dormant company
even if it has continued ‘payment of fees to Registrar of Companies and payment of rentals for its office and
accounting records’ for last two years, as these transactions have been kept outside the purview of significant accounting
transactions.
(iii)According to the Rule 3 of the Companies (Miscellaneous) Rules, 2014, a company may make an application in
prescribed form to the Registrar for obtaining the statusof a Dormant Company in accordance with the provisions
of section 455 after passing a special resolution to this effect in the general meeting of the company or after issuing
a notice to all the shareholders of the company for this purpose and obtaining consent of at least 3/4thshareholders (in
value).
Thus, special resolution is a pre- requisite to make an application to Registrar of Companies for obtaining the
status of dormant company.
(iv)According to the Rule 3 of the Companies (Miscellaneous) Rules, 2014, a company shall be eligible to apply under
this rule only, if no inspection, inquiry or investigation has been ordered or taken up or carried out against the
company.
According to section 455(6), the Registrar shall strike off the name of a dormant company from the register of dormant
companies, which has failed to comply with the requirements of section 455.
In the given case, Gulmohar Ltd. was not eligible to apply for the status of a dormant company as an investigation was
pending against the company which was ordered 6 months ago. But since, it has already made an application and then it
came to the light about the pending investigation against the company, the Registrar shall not register it as a dormant
company and if already registered as a dormant company, strike off the name of a dormant company from the
register of dormant companies as the company has contravened the necessary requirements.

64 | P a g e By CA Sanidhya Saraf
 9.Compounding of Offences, Adjudication, Special Courts,
National Company Law Tribunal and Appellate Tribunal
Section A- Test Your Knowledge

(1)As per the Companies Act, 2013, every petition filed before the Tribunal shall be disposed of:
(a) within 1 month from the date application is admitted
(b) within 2 months from the date of first hearing
(c) within 3 months from the date of its presentation
(d) within 6 months from its filing
Ans 1: (c)

(2)Trial of an offence under the Companies Act, by special court shall be of such an offence:
(a) which is punishable with imprisonment for a term exceeding one year
(b) which is punishable with imprisonment for a term not exceeding one year
(c) which is punishable with imprisonment for a term exceeding three years
(d) which is punishable with imprisonment for a term not exceeding three years
Ans 2: (d)

(3)Makhija Developers Limited, being unsatisfied with the order given by the NCLT, desires to prefer an appeal against the
order of the NCLT. You, as a legal advisor to Makhija Developers Limited, are required to provide them with the best
course of action available considering the provisions of the Companies Act, 2013.
(a) Makhija Developers Limited cannot prefer an appeal against an order passed by NCLT Mumbai u/s 9 of the
Insolvency and Bankruptcy Code as Interim Resolution Professionalis already appointed.
(b) Makhija Developers Limited may be able to prefer an appeal against the order passed by NCLT Mumbai within a
period of 45 days from the date of order of copy made available to Makhija Developers Limited.
(c) Makhija Developers Limited cannot prefer an appeal against an order passed by NCLT Mumbai u/s 9 of the
Insolvency and Bankruptcy Code as reasonable opportunity of being heard was given to Makhija Developers
Limited.
(d) Makhija Developers Limited may be able to prefer an appeal against the order passed by NCLT Mumbai within
a period of 60 days from the date of order of copy made available to Makhija Developers Limited.
Ans 3: (b)

(4)Requisite number of shareholders of Vimaan Aerospace Limited, which has been incorporated under the
Companies Act, 2013, filed an application with the National Company Law Tribunal (NCLT) under Section 241

65 | P a g e By CA Sanidhya Saraf
highlighting the mismanagement in the conduct of the affairs of the company. Taking cognizance of the application,
the National Company Law
Tribunal (NCLT) passed an order under Section 420 on November 23, 2021, providing the sought after relief to the
shareholders of Vimaan Aerospace Limited. On finding some mistake in the order, the shareholders brought the same
to the notice of NCLT for rectification. You are required to select the correct statement from those given below as
to the circumstances under which NCLT would be able to amend its order and the maximum period which the said order
can be amended:
(a) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at any
time within a period of six monthsfrom the date of such order provided no appeal has been made against
the said order.
(b) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at
any time within a period of one year from the date of such order provided no appeal has been made against
the said order.
(c) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at
any time within a period of two years from the date of such order provided no appeal has been made against
the said order.
(d) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at
any time within a period of three years from the date of such order provided no appeal has been made
against the said order.
Ans 4: (c)

Section B- Descriptive Questions

(1)In the annual general meeting of XYZ Ltd., while discussing on the matter of retirement and reappointment of
director Mr. X, allegations of fraud and financial irregularities were levelled against him by some members. This
resulted into chaos in the meeting. The situation was normal only after the Chairman declared about initiating
an inquiry against the director. Mr. X, however, could not be re-appointed in the meeting. The matter was
published in the newspapers next day. On the basis of such news, whether the court can take cognizance of
the matter and take action against the director on its own?
Justify your answer with reference to the provisions of the Companies Act, 2013.
Ans 1: Section 439 of the Companies Act, 2013 provides that offences under the Act shall be non- cognizable. As per
this section:

66 | P a g e By CA Sanidhya Saraf
 1. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, every offence under this Act
except the offences referred to in sub section (6) of section 212 shall be deemed to be non-cognizable within
the meaning of the said Code.
2. No court shall take cognizance of any offence under this Act which is alleged to have been committed by any
company or any officer thereof, except on the complaint in writing of the Registrar, a shareholder or a
member of the company, or of a person authorized by the Central Government in that behalf.
Thus, in the given situation, the court shall not initiate any Suo moto action against the director Mr. X without receiving
any complaint in writing of the Registrar of Companies, a shareholder of the company or of a person authorized by
the Central Government in this behalf.

(2)What is the object of Constituting Panel for Mediation and Conciliation under the Companies Act, 2013?
Who can file application for mediation and conciliation?
Ans 2: Under section 442 of the Companies Act, 2013, it is provided that the Central Government shall maintain a
panel of experts for mediation between the parties during pendency of any proceedings before the Central Government or
the Tribunal or the Appellate Tribunal under the Act. In common parlance, mediation means intervention of some
third party in a dispute with the intention to resolve the dispute. Similarly, conciliation means the powers of adjusting
or settling disputes in a friendly manner through extra judicial means. The object behind the panel is to dispose the matter
pending before the Government / Tribunal as mentioned above.
Filing of application: Application for mediation and conciliation can be made by:
(A) any parties to the proceedings (It shall be accompanied with such fees and in such form as may be
prescribed)
(B) The Central Government or the Tribunal or the Appellate Tribunal before which any proceeding is pending may,
Suo moto refer any matter pertaining to such proceedingto such number of experts as it may deem fit.

(3)Mr. Joseph, a member of Armaments Ltd., is aggrieved due to failure of the company to make payment of
dividend declared in the AGM held in August 2015. He makes a complaint, in writing, before the court of
competent jurisdiction within the prescribed period of limitation, but the court refused to take cognizance
of the alleged offence. Explain the legal position in this regard under the Companies Act, 2013.
Also state the offences under the Companies Act, 2013 which are cognizable and which are non-cognizable.
Ans 3: Cognizance of offence: A court shall take cognizance of any offence under this Act whichis alleged to
have been committed by any company or any officer thereof only on the written complaint of -
(a) The Registrar,
(b) A shareholder of the company
(c) A member of the company, or
(d) Of a person authorised by the Central Government in that behalf.
Provided that the court may take cognizance of offences relating to issue and transfer of securities and non-payment of
dividend, on a complaint in writing, by a person authorized bythe Securities and Exchange Board of India.

67 | P a g e By CA Sanidhya Saraf
In the present case, Mr. Joseph, a member of Armaments Ltd. is aggrieved due to failure of the company to make payment
of dividend declared in the AGM held in August 2015. He makes a complaint, in writing, before the court of competent
jurisdiction within the prescribed period of limitation, but the court refused to take cognizance of the alleged offence.
Here, the Court shall take cognizance of the offence relating to nonpayment of dividend as the shareholder have
made a complaint in writing before the competent jurisdiction.
Cognizable and non-cognizable offences: Overriding the provisions given under the Codeof Criminal Procedure,
1973, every offence under the Companies Act, 2013 except the offences referred to in section 212(6) of the
Companies Act, 2013, which deals with the investigation into affairs of company by serious fraud investigation office,
shall be deemed to be non-cognizable within the meaning of the said Code.
Therefore, the offences as covered under section 212(6) shall now be deemed to be cognizable where police officer
may arrest person without warrant and are non-bailable. The Companies Act, 2013 establishes the offence covered under
section 212(6) as a public wrong which has to be prevented and controlled. This non-bailable nature of the offences deter
the offender and the others from committing further and similar offences.

(4)Excel Ltd. committed an offence under the Companies Act, 2013. The offences falls within the jurisdiction
of a special court of Bundi district in which the registered office of Excel Ltd was situated. However, in that
Bundi district, there were two special courts one in X placeand other in Y place. Identify the jurisdiction of
special court for trial of an offences committed by Excel Ltd.
Ans 4: All offences which are punishable in this Act with imprisonment of 2 years or more, shall be triable only by the
special court established for the area in which the registered office of the company in relation to which the offence is
committed. According to section 436 where there are more special courts than one for such area, by such one of
them as may be specified in this behalf by the High court concerned.
Accordingly, in the given case, there are more than one special court in Bundi district where registered office of Excel
Ltd. is situated. The jurisdiction for trial in special court will be specified by H.C of the State (i.e. Rajasthan).

(5)Before imposing penalty, the adjudicating authority issued a show cause notice to the company and its
officers on 15th July, 2020 to represent before the adjudicating authority. The notice was served on them on
31st July 2020. State the time period within which the company and its officers who were called upon may be
present before the Adjudicating authority.
Ans 5: Issue of written notice by an adjudicating officer: Rule 3 of the Companies (Adjudication of Penalties)
Rules, 2014 read with section 454 of the Companies Act, 2013, states that before adjudging penalty, the adjudicating
officer shall issue a written notice in the specified manner-
• to the company and
• to officer of the co.mpany who is in default or
• any other person, as the case may be
to show cause, within such period as may be specified in the notice (not being less than fifteen days and more than
thirty days from the date of service thereon), why the penalty should not be imposed on it or him.

68 | P a g e By CA Sanidhya Saraf
Accordingly, the company and its officers shall be presented before the Adjudicating Authority on or before 30th August
2020 (being not more than 30 days from the date of service of notice thereon).

(6)On an application filed before Tribunal from one of the shareholder of Company, Tribunal (NCLT) passed
order on 20th December 2019 without the consent of parties. Mr. Rama, one of the party to the proceeding
whose family condition was not good so didn’t take much interest in order of tribunal but after few days due to
aggrieved by the order, he filed an appeal before Appellate Tribunal (NCLAT) on 15th March 2020 showing
sufficient cause of delay for not filling appeal up to 45 days from the date of order. The Appellate Tribunal has
passed an order dated 30th April 2020, Mr. Rama was not satisfied and made application to Supreme Court on
30th September 2020 against the order of the Appellate Tribunal.
Considering the given situation, examine whether Appeal filed before the Supreme Court is admissible after
showing cause of delay.
Ans 6: According to Section 423 of the Companies Act, 2013, any person aggrieved by an order of the Appellate
Tribunal may prefer an appeal to the Supreme Court on any question of law arising out of Appellate Tribunal’s
order.
Every appeal shall be filed within a period of 60 days from the date on which a copy of the order of the Appellate
Tribunal is made available to the person aggrieved and shall be in such form, and accompanied by such fees, as may
be prescribed.
Supreme Court may entertain an appeal even after the expiry of the said period of 60 days from the date aforesaid,
but within a further period not exceeding 60 Days, if it is satisfied that the appellant was prevented by sufficient
cause from filing the appeal within period.
In above case, since Mr. Rama even aggrieved by order of Appellate Tribunal filed application before Supreme Court on
30th September 2020. But as Supreme Court can entertain appeal only up to 60 days + 60 Days (Extension if sufficient
cause). Since this appeal was filed beyond 120 days by Mr. Rama, so, appeal filed before the Supreme Court is not
admissible.

69 | P a g e By CA Sanidhya Saraf
 10. E-filing
Section A- Test Your Knowledge

(1)The nomenclature MCA21 reflects -------------

(a) that the portal contains 21 e-Forms to be filed electronically by a company during anyfinancial year.
(b) that it is linked with Section 21 of the Companies Act, 2013.
(c) that MCA is capable of fulfilling the aspirations of its stakeholders in the 21 st century.
(d) that it contains 21 standardised features.
Ans 1: (c)

(2)Electronic form for the specified purposes shall be:

(a) exclusive, or in the alternative or in addition to the physical form.
(b) inclusive, or in the alternative or in addition to the physical form.
(c) extensible or in the alternative or in addition to the physical form.
(d) inclusive, or in the alternative or complementary to the physical form.
Ans 2: (a)

(3)SRN stands for:

(a) Service Request Notice
(b) Service Reporting Number
(c) Signature Request Notice
(d) Service Request Number
Ans 3: (d)

(4)Apoorva Medicines Limited shall be required to file financial statements through XBRL:
(a) If it has a paid-up capital of ₹ 5 crores and above.
(b) If it has a turnover of ₹ 75 crores and above.
(c) Both (a) and (b).
(d) Neither (a) nor (b).
Ans 4: (a)

70 | P a g e By CA Sanidhya Saraf
(5)XBRL stands for:
(a) eXtension Business Reporting Language
(b) eXtensible Business Reporting Language
(c) eXclusive Business Reporting Language
(d) eXtended Business Reporting Language
Ans 5: (b)

Section B- Descriptive Questions

(1)Discuss some of the salient features of MCA21.

Ans (1): Some of the salient features of MCA21 are as under:
1. Online Portal: It is the online portal of the Ministry of Corporate Affairs (MCA). It has made all company
related information accessible to various stakeholders and the general public.
2. Convenient: It provides the services on the basis of anywhere and anytime with speed and certainty.
3. Easy and secure access: It provides easy and secure access of the MCA services to various stakeholders.
4. Full Automation: It has fully automated all the processes, thus making India globally competitive.
5. Multiple Payment Options: It provides multiple options to make online payment.
6. SRN: It provides Service Request Number (SRN) which enables the stakeholders to track their service
request.

(2) (i) Raashi, one of the directors of Puneet Mechanics Private Limited, submitted e-Form ADT-3 (Notice
of Resignation by the Auditor) through e-mail. Whether the same constitutes valid e-filing.
(ii) Which companies are exempted from filing of financial statements under the Companies (Filing of
Documents and Forms in Extensible Business Reporting Language) Rules, 2015?
Ans (2): (i) Submission of e-Form ADT-3 (Notice of Resignation by the Auditor) through e-mail by Raashi, one of the
directors of Puneet Mechanics Private Limited, does not constitute valid e-filing. Therefore, she needs to avoid such
kind of a submission.
(ii)According to second Proviso to Rule 3 (1) of the Companies (Filing of Documents and Forms in Extensible Business
Reporting Language) Rules, 2015 following companies are exempted from filing of financial statements under these
rules:
a) Non-banking financial companies;
b) Housing Finance Companies;
c) Companies engaged in the business of Banking;
d) Companies belonging to Insurance sector.

(3)State the process involved in e-Filing.

71 | P a g e By CA Sanidhya Saraf
Ans (3): The process involved in e-Filing of various documents is stated as under:
1. One-time registration of the user at the on-line Portal of MCA21 for creating hispersonalised login ID.
2. Registration of Digital Signature Certificate (DSC).
3. Downloading of e-form and instruction kit, if required.
4. After downloading, the user is required to complete the e-form by filling it either online or off-line.
5. On-line filling requires active internet connection.
6. The e-Forms can be filled-in and signed digitally using an Acrobat Reader.
7. The user can use “pre-fill” option. This will fill-up certain fields of e-forms automatically.
8. The user can do “automated pre-scrutiny” of e-form. This will ensure that the e-Formis complete in all
respects and is good for e-filing.
9. The user may also attach supporting documents, if applicable.
10. After completion, the user is required to sign the e-form using the Digital SignatureCertificate (DSC).
11. Now, the e-form is ready for e-filing at the MCA21 portal using specialized functionality that is provided
at the portal.
12. If the e-Form is correct in all respects, the user can proceed to the next step of making payment.
13. For making payment of applicable fee, the user will be asked to choose any one of the following methods
of payment:
o Credit Card/Debit Card
o Internet Banking
o NEFT
o Physical Challan (i.e. at Bank counter)
o Pay Later
In case payment mode is Credit Card/Debit Card, Internet Banking, etc. the payment will be made instantly. System
will generate a receipt that the user can retain as a part of his records.
In the case of challan payment, a fully completed challan will be generated by the system that can be printed by the
user and taken to any of the nearest authorized branch. He may choose to pay either through cash (limits as stipulated
by Law will be applicable) or through a local cheque or DD. The acknowledged copy of the challan will serve as
the receipt.
Once the user has made the payment in the Bank following the challan payment system, the filing shall be complete.
Based on confirmation of payment by the bank to the MCA21 system, the document will be transmitted to the Back
Office for further processing.
In case of Pay Later, e-form can be uploaded on MCA portal in one step and make the payment at later point of time
using the online payment mode i.e., Credit Card/Debit Card, Internet Banking, etc. An e-challan generated at the
time of uploading e-form contains the validity date within which payment shall be made by the user.
14. e-Filing will be completed once the necessary payment is remitted either through electronic payment means
or through the challan-based method.
15. The user will also be provided a facility at MCA21 portal to check if the e-filing has been completed
successfully.

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MODULE 2
SECTION B: SECURITIES LAWS

1.THE SECURITIES AND EXCHANGE BOARD OF INDIA

ACT,1992

Section A- Test Your Knowledge

(1)Aayush, Bipin, Caroll & Co., a firm of Chartered Accountants, was appointed as statutory auditor of Ruchika
Flavours Limited, a listed company, for the financial year 2019-20. Mr. Bipin is the engaging partner of the said
audit with a team of fifteen members. While conducting audit of the financial statements of Ruchika Flavours Limited,
two members of Mr. Bipin’s team, who are Chartered Accountants, passed the information to their friends and relatives
disclosing that the profits of Ruchika Flavours Limited for this year are increasing by 25% in comparison to the previous
audited financial year. At the time of passing the information, it was not available in the public domain through the
company. Certain personswho were in possession of this information, purchased the shares of Ruchika Flavours Limited
at a low price. After the audited financial statements came into public domain, the market price of the shares
increased sharply and they made profit by selling the shares, earlier purchased at low price, at the enhanced market
price. You are required to select the correct option which indicates whether it is a case of insider trading or not and if it is
a case of insider trading then the quantum of penalty that can be levied under the Securities and Exchange Board of
India, Act, 1992.
a) It is not a case of insider trading since both the Chartered Accountants are part of statutory audit team and
therefore, are not restricted to use any information relating to Ruchika Flavours Limited.
b) It is not a case of insider trading since the information disclosed by both the Chartered Accountants of statutory
audit team is not a price-sensitive information.
c) It is a case of insider trading and therefore, the penalty leviable would be not less than ₹10 lacs but which
may extend to ₹ 25 crores or three times of profits made out of insider trading, whichever is higher.
d) It is a case of insider trading and therefore, the penalty leviable would be not less than ₹ 25 crores or three
times of profits made out of insider trading, whichever is lower.
Ans 1: (c)

(2)Akshara Builders and Developers Ltd., a company listed on BSE Limited, is contemplating upper revision in the
rate of interest of its existing 12% bonds by 1% so as to make them 13% bonds with effect from August 14, 2021. The said
proposal is to be laid before the Board of Directors at a Board Meeting to be held on July 14, 2021. From the following
options, choose the one which correctly indicates the latest date by which Akshara Builders and DevelopersLtd. is
required to intimate the BSE Limited about the Board Meeting where increase in rate of interest is being considered,

73 | P a g e By CA Sanidhya Saraf
keeping in view the Regulation 29 of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015:
a) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 1, 2021.
b) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 3, 2021.
c) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 5, 2021.
d) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 7, 2021.
Ans 2: (b)

(3)W Ltd. made the following compliances for the June 2022 quarter, as required by SEBI(LODR) Regulations, 2015 :-
1) It submitted its unaudited quarterly financial statements to the recognised stock exchange on 31st July,
2022.
2) It submitted its quarterly compliance report on corporate governance on 10th July, 2022.
What shall be the last date of submission of quarterly financial statements to the stock exchange for W Ltd., in case
W Ltd. was not able to submit the same on 31st July, 2022, and whether it can be submitted in unaudited form also?
a) 15th August, 2022 and no, it needs to be submitted in audited form.
b) 31st August, 2022 and yes, it can be submitted in unaudited form.
c) 31st July, 2022 and no, it needs to be submitted in audited form.
d) 15th August, 2022 and yes, it can be submitted in unaudited form.
Ans 3: (d)

(4)Mr. Amar is holding the post of directorship in following Listed entities- LE 1, LE 2, LE 3, LE4, LE 5 LE 6,
and LE 7 as on January 2020. He received an offer of directorship from LE 8 in April 2020. Whether Amar can
join the LE 8?
a) Yes, as per the SEBI(LODR)Regulation, directorship is restricted to 8 listed entities. Hence Mr. Amar can.
b) Yes, as per the SEBI(LODR)Regulation read with the companies Act, 2013, Mr. Amar can accept
directorship in 10 listed compa.nies.
c) No, as per the SEBI(LODR)Regulation, directorship cannot be in more than sevenlisted entities with effect
from April 1, 2020, Mr. Amar cannot.
d) Yes, as no restriction is marked on holding of directorship in the Listed companies.
Ans 4: (c)

(5)As per SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, noacquirer shall acquire shares
or voting rights in a target company which taken together with shares or voting rights, if any, held by him and by persons

74 | P a g e By CA Sanidhya Saraf
acting in concert with him in such target company, entitle them to exercise ____ of the voting rights in such target
company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target
company:
a) Ten percent or more
b) Twenty per cent or more
c) Twenty-five per cent or more
d) Fifty per cent or more
Ans 5: (c)

Section B- Descriptive Questions

(1)A group of complainants have alleged that Mr. Z, a Member of the Securities and Exchange Board of India
(SEBI) has pecuniary interest in some of the cases that came up before the Board and that he misused his
position and therefore, he should be removed from his office. The complainants seek your advice. Advise.
Ans 1: Removal of Member of the SEBI (Section 6 of the Securities and Exchange Board of India Act, 1992)
According to section 6 of the Securities and Exchange Board of India Act, 1992, the Central Government shall have
the power to remove a member appointed to the Board, if he/she :
(i) is, or at any time has been adjudicated as insolvent;
(ii) is of unsound mind and stands so declared by a competent court;
(iii) has been convicted of an offence which, in the opinion of the Central Government, involves a moral turpitude.
(iv) has, in the opinion of the Central Government so abused his position as to render his continuance in office
detrimental to the public interest.
Before removing a member, he will be given a reasonable opportunity of being heard in the matter.
In the present case, a group of complainants have alleged that Mr. Z, a member of the SEBI has pecuniary interest
in some of the cases that came up before the Board and he misused his position and therefore, he should be
removed from his office.
Here, above complainants may approach the Central Government for removal of Mr. Z, a member of the SEBI and if
the Central Government is of the opinion that Mr. Z has so abused his position as to render his continuation in office
detrimental to the public interest, the Central Government may remove Mr. Z from his office after giving him a reasonable
opportunity ofbeing heard in the matter.

(2)SEBI received complaints from some investors alleging that ABC Ltd. and some brokers are indulging in price
manipulation in the shares of ABC Ltd. Explain the powers that can be exercised by SEBI under the Securities
and Exchange Board of India Act, 1992 in case the allegations are found to be correct.

75 | P a g e By CA Sanidhya Saraf
Ans 2: Price manipulation in the shares of ABC Ltd. can be considered as fraudulent and unfair trade practices relating to
securities market. In this case SEBI may exercise the following powers under section 11(4) of securities and Exchange
Board of India Act, 1992.
(i) Suspend the trading of any security (in this case the securities of ABC Ltd.) in a recognized stock
exchange.
(ii) Restrain persons (in this case ABC Ltd.) from accessing the securities market. It can also prohibit any
person associated with securities market (i.e. brokers who have indulged in price manipulation) to buy, sell
or deal in securities market.
SEBI may issue the above orders for reasons to be recorded in writing. SEBI shall, either before or after passing such
orders give an opportunity of hearing to company and brokers concerned (proviso 2 to Section 11(4)) SEBI may also
appoint an adjudicating officer who may levy penalty under section 15 HA after holding an enquiry in the prescribed
manner. According to section 15HA if any person indulges in fraudulent and unfair trade practices relating to securities,
he shall be leviable to a penalty which shall not be less than five lakh rupees but which may extend to twenty-five
crore rupees or three times the amount of profits made out of such practices, whichever is higher.
Prohibition on manipulation and deceptive practices: Further according to section 12A, no person shall directly
or indirectly indulge in following (i.e.) (a) using in manipulative or deceptive device in connection with purchase, sale
or securities listed (b) Employ any scheme or device to defraud in connection with dealing in securities which are
listed (c) engage in an act which would operate as fraud or deceit upon any person in connection with dealing in securities
which are listed. SEBI may impose penalty which shall not be less than one lakh rupees but which may extend to one
crore rupees. (Section 15 HB).

(3)Clever who is registered as an Intermediary fails to enter into an agreement with his clientand hence
penalised by SEBI under section 15B of the SEBI Act. Advise Mr. Clever as to what remedies are available
to him against the order of SEBI.
Ans 3: Remedies against SEBI order: Section 15B of the Securities and Exchange Board of IndiaAct, 1992 lays
down that if any person, who is registered as an intermediary and is required under this Act or any rules or
regulations made there under, to enterr into an agreement with his client, fails to enter into such agreement, he shall
be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever
is less. Mr. Clever has been penalised under the above mentioned provision. Two remedies are available to Mr.
Clever in this matter:-
(i) Appeal to the Securities Appellate Tribunal: Section 15T of the SEBI Act, (1) any person aggrieved,
—
(a) by an order of the Board made, on and after the commencement of theSecurities Laws (Second Amendment)
Act, 1999, under this Act, or the rules or regulations made there under; or
(b) by an order made by an adjudicating officer under this Act; or
(c) by an order of the Insurance Regulatory and Development Authority or the Pension Fund Regulatory and
Development Authority, may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the
matter.
Every appeal shall be filed within a period of forty-five days from the date on which a copy of the order made by the
Board or the Adjudicating Officer or the Insurance Regulatory and Development Authority or the Pension Fund

76 | P a g e By CA Sanidhya Saraf
Regulatory and Development Authority, as the case may be, is received by him and it shall be in such form and be
accompanied by such fee as may be prescribed:
Provided that the Securities Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-
five days if it is satisfied that there was sufficient cause for not filing it within that period.
On receipt of an appeal under sub-section (1), the Securities Appellate Tribunal may, after giving the parties to the appeal,
an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order
appealed against.
The Securities Appellate Tribunal shall send a copy of every order made by it to the Board, or the Insurance Regulatory
and Development Authority or the Pension Fund Regulatory and Development Authority, as the case may be the parties
to the appeal and to the concerned Adjudicating Officer.
The appeal filed before the Securities Appellate Tribunal under sub-section (1) shall be dealt with by it as
expeditiously as possible and endeavor shall be made by it to dispose of the appeal finally within six months from
the date of receipt of the appeal.
(ii) Appeal to the Supreme Court: Section 15Z of the SEBI Act, 1992 provides that any person aggrieved by
any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court
within 60 days from the date of communication of the decision or order to him on any question of fact
or law arising out of such order. The Supreme Court may, if it is satisfied that the appellant was prevented
by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period
not exceeding 60 days.

(4)A group of investors are upset with the functioning of two leading stock brokers of Calcutta Stock Exchange
and want to make a complaint to SEBI for intervention and redressal of their grievances. Explain briefly the purpose
of establishing SEBI and what type of defaults by thestock brokers come within the purview of SEBI Act,
1992.
Ans 4: The Securities and Exchange Board of India (SEBI) was established primarily for the purpose of
1. to protect the interests of investors in securities
2. to promote the development of securities market
3. to regulate the securities market and
4. For matters connected therewith and incidental thereto.
The following defaults by stock brokers come within the purview of SEBI Act:
(a) Any failure on the part of the stock broker to issue contract notes in the form and inthe manner specified
by the Stock Exchange.
(b) Any failure on the part of the broker to deliver any security or to make payment of the amount due to the investor
in the manner or within the period specified in the regulations.
(c) Any collection of charges by way of brokerage in excess of the brokerage as specified in the regulations.
(Section 15 F, SEBI Act, 1992)

77 | P a g e By CA Sanidhya Saraf
(5)Mr. Raman, an investor is not satisfied with the dealings of his stock broker who is registered with Delhi
Stock Exchange. Mr. Raman approaches you to guide him regarding the avenues available to him for making a
complaint against the stock broker under Securities and Exchange Board of India Act, 1992 and also the
grounds on which such complaint can be made. You are required to briefly explain the answer to his
queries.
Ans 5: Securities and Exchange Board of India (SEBI) was established for regulating the various aspects of stock
market. One of its functions is to register and regulate the stock brokers. In the light of this, Mr. Raman is advised
that the complaint against the erring stock broker may be submitted to SEBI.
The grounds on which or the defaults for which complaints may be made to SEBI are as follows:
(a) Any failure on the part of the stock broker to issue contract notes in the form andmanner specified by
the stock exchange of which the stock broker is a member.
(b) Any failure to deliver any security or any failure to make payment of the amount dueto the investor in the
manner within the period specified in the regulations.
(c) Any collection of charges by way of brokerage which is in excess of the brokeragespecified in the
regulations.

(6)On the complaint of Mr. Kamlesh Gupta, after enquiry SEBI finds that Mr. P. Mehta, a Chief Executive Officer
of the Company, on the basis of unpublished price sensitive information, has indulged in the trading of the
securities of that company. Explain, on the basis of the said finding, what action SEBI can take against Mr. P. Mehta
under the Securities and Exchange Board of India Act, 1992.
Ans 6: Section 15G of the Securities and Exchange Board of India (SEBI) Act, 1992 deals withpenalty for
Insider Trading. According to this, if any insider
(i) either on his own behalf or on behalf of any other person, deals in securities of a body corporate on any stock
exchange on the basis of any unpublished price sensitive information; or
(ii) communicates any unpublished price sensitive information to any person, with or without his request for such
information except as required in the ordinary cause of business or under any law, or
(iii) counsels or procures for, any other person to deal in any securities of any body corporate on the basis of
unpublished price sensitive information,
shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits made out of insider trading,
whichever is higher. As such SEBI can, after following the prescribed procedure, impose a penalty on Mr. P. Mehta.
The maximum penalty that SEBI can impose is Rupees twenty-five crores or three times the amount of profits made
out of insider trading, whichever is higher.

(7)Securities and Exchange Board of India (SEBI) has undertaken inspection of books of accounts and
records of LR Ltd., a listed public company. Specify the measures which may be taken by SEBI under the
Securities and Exchange Board of India Act, 1992 to protect the interest of investors and securities market, on
completion of such inquiry.

78 | P a g e By CA Sanidhya Saraf
Ans 7: As per section 11 (4) of the Securities and Exchange Board of India Act, 1992, the Board may, by an order,
for reasons to be recorded in writing, in the interest of investors or securities market, take any of the following measures,
either pending investigation or inquiry or on completion of such investigation or inquiry, namely:—
1. suspend the trading of any security in a recognised stock exchange;
2. restrain persons from accessing the securities market and prohibit any person associated with securities
market to buy, sell or deal in securities;
3. suspend any office-bearer of any stock exchange or self-regulatory organization from holding such position;
4. impound and retain the proceeds or securities in respect of any transaction which is under investigation;
5. attach, for a period not exceeding ninety days, bank accounts or other property of any intermediary or any person
associated with the securities market in any manner involved in violation of any of the provisions of this Act,
or the rules or the regulations made thereunder:
Provided that the Board shall, within ninety days of the said attachment, obtain confirmation of the said attachment from
the Special Court, established under section 26A, having jurisdiction and on such confirmation, such attachment shall
continue during the pendency of the aforesaid proceedings and on conclusion of the said proceedings, the
provisions of section 28A shall apply:
Provided further that only property, bank account or accounts or any transaction entered therein, so far as it relates
to the proceeds actually involved in violation of any of the provisions of this Act, or the rules or the regulations
made thereunder shall be allowed to be attached.
6. direct any intermediary or any person associated with the securities market in any manner not to dispose of or
alienate an asset forming part of any transaction which is under investigation.
The amount disgorged, pursuant to a direction issued, under the SEBI Act or the Securities Contracts (Regulation)
Act, 1956 or the Depositories Act, 1996, as the case may be-
o shall be credited to the Investor Protection and Education Fund (IPEF) established by the Board, and
o such amount shall be utilised by the Board in accordance with the regulations made under this Act.’’.
Provided that the Board may take any of the measures specified in clause (d) or clause
(e) or clause (f), in respect of any listed public company or a public company (notbeing intermediaries referred
to in section 12) which intends to get its securities listedon any recognised stock exchange where the Board has
reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade
practices relating to securities market :
Provided further that the Board shall, either before or after passing such orders, give an opportunity of hearing to
such intermediaries or persons concerned.
Penalty: The Board may, by an order, for reasons to be recorded in writing, levy penalty under sections 15A, 15B,
15C, 15D, 15E, 15EA, 15EB, 15F, 15G, 15H, 15HA and 15HB after holding an inquiry in the prescribed manner.

(8)Mr. S, a member of MN Ltd., obtained an order from the Securities and Exchange Board of India (SEBI)
against the company. But the company failed to redress the grievance of Mr. S within the time fixed. Consequently,
SEBI imposed penalty on the company. The company, however, did not pay the penalty also. State how the
penalty can be recovered from the company?

79 | P a g e By CA Sanidhya Saraf
Ans 8: According to Section 28A of the Securities and Exchange Board of India Act, 1992, if a person fails to pay
the penalty imposed by the adjudicating officer or fails to comply with any direction of the Board for refund of monies
or fails to comply with a direction of disgorgement order issued under section 11B or fails to pay any fees due to the
Board, the Recovery Officer may draw up under his signature a statement /certificate in the specified form specifying the
amount due from the person and shall proceed to recover from such person the amount specified in the certificate
by one or more of the following modes, namely:
a) attachment and sale of the person’s movable property;
b) attachment of the person’s bank accounts;
c) attachment and sale of the person’s immovable property;
d) arrest of the person and his detention in prison;
e) appointing a receiver for the management of the person’s movable and immovable properties.
The expression ‘Recovery Officer’ means any officer of the Board who may be authorized by general or special order in
writing, to exercise the powers of a Recovery Officer. The Recovery Officer shall be empowered to seek the
assistance of the local district administration while exercising the powers.

(9)The composition of Audit Committee of M/s MKBTC Limited, an unlisted Public Company, as on 31-3-2019
comprised of 7 Directors including 4 Independent Directors. The majority of the members of the Audit Committee
has the ability to read and understand the financial statements but none of them has accounting or related
financial management expertise. The Company listed its Securities in a recognized Stock Exchange in the month of
August 2019. Referring to the regulations of Securities and Exchange Board of India [Listing Obligations and
Disclosure Requirements] Regulations 2015, decide whether the existing Audit Committee can continue
after listing of its Securities?
Ans 9: Audit Committee: According to Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, every listed entity shall constitute a qualified and independent audit committee which shall
have:
a) Minimum three directors as members.
b) At least Two-thirds of the members of audit committee shall be independent directors.
c) All members of audit committee shall be financially literate and at least one member shall have accounting
or related financial management expertise.
As per the facts of the question, M/s MKBTC Limited, listed its securities in a recognised stock exchange in
the month of August, 2019. In order to comply with the requirements of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the company requires to do the following:
(i) The audit committee of M/s MKBTC Limited already has 7 directors as members, which is in compliance.
(ii) The audit committee has 4 directors as independent directors. However, once the company gets listed, at least
5 [7*(2/3)] directors shall be independent directors. Thus, they need to change the composition of audit
committee once the company gets listed on stock exchange.
(iii) In the existing audit committee though majority of the members have the ability to readand understand the
financial statement but none of them has accounting or related financial management expertise. However, once
the company gets listed it is required that all members of audit committee shall be financially literate and
at least one member shall have accounting or related financial management expertise. Hence, it is required that

80 | P a g e By CA Sanidhya Saraf
 the company should appoint at least one member in the audit committee who shall have accounting or related
financial management expertise.
In view of above, the existing audit committee cannot continue after listing of its securities.

(10)Mr. Zubin (Member of SEBI) was adjudged as an insolvent by the Adjudicating authority.As of that,
a group of complainants have alleged that Mr. Zubin while rendering of his services in office may be biased in
the performance of his duties. Working in such a state of position by him, may be detrimental to the public
interest and so should be removed from his office. Advise in the given situation, the tenability of maintenance
of complaint against Mr. Zubin.
Ans 10: According to section 6 of the Securities and Exchange Board of India Act, 1992, the Central Government shall
have the power to remove a member appointed to the Board, if he/she:
(i) is, or at any time has been adjudicated as insolvent;
(ii) is of unsound mind and stands so declared by a competent court;
(iii) has been convicted of an offence which, in the opinion of the Central Government, involves a moral
turpitude.
(iv) has, in the opinion of the Central Government so abused his position as to render his continuance in office
detrimental to the public interest.
Before removing a member, he will be given a reasonable opportunity of being heard in the matter.
In the present case, a group of complainants have alleged that Mr. Zubin, a member of the SEBI is being adjudicated
as an insolvent. His state of position may effect on rendering of his services in a biased manner. This may be unfavorable
to the public interest and so should be removed from his office.
Here, above complainants may approach the Central Government for removal of Mr. Zubin, and if the Central
Government is of the opinion that Mr. Zubin was not competent in rendering of his services/duties in a office as a
member of the Board. The Central Government may remove Mr. Zubin from his office in compliance with the said
provision.

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 PART II: ECONOMIC LAWS

1.The Foreign Exchange Management Act, 1999

Section A- Test Your Knowledge

(1)In September, 2020, Mr. Purshottam Saha visited Atlanta as well as Athens and thereafter, London and Berlin on a
month-long business trip, for which he withdrew foreign exchange to the extent of US$ 50,000 from his banker State
Bank of India, New Delhi branch. In December, 2020 he further, withdrew US$ 50,000 from SBI and remitted the same
to his son Raviyansh Saha who was studying in Toronto, Canada. In the first week of January, 2021, he sent his ailing
mother Mrs. Savita Saha for a specialised treatment along with his wife Mrs. Rashmi Sahato Seattle where his younger
brother Pranav Saha, holder of Green Card, is residing. For the purpose of his mother’s treatment and to help Pranav Saha
to meet increased expenses, he requested his banker SBI to remit US$ 75,000 to Pranav Saha’s account maintained with
Citibank, Seattle. In February, 2021, Mr. Purshottam Saha’s daughter Devanshi Saha got engaged and she opted for a
‘destination marriage’ to be held in August, 2021 in Zurich, Switzerland. While on a trip to Dubai in the last week of
March, 2021, he again withdrew US$ 35,000 to be used by him and Devanshi Saha for meeting various trip expenses
including shopping in Dubai. Later, the event manager gave an estimate of US$ 2,50,000 for the wedding of Devanshi
Saha at Zurich, Switzerland. Which option do you think is the correct one in the light of applicable provisions of
Foreign Exchange Management Act, 1999 including obtaining of prior approval, if any, from Reserve Bank of India
since Mr. Purshottam Saha withdrew foreign exchange on various occasions from his banker State Bank of India.
a) In respect of withdrawal of foreign exchange on various occasions from his banker State Bank of India and remitting
the same outside India during the financial year 2020-21, Mr. Purshottam Saha is not required to obtain any prior
approval.
b) In respect of withdrawal of US$ 35,000 in the last week of March, 2021, for a trip to Dubai, Mr. Purshottam
Saha must have obtained prior approval of Reserve Bank of India since the maximum amount of foreign exchange
that can be withdrawn in a financial year is US$ 1,75,000.
c) After withdrawing US$ 1,00,000, Mr. Purshottam Saha must have obtained prior approval of Reserve Bank
of India for the remaining remittances made during the financial year 2020-21, otherwise SBI would not
have permitted further withdrawals.
d) After withdrawing US$ 50,000, Mr. Purshottam Saha must have obtained prior approval of Reserve Bank of
India for the remaining remittances made during the financial year 2020-21, otherwise SBI would not have
permitted further withdrawals.
Ans 1: (a)

(2)M/s. Kedhar Sports Academy, a private coaching club, provides coaching for cricket, football and other similar
sports. It coaches sports aspirants pan India. It also conducts various sports events and campaigns, across the country. In
2022, to mark the 25th year of its operation, a cricket tournament (akin to the format of T-20) is being organized
by M/s. Kedhar Sports Academy in Lancashire, England, in the first half of April. The prize money for the ‘winning
team’ is fixed at USD 40,000 whereas in case of ‘runner-up’, it is pegged at USD 11,000. You are required to choose the

82 | P a g e By CA Sanidhya Saraf
correct option from the four given below which signifies the steps to be taken by M/s. Kedhar Sports Academy for
remittance of the prize money of USD 51,000 (i.e. USD 40,000+USD 11,000) to England keeping in view the relevant
provisions of Foreign Exchange Management Act, 1999:
a) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is required to obtain prior
permission from the Ministry of Human Resource Development (Department of Youth Affairs and Sports).
b) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is required to obtain prior
permission from the Reserve Bank of India.
c) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is not required to obtain any
prior permission from any authority, whatsoever, and it can proceed to make the remittance.
d) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is required to obtain prior
permission from the Ministry of Finance (Department of Economic Affairs).
Ans 2: (c)

(3)Akash Ceramics Limited, an Indian company, holds a commercial plot in Chennai which it intends to sell. M/s. Super
Seller, a real estate broker with its Head Office in the USA, has been appointed by Akash Ceramics Limited to find some
suitable buyers for the said commercial plot in Chennai which is situated at a prime location. M/s. Super Seller identifies
Glory Estate Inc., based out of USA, as the potential buyer. It is to be noted that Glory Estate Inc. is controlled from
India and hence, is a ‘Person Resident in India’ under the applicable provisions of Foreign Exchange Management Act,
1999. A deal is finalised and Glory Estate Inc. agrees to purchase the commercial plot for USD 600,000 (assuming 1
USD = `70). According to the agreement, Akash Ceramics Limited is required to pay commission @ 7% of the sale
proceeds to M/s. Super Seller for arranging the sale of commercial plot to Glory Estate Inc. and commission is to remitted
in USD to the Head Office of M/s. Super Seller located in USA. Considering the relevant provisions of Foreign Exchange
Management Act, 1999, which statement out of the four given below is correct (ignoring TDS implications arising under
the Income-tax Act, 1961):
a) There is no requirement of obtaining prior permission of Reserve Bank of India (RBI) for remittance of
commission upto USD 25,000 by Akash Ceramics Limited to M/s. Super Seller but for the balance commission
of USD 17,000, prior permission of RBI is required to be obtained.
b) There is no requirement of obtaining prior permission of Reserve Bank of India (RBI) for remittance of
commission upto USD 30,000 by Akash Ceramics Limited to M/s. Super Seller but for the balance commission
of USD 12,000, prior permission of RBI is required to be obtained.
c) There is no requirement of obtaining prior permission of Reserve Bank of India (RBI) for remittance of entire
commission of USD 42,000 by Akash Ceramics Limited to M/s. Super Seller.
d) It is mandatory to obtain prior permission of Reserve Bank of India (RBI) for remittance of entire commission
of USD 42,000 by Akash Ceramics Limited to M/s. Super Seller.
Ans 3: (d)

(4)Mr. Raman, a non-resident Indian, has a Systematic Investment Plan (SIP) with a prominent Indian mutual fund. Due
to some impending financial difficulties, he requested his elder brother Mr. Raghav, a resident Indian currently working
as Manager in a multi-national company at Mumbai, to make payment of a few subsequent instalments of SIP on his
behalf. Which option, do you think, correctly signifies whether Mr. Raghav is permitted to undertake such transaction

83 | P a g e By CA Sanidhya Saraf
of paying a few instalments of SIP on behalf of his nonresident brother considering the applicable provisions of the
Foreign Exchange Management Act, 1999:
a) Mr. Raghav is not permitted to undertake such transaction of paying a few instalments of SIP on behalf of
his non-resident brother since it amounts to payment for the credit of a nonresident person.
b) Mr. Raghav is permitted to undertake such transaction of paying a few instalments of SIP on behalf of his
non-resident brother since Mr. Raman is his real brother.
c) Mr. Raghav is permitted to undertake such transaction of paying a few instalments of SIP on behalf of his
non-resident brother only if his employer permits.
d) Mr. Raghav is permitted to undertake such transaction of paying a few instalments of SIP on behalf of his
non-resident brother only if he obtains prior permission of Reserve Bank of India.
Ans 4: (a)

(5)Mohita Periodicals and Mags Publications Limited, having registered office in Chennai, has obtained consultancy
services from an entity based in France for setting up a software programme to strengthen various aspects relating to
publications. The consideration for such consultancy services is required to be paid in foreign currency. The compliance officer
of Mohita Periodicals and Mags Publications Limited, Mrs. Ritika requires your advice regarding the foreign exchange
that can be remitted for the purpose of obtaining consultancy services from abroad without prior approval of Reserve Bank
of India. Out of the following four options, choose the one which correctly portrays the amount of foreign exchange
remittable for the given purpose after considering the provisions of the Foreign Exchange Management Act, 1999 and
regulations made thereunder:
a) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags Publications
Limited for obtaining consultancy services from an entity based inFrance without prior approval of RBI is US$
50,000,000.
b) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags Publications
Limited for obtaining consultancy services from an entity based inFrance without prior approval of RBI is US$
10,000,000.
c) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags Publications
Limited for obtaining consultancy services from an entity based inFrance without prior approval of RBI is US$
5,000,000.
d) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags Publications
Limited for obtaining consultancy services from an entity based inFrance without prior approval of RBI is US$
1,000,000.
Ans 5: (d)

(6)After five years of stay in USA, Mr. Umesh came to India at his paternal place in New Delhi on October 25, 2019, for
the purpose of conducting business with his two younger brothers Rajesh and Somesh and contributed a sum of ` 10,00,000
as his capital. Simultaneously, Mr. Umesh also started a proprietary business of selling artistic brassware, jewelry, etc.
procured directly from the manufacturers based at Moradabad. Within a period of two months after his arrival from
USA, Mr. Umesh established a branch of his proprietary business at Minnesota, USA. You are required choose the
appropriate option with respect to residential status of Mr. Umesh and his branch for the financial year 2020-21 after
considering the applicable provisions of the Foreign Exchange Management Act, 1999:

84 | P a g e By CA Sanidhya Saraf
 a) For the financial year 2020-21, Mr. Umesh and his branch established at Minnesota,USA, are both persons
resident outside India.
b) For the financial year 2020-21, Mr. Umesh is a resident in India but his branchestablished at
Minnesota, USA, is a person resident outside India.
c) For the financial year 2020-21, Mr. Umesh and his branch established at Minnesota,USA, are both persons
resident in India.
d) For the financial year 2020-21, Mr. Umesh is a person resident outside India but his branch established at
Minnesota, USA, is a person resident in India.
Ans 6: (c)

Section B- Descriptive Questions

(1)‘Printex Computer’ is a Singapore based company having several business units all over the world. It has
a unit for manufacturing computer printers with its Headquarters in Pune. It has a Branch in Dubai which is
controlled by the Headquarters in Pune. What would be the residential status under the FEMA, 1999 of printer units
in Pune and that of Dubai branch?
Ans 1: Printex Computer being a Singapore based company would be person resident outside India [(Section 2(w)]. Section
2 (u) defines ‘person’ under clause (viii) thereof, as person would include any agency, office or branch owned or controlled
by such person. The term such person appears to refer to a person who is included in clause (i) to (vi). Accordingly,
Printex unit in Pune, being a branch of a company would be a ‘person’.
Section 2(v) defines a person resident in India. Under clause (iii) thereof person resident in India would include an
office, branch or agency in India owned or controlled by a person resident outside India. Printex unit in Pune is owned or
controlled by a person resident outside India, and hence it, would be a ‘person resident in India.’
However, Dubai Branch though not owned, is controlled by the Printer unit in Pune which is a person resident in India.
Hence, the Dubai Branch is a person resident in India

(2)Mr. Sane, an Indian National desires to obtain Foreign Exchange for the following purposes:
(i)Remittance of US Dollar 50,000 out of winnings on a lottery ticket.
(ii)US Dollar 100,000 for sending a cultural troupe on a tour of U.S.A.
Advise him whether he can get Foreign Exchange and if so, under what conditions?
Ans 2: Under provisions of section 5 of the Foreign Exchange Management Act, 1999 certain Rules have been made
for drawal of Foreign Exchange for Current Account transactions. As per these Rules, Foreign Exchange for some of the Current
Account transactions is prohibited. As regards some other Current Account transactions, Foreign Exchange can be
drawn with prior permission of the Central Government while in case of some Current Account transactions, prior permission
of Reserve Bank of India is required.

85 | P a g e By CA Sanidhya Saraf
 (i) In respect of item No.(i), i.e., remittance out of lottery winnings, such remittance is prohibited and the same
is included in First Schedule to the Foreign ExchangeManagement (Current Account Transactions) Rules,
2000. Hence, Mr. Sane can not withdraw Foreign Exchange for this purpose.
(ii) Foreign Exchange for meeting expenses of cultural tour can be withdrawn by any person after obtaining permission
from Government of India, Ministry of Human Resources Development, (Department of Education and Culture)
as prescribed in Second Schedule to the Foreign Exchange Management (Current Account Transactions) Rules,
2000.
Hence, in respect of item (ii), Mr. Sane can withdraw the Foreign Exchange after obtaining such
permission.
In all the cases, where remittance of Foreign Exchange is allowed, either by general or specific permission, the remitter has
to obtain the Foreign Exchange from an Authorised Person as defined in Section 2(c) read with section 10 of the Foreign
Exchange Management Act, 1999.

(3)State which kind of approval is required for the following transactions under the Foreign Exchange
Management Act, 1999:
(i)X, a Film Star, wants to perform along with associates in New York on the occasion of Diwali for Indians residing
at New York. Foreign Exchange drawal to the extent of US dollars 20,000 is required for this purpose.
(ii)R wants to get his heart surgery done at United Kingdom. Up to what limit Foreign Exchange can be drawn
by him and what are the approvals required?
Ans 3: Approval to the following transactions under FEMA, 1999:
(i) Foreign Exchange drawals for cultural tours require prior permission/approval of the Ministry of Human
Resources Development (Department of Education and Culture) irrespective of the amount of foreign
exchange required. Therefore, in the given case X, the Film Star is required to seek permission of the said
Ministry of the Government of India.
(ii) Individuals can avail of foreign exchange facility within the limit of USD 2,50,000 only. Any additional
remittance in excess of the said limit for the expenses requires an approval from RBI. However in
connection with medical treatment abroad, no approval of the Reserve Bank of India is required. Therefore,
R can draw foreign exchange up to amount estimated by a medical institute offering treatment.

(4)Referring to the provisions of the Foreign Exchange Management Act, 1999, examine whether V, an exporter
is bound to make declaration of a gift of Jewellery valued at ` 20,000 exported from India to United Kingdom.
Ans 4: In accordance with provisions of the FEMA, 1999 as contained in section 7 read with section 8, an exporter shall
make appropriate declaration of the value of the goods being exported and he is also required to repatriate the foreign
exchange due ((to India in respect of such exports to India in the manner within the time as may be prescribed. Under
section 8, the exporter is under an obligation to realise and repatriate to India such foreign. However, if there is an delay
in the receipt of export, it will not be a violation which shall be punishable. Section 8 applies to a resident who shall
take all the reasonable steps, depending upon the individual case.

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There are certain categories of export for which declaration need not be made. These are given under the Regulation 4 of the
Foreign Exchange Management (Export of Goods & Services) Regulations, 2015. According to the regulation, export
of goods by way of gift shall be accompanied by a declaration / undertaking by the exporter confirming that they are
not more than five lakh rupees in value. Taking into consideration the above, since the value of gift of jewellery to V’s friend
in the United Kingdom is less than ` 5 lac in value, declaration (as per the format specified in the regulations) is not
required to be furnished by the exporter to the specified authority.

(5)Referring to the provisions of the Foreign Exchange Management Act, 1999, state the kind of approval required
for the following transactions:
(i)M requires U.S. $ 5,000 for remittance towards hiring charges of transponders.
(ii)P requires U.S. $ 2,000 for payment related to call back services of telephones.
Ans 5: Under section 5 of the Foreign Exchange Management Act, 1999, and Rules relating thereto, some current account
transactions require prior approval of the Central Government, some others require the prior approval of the Reserve
Bank of India, some are freely permitted transactions and some others are prohibited transactions. Accordingly,
(i) It is a current account transaction, where M is required to take approval of the Central Government for drawal
of foreign exchange for remittance of hire charges of transponders.
(ii) Withdrawal of foreign exchange for payment related to call back services of telephone is a prohibited
transaction. Hence, Mr. P cannot obtain US $ 2,000 for the said purpose.

(6)Suresh resided in India during the Financial Year 2013-14. He left India on 15th July, 2014 for Switzerland for
pursuing higher studies in Biotechnology for 2 years. What would be his residential status under the Foreign
Exchange Management Act, 1999 during the Financial Years 2014-15 and 2015-16?
Mr. Suresh requires every year USD 25,000 towards tuition fees and USD 30,000 for incidental and stay expenses
for studying abroad. Is it possible for Mr. Suresh to get the required Foreign Exchange and, if so, under what
conditions?
Ans 6: Residential Status: According to section 2(v) of the Foreign Exchange Management Act, 1999, ‘Person
resident in India’ means a person residing in India for more than 182 days during the course of preceding financial year
[Section 2(v)(i)]. However, it does not include a person who has gone out of India or who stays outside India for
employment outside India or for any other purpose in such circumstances as would indicate his intention to stay outside
India for an uncertain period.
Generally, a student goes out of India for a certain period. In this case, Mr. Suresh who resided in India during the
financial year 2013-14 left on 15.7.2014 for Switzerland for pursuing higher studies in Biotechnology for 2 years, he will
be resident as he has gone to stay outside India fora ‘certain period’ RBI has however clarified in its AP circular no.
45 dated 8th December 2003, that students will be considered as non-residents. This is because usually students start working
there to take care of their stay and cost of studies.

Mr. Suresh will be treated as person resident in India for Financial Year 2014-2015 till 16th July 2014 and from 17th July
2014, he will be considered as person resident outside India.

87 | P a g e By CA Sanidhya Saraf
However, during the Financial Year 2015-2016, Mr. Suresh will be considered as person resident outside India as he
left India on 15th July 2014.
Foreign Exchange for studies abroad: According to Para I of Schedule III to Foreign Exchange Management (Current
Account Transactions), Amendment Rule, 2015 dated 26th May, 2015, individuals can avail of foreign exchange facility
for the studies abroad within the limit of USD 2,50,000 only. Any additional remittance in excess of the said limit shall
require prior approval of the RBI. Further proviso to Para I of Schedule III states that individual may be allowed
remittances (without seeking prior approval of the RBI) exceeding USD 2,50,000 based on the estimate received from the
institution abroad. In this case the foreign exchange required is only USD 55,000 per academic year and hence approval
of RBI is not required

7(i)Mr. P has won a big lottery and wants to remit US Dollar 20,000 out of his winnings tohis son who is in
USA. Advise whether such remittance is possible under the Foreign Exchange Management Act, 1999.
(ii) Mr. Z is unwell and would like to have a kidney transplant done in USA. He would like to know the formalities
required and the amount that can be drawn as foreign exchange for the medical treatment abroad.
Ans 7: Remittance of Foreign Exchange (Section 5 of the Foreign Exchange Management Act, 1999): According to
section 5 of the FEMA, 1999, any person may sell or draw foreign exchange to or from an authorized person if such a
sale or drawal is a current account transaction. Provided that Central Government may, in public interest and in
consultation with the reserve bank, impose such reasonable restrictions for current account transactions as may be
prescribed.
As per the rules, drawal of foreign exchange for current account transactions are categorized under three headings-
1. Transactions for which drawal of foreign exchange is prohibited,
2. Transactions which need prior approval of appropriate government of India for drawal of foreign exchange,
and
3. Transactions which require RBI's prior approval for drawl of foreign exchange.
(i) Mr. P wanted to remit US Dollar 20,000 out of his lottery winnings to his son residing in USA. Such
remittance is prohibited and the same is included in the Foreign Exchange Management (Current Account
Transactions) Rules,2000.
Hence Mr. P cannot withdraw foreign exchange for this purpose.
(ii) “Remittance of foreign exchange for medical treatment abroad” requires prior permission or approval of
RBI where the individual requires withdrawal of foreign exchange exceeding USD 250,000. The
Schedule also prescribes that for the purpose of expenses in connection with medical treatment, the
individual may avail of exchange facility for an amount in excess of the limit prescribed under the
Liberalized Remittance Scheme, if so required by a medical institute offering treatment.
Therefore, Mr. Z can draw foreign exchange up to the USD 250,000 and no prior permission/ approval of RBI will be
required. For amount exceeding the above limit, authorised dealers may release foreign exchange based on the estimate from
the doctor in India or hospital or doctor abroad.

(8)Mr. Rohan, an Indian Resident individual desires to obtain Foreign Exchange for the following purposes:

88 | P a g e By CA Sanidhya Saraf
(A)US$ 120,000 for studies abroad on the basis of estimates given by the foreign university.
(B)Gift Remittance amounting US$ 10,000.
Advise him whether he can get Foreign Exchange and if so, under what condition(s)?
Ans 8: (A) Remittance of Foreign Exchange for studies abroad: Foreign exchange may be released for studies
abroad up to a limit of US $ 250,000 for the studies abroad withoutany permission from the RBI. Above this limit,
RBI’s prior approval is required. Further proviso to Para I of Schedule III states that individual may be allowed
remittances exceeding USD 250,000 based on the estimate received from the institution abroad. In this case since US
$ 120,000 is the drawal of foreign exchange, so permission of theRBI is not required.
(B) Gift remittance exceeding US $ 10,000: Under the provisions of Section 5 of FEMA 1999, certain Rules have been
made for drawal of foreign exchange for current account transactions. Gift remittance is a current account transaction.
Gift remittance exceeding US $ 250,000 can be made after obtaining prior approval of the RBI. In the present case,
since the amount to be gifted by an individual, Mr. Rohan is USD 10,000, there is no need for any permission from
the RBI.

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 2.The Foreign Contribution (Regulation) Act, 1999

Section A- Test Your Knowledge

(1)Alexander Philip, a foreign citizen, has made donations in kind to his known resident Indians for their personal
use. When shall such donation in kind be excluded from the definition of ‘foreign contribution’ considering the relevant
provisions of Foreign Contribution (Regulation) Act, 2010?
a) A donation in kind by a foreign citizen to a resident Indian shall be excluded from the definition of ‘foreign
contribution’, if the market value, in India, of such article, on the date of such gift, is more than ₹ 1,00,000
but less than ₹ 5,00,000.
b) A donation in kind by a foreign citizen to a resident Indian shall be excluded from the definition of ‘foreign
contribution’, if the market value, in India, of such article, on the date of such gift, is more than ₹5,00,000
but less than ₹10,00,000.
c) Any donation in kind given by a foreign citizen to a resident Indian for personal use is always excluded.
d) A donation in kind by a foreign citizen to a resident Indian shall be excluded from the definition of ‘foreign
contribution’, if the market value, in India, of such article, on the date of such gift, is not more than
₹1,00,000.
Ans 1: (d)

(2)Mr. Vijay, Sanjay and Ajay are brothers. Mr. Sanjay who is professor reside in India, rest both the brothers settled
in abroad. Mr. Sanjay on his 25th wedding anniversary received a gift from his elder brother who is American
national currently. Gift includes i-phone and an old chain of their father, with attached emotional memories. I-phone
in Indian rupee worth INRs1 lac 10 thousands, while chain worth INRs 80 thousand.
While younger brother of Mr. Sanjay who is British national and investment banker by profession, present him
securities worth INRs 2 lacs.
Regarding the intimation of foreign contribution received by Mr. Sanjay, state the correct legal requirement in the light of the
FCRA :
a) Intimation is required to be given to Central Government regarding any of the foreign contribution received by
him within three months from the date of receipt of such contribution.
b) Intimation is required to be given to Central Government regarding the foreign contribution received by him
with his brothers being more than limit of 1 Lakh within30 days from the date of receipt of such
contribution.
c) Intimation is not required to be given to Central Government regarding the foreign contribution received by him
with his brothers being less than the threshold limit of 10 Lakh whereas w.r.t. to chain of worth INR 80,000.
d) No Intimation is required to be given to Central Government regarding the foreign contribution received him
as it was for personal use.

Ans 2: (c)

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(3)The Certificate of registration for receiving foreign contribution was issued on 1st April, 2023 to Mr. X . What
shall be the validity period for said registration:

a) 31st March 2025

b) 1st April 2026
c) 1st April, 2027
d) 31st March 2028
Ans 3: (d)

(4)Mr Raja, an office-bearer of a political party, receives foreign contribution of Rs. 9 lakh duringthe financial year
2022-2023 from his sister residing abroad. Mr. Raja is required to inform of such foreign contribution received to
the Central Government within how many time period:
a) With in 30 days from the date of receipt of such foreign contribution
b) With in 3 months from the date of receipt of such foreign contribution
c) With in 6 months from the date of receipt of such foreign contribution
d) No intimation is required for such foreign contribution
Ans 4: (d)

(5)Mr. X has been found guilty of violation of the provisions of FCRA, 2010. What shall be the consequences w.r.t. the
unutilised amount of foreign contribution?
a) Such unutilised amount of foreign contribution shall be forfeited.
b) Such unutilised amount of foreign contribution shall not be utilized, without the prior approval of the C.G
c) Such unutilised amount of foreign contribution shall not be utilized without the prior approval of the RBI.
d) Such unutilised amount of foreign contribution shall not be utilized till the settlement of penalty imposed
Ans 5: (b)

Section B- Descriptive Questions

(1)State under what circumstances Government can cancel the certificate of registration granted to a person
under FCRA?

Ans 1: As per section 14 of the FCRA, Central Government may cancel the certificate, after carrying out an inquiry,
on the following grounds –
a) the holder of the certificate has made an incorrect/false statement in the application for the grant of
registration or renewal
b) the holder of the certificate has violated any of the terms and conditions of the certificate or renewal
thereof

91 | P a g e By CA Sanidhya Saraf
 c) in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate
d) the holder of the certificate has violated any of the provisions of this Act or rules or order made thereunder.
e) if the holder of the certificate has not been engaged in any reasonable activity in its chosen field for the benefit
of the society for two consecutive years or has become defunct.
Any person whose certificate has been cancelled under this section shall not be eligible for registration or grant of prior
permission for a period of three years from the date of cancellation of such certificate.

(2)X, an association having registration wishes to transfer the Foreign Contribution received byit to another
organization? Can it do so? Is there any restriction on transfer of funds to other organisations?

Ans 2: As per amendment to Section 7 of FCRA, 2010, vide The Foreign Contribution (Amendment) Act, 2020;
No person who -
(a) is registered and granted a certificate or has obtained prior permission under this Act; and
(b) receives any foreign contribution,
shall transfer such foreign contribution to any other person.
Prior to amendment, foreign contribution could be transferred with the prior approval of the Central Government to such
persons which did not possess the certificate of registration or prior permission. Further foreign contribution was also
permitted to be transferred to any other person who was registered under FCRA, 2010 or had obtained prior
permission. It can be seen that the legislature has placed a blanket prohibition on transfer of foreign contribution received
by any person to any other person. The intention is to prevent recipients of foreign contribution acting as mere conduits
or facilitating agents for obtaining foreign contributions.

(3)Can foreign contribution be received in and utilised from multiple Bank Accounts?

Ans 3: Yes. The foreign contribution should be received only in the exclusive single “FCRA account” of New Delhi
Main Branch of SBI (also called designated FC account), as mentioned in the order for registration or prior permission
granted and shall be independently maintained by the associations. Besides, this “FCRA Account”, the association
may also open “another FCRA Account” in any scheduled bank of its choice & link these accounts for transfer of
foreign contribution. Also, one or more accounts (called Utilization Account) in one or more scheduled banks may be
opened by the association for ‘utilising’ the foreign contribution after it has been received in the designated FCRA bank
account, provided that no fund other than foreign contribution shall be received or deposited in such account or
accounts and in all cases of any change, intimation in FC-6D is to be given online within 45 days of opening of
such account.

(4)Can capital assets purchased with the help of foreign contributions be acquired in the name of the Mr
Ram, an office bearer of the association?
Ans 4: No. Every asset purchased with foreign contribution should be acquired and possessed in the name of the
association since an association has a separate legal entity distinct from its members.

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(5)Mr. X, an individual of Indian origin but currently a citizen of a foreign country gives a donation. State whether
the donation given by Mr. X will be treated as ‘foreign contribution’?

Ans 5: Yes. Donation from a Person of Indian origin who has acquired foreign citizenship is treated as foreign
contribution. This will also apply to Person of Indian Origin / Overseas Citizen of India cardholders. However, this will
not apply to 'Non-resident Indians', who still hold Indian citizenship and they are not foreigners. Therefore, donation
given by Mr. X, an individual of Indian origin with foreign nationality will be treated as foreign contribution.

(6)Mr. Rohit, a relative of Ms. Suman, who is residing in France remitted foreign contribution of Rs. 2 lakhs
to her for arrangement of religious programme for the believers of Gurudev. Whether foreign remittances
received from a relative are to be treated as foreign contribution as per FCRA, 2010?

Ans 6: No. As per Section 4(e) of FCRA, 2010 and Rule 6 of FCRR, 2011, even the personsprohibited under section
3, i.e., persons not permitted to accept foreign contribution, are allowed to accept foreign contribution from their
relatives. However, in terms of Rule 6 of FCRR, 2011, any person receiving foreign contribution in excess of ten
lakh rupees or equivalent thereto in a financial year from any of his relatives shall inform the Central
Government regarding the details of the foreign contribution received by him in electronic form in Form FC-1 within
three months from the date of receipt of such contribution.
Here in the given situation, since the amount remitted by Mr. Rohit is less than Rs. ten lakh, so Ms. Suman is not
required to inform the Central Government.

(7)After giving a reasonable opportunity of being heard, Central Government cancelled the certification of
registration of Toastea Ltd, a company registered under FCRA on the ground that such cancellation was in public
interest. Two and a half years have passed since such cancellation. Company has submitted its written declaration
not to involve in such activities again and requests restoration of the registration. Advise Toastea Ltd. on its
eligibility for re- registration or grant of prior permission.

Ans 7: Restoration of Registration: As per section 14(3) of the Foreign Contribution (Regulation) Act, 2010, any
person whose certificate has been cancelled under this section shall not be eligible for registration or grant of prior permission
for a period of three years from the date of cancellation of such certificate.
In the instant case, Toastea Ltd. is not eligible for re-registration or grant of prior permission as only two and a half years have
passed since such cancellation. So, restoration is not permissible as therequirement of three years cooling period from
the date of cancellation of such certificate for re- registration is not complied with. Therefore Toastea Ltd. is advised to seek for
fresh registration or grant of prior permission on the completion of three years from the date of cancellation.

(8)In the light of the provisions of the Foreign Contribution (Regulation) Act, 2010 examine and decide whether
the following persons in India are permitted to receive the amount/articles in the following situations:
(i)M/s KG & Co.; a partnership firm obtained loan from a club registered in London for its business
purpose.
(ii)Hello FM, a registered association, received funds from a foreign company forestablishing Frequency
Model Radio Station to broadcast audio news.

93 | P a g e By CA Sanidhya Saraf
(iii)Mr. Happy received a wrist watch as marriage anniversary gift from his uncle, a citizen of USA. The
market value of the wrist watch is Rs. 25,000.

Ans 8: (i) As per Explanation 3 to section 2(1)(h)‒Any amount received, by any person from any foreign source in India,
by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in
lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether
within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall
be excluded from the definition of foreign contribution within the meaning of this Thus the loan availed from a club
registered in London will be covered under business hence excluded from definition of foreign contribution. However,
the provisions of FEMA, 1999 shall apply and permissibility of availing foreign currency loan by a partnership firm needs
to be evaluated.

(ii)As per section 3 of the FCRA, 2010, no foreign contribution shall be accepted by any association or company engaged
in the production or broadcast of audio news or audio visual news or current affairs programs through any electronic
mode, or any other electronic form as defined in the Information Technology Act, 2000 or any other mode of mass
communication; Accordingly, Hello FM is not permitted to receive any funds from a foreign company.

(iii)As per the provisions of the Foreign Contribution (Regulation) Act, 2010, “foreign contribution” means the
donation, delivery or transfer made by any foreign source, of any article, not being an article given to a person as a gift
for his personal use, if the market value, in India, of such article, on the date of such gift, is not more than such sum as
may be specified from time to time, by the Central Government by the rules made by it in this behalf;(This sum has
been specified as Rupees One lakh/-currently).
In the given situation, Mr. Happy received the wrist watch (market value Rs.25,000) as marriage anniversary gift
from his uncle, a citizen of USA. Since, the value of the wrist watch is within the prescribed limit, hence, Mr. Happy
is permitted to receive the article.

(9)Mr. Ramakant Hathi, an Indian Administrative Service (IAS) officer has received an invitation to visit
Germany for representing India in an Annual Summit programme. Mr. Ramakant Hathi, on his visit has met
with a sudden illness and received foreign hospitality of amount equivalent to INR 65,000 in the form of emergent
medical treatment. Under the given scenario, you are required to advise Mr. Ramakant Hathi regarding his
responsibility to intimate the receipt of Foreign Hospitality as per the provisions of the Foreign Contribution
(Regulation) Act, 2010 and rules made thereunder.

Ans 9: As per section 6 of the Foreign Contribution (Regulation) Act, 2010, various categories of persons are required
to take prior permission of the Central Government before accepting Foreign Hospitality, while visiting any country
or territory outside India. Government servantsare one of such persons who are required to take prior permission. Provided
it shall not be necessary to obtain any such permission for an emergent medical aid needed on account of sudden illness
contracted during a visit outside India.
Section 6 read along with Rule 7 of Foreign Contribution Rules 2011 and amendments thereto states that in case of emergent
medical treatment aid needed on account of sudden illness during a visit abroad, the acceptance of foreign hospitality
shall be required to be intimated to the Central Government within one month of such receipt in electronic form FC-
2 giving full details including the source, approximate value in Indian rupees, and the purpose for which and the
manner in which it was utilised. No such intimation is required if the value of such hospitality in emergent medical aid is upto
one lakh rupees or equivalent.

94 | P a g e By CA Sanidhya Saraf
Accordingly, Mr. Ramakant Hathi is not required to intimate such details of acceptance of foreign hospitality as the value
of such hospitality in emergent medical treatment of foreign currency equivalent to INR 65,000 is within the limits specified
in Rule 7 of Foreign Contribution (Regulation) Rules, 2011 of up to Rupees one lakh or equivalent.

(10)XYZ Foundation, a society registered under the Societies Registration Act, 1860, has received foreign
contribution from a Mala Company LLC, a company incorporated in Singapore. XYZ Foundation deposited
the amount of foreign contribution in a bank and earned interest on it. XYZ Foundation desires to invest
maturity proceeds from deposits in mutual funds. You are required to advise whether XYZ Foundation is allowed
to make such investment considering the provisions of the Foreign Contribution (Regulation) Act, 2010 (the Act)
(Note: XYZ Foundation has obtained certificate of registration under section 11 of the Act).

Ans 10: As per section 8 of the Act, every person, who is registered and granted a certificate or given prior permission
under this Act and receives any foreign contribution, shall utilise such contribution for the purpose for which the
contribution has been received.
Further Rule 4 (1) of FCRR, 2011 defines speculative activities and includes instruments where there is an element
of risk of appreciation or depreciation of the original investment.
Further as per the explanation 2 to the definition of foreign contribution under the Act, the interest accrued on the foreign
contribution deposited in any bank referred to in section 17(1) or any other income derived from the foreign contribution
or interest thereon shall also be deemed to be foreign contribution within the meaning of this clause.
Foreign contribution or any income arising out of it shall not be used for speculative business, where speculative business
which includes investment in mutual fund.
Therefore, XYZ Foundation cannot use the foreign contribution or the interest earner on the foreign contribution for the
Investment in Mutual Funds or for any speculative activities.

95 | P a g e By CA Sanidhya Saraf
 3.The Insolvency and Bankruptcy Code, 2016

Section A- Test Your Knowledge

(1)An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was filed by the Raheja Portland Cement
Limited in the capacity as operational creditor against the corporate debtor Makhija Builders and Developers Limited.
The application was admitted by the order of the National Company Law Tribunal – Mumbai (NCLT, Mumbai) after
giving a reasonable opportunity of being heard to Makhija Builders and Developers Limited and Mr. Ritesh was appointed
as Interim Resolution Professional (IRP). However, Mr. Sanskar and Mr. Satvik, two of the directors of Makhija
Builders and Developers Limited, were suspicious about the claims filed by Raheja Portland Cement Limited since
they were much more than what was due to the company and therefore, they are desirous of making an appeal
against the order of the NCLT, Mumbai. You, as a legal advisor, are required to advise them as to the maximum time
within which an appeal against the order of the NCLT, Mumbai, can be filed by them with the National Company
Law Appellate Tribunal (NCLAT).
a) Mr. Sanskar and Mr. Satvik, the two directors of Makhija Builders and Developers Limited shall be able to
prefer an appeal against the order passed by NCLT, Mumbai under Section 9 of the Insolvency and Bankruptcy
Code, 2016, within a period of 45 days from the date of order.
b) Mr. Sanskar and Mr. Satvik, the two directors of Makhija Builders and Developers Limited shall be able to
prefer an appeal against the order passed by NCLT, Mumbai under Section 9 of the Insolvency and Bankruptcy
Code, 2016, within a period of 30 days from the date of order.
c) Mr. Sanskar and Mr. Satvik, the two directors of Makhija Builders and Developers Limited shall be able to
prefer an appeal against the order passed by NCLT, Mumbai under Section 9 of the Insolvency and Bankruptcy
Code, 2016, within a period of 15 days from the date of order.
d) Mr. Sanskar and Mr. Satvik, the two directors of Makhija Builders and Developers Limited shall be able to
prefer an appeal against the order passed by NCLT, Mumbai under Section 9 of the Insolvency and Bankruptcy
Code, 2016, within a period of 10 days from the date of order.
Ans 1: (b)

(2)Aakansha Plastics Limited, having registered office at Bhatinda, Punjab, was formed in the year 2005. On March
31, 2021, its paid-up share capital was ₹ 5,00,00,000; Amount due from Debtors viz. Shilpa Furnitures Private Limited and
Shobhna Traders & Co. ₹ 4,00,00,000; Secured loans obtained from Crescent Bank Limited ₹ 6,00,00,000; Amount due
to creditors, namely, Sambhav & Sons and Satyadev Suppliers Private Limited ₹ 3,00,00,000. The performance of
the company decreased sharply due to stiff competition, wrong planning and mismanagement and it came on the
verge of insolvency. Choose from the followingalternatives as to who is the corporate debtor:
a) Shilpa Furnitures Private Limited and Shobhna Traders & Co.
b) Aakansha Plastics Limited.
c) Sambhav & Sons and Satyadev Suppliers Private Limited.
d) Crescent Bank Limited.
Ans 2: (b)

96 | P a g e By CA Sanidhya Saraf
(3)Ruby Petals Limited, a small company, files an application with the National Company Law Tribunal (NCLT) stating
that the fast track corporate insolvency resolution process against it cannot be completed within the prescribed period of
90 days. On being satisfied, NCLT orders to extend the period of such process by 30 days. However, Ruby Petals
Limited again initiates an application for further extension of time period of insolvency process by another 10 days.From
the four options given below which one, do you think, is applicable in such a situation:
a) National Company Law Tribunal can extend the period of fast track corporate insolvency resolution process
against Ruby Petals Limited by another 10 days since total extension does not exceed 45 days.
b) National Company Law Tribunal can extend the period of fast track corporate insolvency resolution process
against Ruby Petals Limited by another 10 days if the corporate debtor deposits ₹ 50,000 as penalty.
c) National Company Law Tribunal can extend the period of fast track corporate insolvency resolution process
against Ruby Petals Limited by another 10 days if the corporate debtor deposits ₹ 1,00,000 as penalty.
d) National Company Law Tribunal cannot extend the period of fast track corporate insolvency resolution process
against Ruby Petals Limited by another 10 days since such extension shall not be granted more than
once.
Ans 3: (d)

(4)Munikh Hospitality Services Limited was admitted in the Corporate Insolvency Resolution Process (CIRP) under
Section 7 of the Insolvency and Bankruptcy Code. The Resolution Professional (RP) Mr. Somesh, after his appointment,
conducted a meeting of Committee of Creditors (CoC) but the same was adjourned due to the lack of quorum. At the
appointed date and time, when the adjourned meeting was resumed, a resolution was passed by the CoC members present,
representing 51% of the voting rights, for liquidation of Munikh Hospitality Services Limited, the Corporate Debtor, before
the completion of the Corporate Insolvency Resolution Process (CIRP). You, as a qualified Chartered Accountant
comprising the team of RP, are required to advise whether the resolution of liquidation passed by certain members of
CoC representing 51% of the voting rights is valid or not considering the applicable provisions of the Insolvency
and Bankruptcy Code, 2016.
a) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain members of CoC
representing 51% of the voting rights is not valid since the resolution has not been approved by minimum
of 90% of the voting shares of the creditors.
b) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain members of CoC
representing 51% of the voting rights is not valid since the resolution has not been approved by minimum
of 66% of the voting shares of the creditors.
c) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain members of CoC
representing 51% of the voting rights is not valid since such resolution cannot be passed before the
completion of the CIRP.
d) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain members of CoC
representing 51% of the voting rights is valid since the same has been passed by the majority of creditors.

Ans 4: (b)
(5)Shivdeep submitted his claim as an operational creditor to the liquidator of Chiranjeevi Food Products Limited which
is under liquidation. After submission of his claim, Shivdeep is desirous of altering it. Out of the following four options,
which one correctly indicates the time period within which he can alter his claim after its submission.

97 | P a g e By CA Sanidhya Saraf
 a) Shivdeep can alter his claim within five days of its submission to the liquidator ofChiranjeevi Food
Products Limited.
b) Shivdeep can alter his claim within ten days of its submission to the liquidator of Chiranjeevi Food
Products Limited.
c) Shivdeep can alter his claim within fourteen days of its submission to the liquidator of Chiranjeevi Food
Products Limited.
d) Shivdeep can alter his claim within thirty days of its submission to the liquidator ofChiranjeevi Food
Products Limited.
Ans 5: (c)

Section B- Descriptive Questions

(1)When will the provisions of insolvency and liquidation be applicable to a corporate person?
Ans 1: The provisions relating to the insolvency and liquidation of corporate debtors shall be applicable only when
the amount of the default is one lakh rupees or more. However, theCentral Government may, by notification, specify
the minimum amount of default of higher value which shall not be more than one crore rupees.
Vide Notification No. S.O.1205(E), date 24-03-22, minimum amount of default is increase to 1 crore for triggering
CIRP under the IBC.

(2)What is the Insolvency Resolution Process for financial creditors?

Ans 2: A financial creditor either itself or along with other financial creditors may lodge an application before the
Adjudicating Authority (National Company Law Tribunal) for initiating corporate insolvency resolution process against
a corporate debtor who commits a default in payment of its dues.
The financial creditor shall along with the application give evidence in support of the default committed by the corporate
debtor. He shall also give the name of the interim resolution professional.
Where the Adjudicating Authority is satisfied that a default has occurred and the application by the financial creditor
is complete and there are no disciplinary proceedings pending against the proposed resolution professional, it may admit
such application made by the financial creditor.
If the Adjudicating Authority is satisfied that default has not occurred (reasons to be recorded in writing) or the
application is incomplete or any disciplinary proceeding is pending againstthe resolution professional, it shall reject
the application. However, the applicant may rectify the defect within seven days of receipt of notice of rejection from
the Adjudicating Authority.

(3)What is the Insolvency Resolution Process for operational creditors?

98 | P a g e By CA Sanidhya Saraf
Ans 3: On the occurrence of default, an operational creditor shall first send a demand notice and a copy of invoice
to the corporate debtor.
The corporate debtor shall within a period of ten days of receipt of demand notice notify the operational creditor about the
existence of a dispute, if there is any and record of pendency of any suit or arbitration proceedings. He shall also provide
the details of repayment of unpaid operational debt in case the debt has or is being paid.
After the expiry of ten days, if the operational creditor does not receive his payment or the confirmation of a dispute that
existed even before the demand notice was sent, he may file an application before the Adjudicating Authority for initiating
a corporate insolvency resolution process.
The Adjudicating Authority shall within fourteen days of receipt of the application, admit or reject the application.
However, before rejecting the application, an opportunity shall be given to the applicant to rectify the defect within
seven days of receipt of rejection.

(4)What are the eligibility criteria for appointment of an Insolvency Professional as a Resolution Professional for
a corporate insolvency resolution process?
Ans 4: As per Regulation 3 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016, an insolvency professional shall be eligible for appointment as a resolution
professional for a corporate insolvency resolution process if he and all partners and directors of the insolvency
professional entity of which he is partner or director are independent of the corporate debtor i.e.,
• He is eligible to be appointed as an independent director on the board of the corporate debtor under Section 149
of the Companies Act, 2013, where the corporate debtor is a company.
• He is not a related party of the corporate debtor.
• He is not an employee or proprietor or a partner of a firm of auditors or secretarial auditors in practice or
cost auditors of the corporate debtor in the last three financial years.
• He is not an employee or proprietor or a partner of a legal or consulting firm that hasor had any transaction
with the corporate debtor amounting to five per cent or more of the gross turnover of such firm in the last
three financial years.

(5)What is the procedure of Insolvency Resolution Process for a Corporate Applicant?

Ans 5: Where a corporate debtor has committed a default, a corporate applicant thereof may file an application for initiating
corporate insolvency resolution process with the Adjudicating Authority.
The corporate applicant shall furnish the information relating to books of account and other documents and a resolution
professional shall be appointed as interim resolution professional.
The Adjudicating Authority may either accept or reject the application within fourteen days of receipt of application.
However, applicant shall be allowed to rectify the defect within seven days of receipt of notice of such rejection
(6)Is there any time limit for completion of the Insolvency Resolution Process?
Ans 6: Section 12 states that any Insolvency Resolution Process shall be completed within a period of one hundred
and eighty days from the date of admission of the application to initiate the process.

99 | P a g e By CA Sanidhya Saraf
However, the National Company Law Tribunal (NCLT) may on an application made by the resolution professional, under
a resolution passed by the Committee of Creditors, by a vote of 66% of voting shares, after consideration provide
one extension which shall not extend more than 90 days.
Second proviso to Section 12 (3) states that the corporate insolvency resolution process (CIRP) shall compulsorily be
completed within 330 days from the insolvency commencement date including any extension of the time period of
corporate insolvency resolution process granted under Section 12 and also the time taken in legal proceedings in
relation to such resolution process of the corporate debtor.

(7)What is the effect of order of moratorium?

Ans 7: Section 14 contains the provisions relating to moratorium. During the moratorium period the following acts shall
be prohibited:
(a) The institution of suits or continuation of any pending suits or proceedings against the corporate debtor including
execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any ofits assets or any legal
right or beneficial interest therein;
(c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its
property including any action under the SARFAESI Act, 2002
(d) The recovery of any property by an owner or lessor where such property is occupied by or in the possession
of the corporate debtor.
Explanation to Section 14 (1)clarifies that notwithstanding anything contained in any other law for the time being
in force, a licence, permit, registration, quota, concession, clearanceor a similar grant or right given by the Central
Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for
the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that
there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or
right during moratorium period.

(8)What is a Resolution plan?

Ans 8: According to Section 5 (26), a ‘resolution plan’ means a plan proposed by resolution applicant for insolvency
resolution of the corporate debtor as a going concern in accordance with Part II of the Code.
Explanation to Section 5 (26) clarifies that a resolution plan may include provisions for the restructuring of the corporate
debtor, including by way of merger, amalgamation anddemerger.
The aim of the Code is to revive the corporate debtor and therefore, resolution plan should be such that it is capable
of resolving the insolvency of the corporate debtor as a going concern.
As per Section 30, the resolution applicant shall prepare resolution plan on the basis of information memorandum
and submit the same to the resolution professional.
Each Resolution Plan shall be examined by the resolution professional to confirm that each such plan:
(i) provides for payment of insolvency resolution costs;

100 | P a g e By CA Sanidhya Saraf

 (ii) provides for repayment of the debts to operational creditors;
(iii) provides for management of affairs of the company after approval of the resolution plan;
(iv) provides for implementation and supervision of the resolution plan;
(v) does not contravene provisions of the law for the time being in force; and
(vi) conforms to such other requirement as may be specified by the Board.
The resolution plan needs to be submitted within the prescribed time as provided by Sectio 12. The prescribed time
limit is 180 days and in case of extension it is 270 days. Further, 330 days have also been mandated which shall
include any extension of the time period of corporate insolvency resolution process granted under Section 12 and also
the time taken in legal proceedings in relation to such resolution process of the corporate debtor.
In case of Fast Track Resolution, the time limit is 90 days and if extension is required, another 45 days can be granted.
The resolution professional shall submit the resolution plan to the committee of creditors for its approval which may
approve the plan by a vote of not less than 66% of voting share of the financial creditors. Operational creditors have no
say in approving the resolution plan.
The resolution professional shall submit the approved plan to the Adjudicating Authority.

(9)What is the significance of the Corporate Insolvency Resolution Commencement Date?

Ans 9: The commencement date of the corporate insolvency resolution is the beginning of moratorium or a calm period
till the completion of the corporate insolvency resolution process during which all suits and legal proceedings etc.
against the Corporate Debtor are held in abeyance to give time to the entity to resolve its status.

(10)Mr. Ram, an operational creditor filed an application for corporate insolvency resolution process. He did
not propose for the appointment of an interim resolution professional in the application. State the provisions given
by the Code to resolve such a scenario including the term of IRP so appointed.
Ans 10: Appointment of IRP: As per Section16 of the Code where the application for corporate insolvency
resolution process is made by an operational creditor and no proposal for an interim resolution professional is made
in the said application, the Adjudicating Authority shall make a reference to the Board (IBBI) for the recommendation of
an insolvency professional who may act as an interim resolution professional.
The Board (IBBI) shall recommend the name of an insolvency professional to the Adjudicating Authority against whom
no disciplinary proceedings are pending, within ten days of the receipt of a reference from the Adjudicating Authority.
Period of appointment of IRP: the term of the Interim Resolution Professional shall continue from his appointment
till the date of appointment of the Resolution Professional by COC in its first meeting under Section 22 of the Code.

101 | P a g e By CA Sanidhya Saraf

 MODEL TEST PAPER
Self-Paced Online Modules
Set- A- Corporate and Economic Laws

Time Allowed: 3 Hours Maximum Marks: 100

All Questions are compulsory. Each questions are of 2 Marks Each.
Section A-Company Law (50 Marks)
1. Pharma Limited is a company listed with Bombay Stock Exchange. The company is having 500 small
shareholders. 50 shareholders with shareholding of 1200 equity shares of Rs. 10 each, have proposed
to appoint Amar as a Director as their representative on the Board of Directors of the company. One
of the director of the Board contended that appointment of Amar is not valid due to lack of holding of
any shares in the company.
Based on the above details and referring to the provisions of the Companies Act, 2013, you are
requested to answer the following MCQs: (4 Marks)
1.1 Whether the proposal to appoint Amar as a Small Shareholders’ Director can be adopted?
(a) The said proposal cannot be adopted as notice for his appointment shall be given by
1000 small shareholders.
(b) The said proposal cannot be adopted as notice for his appointment shall be given by
more than 1/10 of total small shareholders and no shareholding of Amar is not in
compliance.
(c) The said proposal can be adopted as 1/10th of 500 small shareholders comes to 50 and
his holding in Pharma Limited is not necessitated mandatorily.
(d) The said proposal cannot be adopted as no nominal value of Rs. 20,000 shares held by
Amar in Pharma Limited.
1.2 If there is no such proposal moved by the small shareholders, can Pharma Limited appoint
Small Shareholders' Director on its own?
(a) No, Pharma Limited cannot appoint a small shareholder director on its own.
(b) Yes, Pharma Limited can suo moto appoint small shareholders' director, even if there is
no such proposal moved by the small shareholders.
(c) No, for appointment of small shareholders director, notice must come from atleast 1000
small shareholders.
(d) No, for the appointment of small shareholders director, notice must come from 1/10 of
total small shareholders.
2. PCR Limited has appointed Mr. Vivek, a person resident in India, as a Managing Director who has
taken a charge of the post on 1 st June, 2021. The remuneration package sanctioned to him is as below:
Sr. No. Particulars Amount
1 Salary 60,00,000
2 Rent free accommodation 6,00,000
3 Children education allowance 3,00,000
 4 Leave Travel Concession Package 3,00,000
5 Premium in respect of insurance taken for indemnification 5,00,000

It has, further, been informed that-

(a) Mr. Vivek has availed the Leave Travel Concession Package which will not be pro -rated for
2021-22.
(b) Mr. Vivek is not proved guilty during the financial year 2021-22 with respect to the above
insurance policy.
Based on the above details and referring to the provisions of the Companies Act, 2013, you are
requested to answer the following MCQs: (6 Marks)
2.1 What would be the amount of yearly remuneration for FY 2021-22 paid by PCR Ltd. to Mr.
Vivek, the managing director who is appointed on 1 st June, 2021?
(a) Rs. 65,50,000
(b) Rs. 60,50,000
(c) Rs. 60,00,000
(d) Rs. 77,00,000
2.2 If PCR Limited has incurred losses during the financial years 2020-21 and 2021-22 and the
effective capital of the company as on 31st March 2021 is in negative, is there any excess
remuneration paid to Mr. Vivek and if yes, what would be that excess remuneration?
(a) Yes, excess remuneration is there of Rs.10,00,000
(b) Yes, excess remuneration is there of Rs. 10,50,000
(c) Yes, excess remuneration is there of Rs. 15,50,000
(d) Yes, excess remuneration is there of Rs. 27,00,000
2.3 Under what circumstances, PCR Limited can waive the excess remuneration paid to Mr. Vivek
(if any)?
(a) A waiver is approved by an ordinary resolution passed by the company within 1 year
from the date the sum becomes refundable.
(b) A waiver is approved by a special resolution passed by the company within 1 year from
the date the sum becomes refundable.
(c) A Waiver is approved by an ordinary resolution passed by the company within 2 years
from the date the sum becomes refundable.
(d) A Waiver is approved by a special resolution passed by the company within 2 years from
the date the sum becomes refundable.
3. Daily Needs Ltd. is a unlisted public company, engaged in the business of supplying the daily needs
of the house hold. It receives orders, on online basis and make supplies to the customers at their door
steps.
As on 31.03.2021, the total number of shareholders were 500. The share capital of the company is
100 lakh rupees.
Gyan Singh is the Managing Director of the company. He joined this company in April 2020. Prior to
joining this company, Gyan Singh was the General Manager in a NBFC. From the media sources, it
came into picture that Gyan Singh was involved in sanctioning the proposal of big loans without
insisting the security from the borrowers and many of the loan accounts during his tenure turned into
NPA. It shows the intention of Gyan Singh that he might have been involved in accepting the bribe in
sectioning the clean loans.
After joining this company, Gyan Singh started ordering his employees to supply the goods at the
shops of the retailers also on credit. Whereas the company’s policy was to supply the essential daily
needs at the door steps of consumers only. Many of retailers used to visit the MD’s office to supply
the goods on credit. In some of the cases the recovery from that retailers became difficult and the
company had to write-off these debts while finalising the annual accounts as of 31.03.2021.
Aggrieved from this, some 10 members of the company made an application before the Tribunal
making the company and its MD as respondents, that the affairs of the company are being conducted
in a manner prejudicial to the public interest and requested for removal of the Managing Director.
The Tribunal turned down the application of the members mentioning therein that the members who
applied for are not eligible to apply.
When Dharmesh, one of the shareholder came into the knowledge that the Tribunal has turned down
the application of 10 member, he himself alone applied to the Tribunal making the company and its
MD as respondent. Dharmesh is holding 2 lakh of shares, consisting the face value of Rs 20 lakh. He
is also the Member of the Parliament.
After accepting the application, the Tribunal heard both the parties and observed that Gyan Singh was
involved in mal-practices, on the basis of his past track record and the present working. It opined that
this person is not a fit and proper person to continue as MD of the company and ordered for removal
of Gyan Singh from the post of Managing Director. The Managing Director claimed for the
compensation for removal of the office from the company, from the date of removal to the remaining
period.
Based on the above scenario, answer the following questions: (10 Marks)
3.1 In case of oppression and mismanagement, how many members can apply to the Tribunal:
(a) Not less than 100 members are required to file an application with the Tribunal.
(b) Not less than one-tenth of the total number of members i.e. 50 members (500/10= 50)
are required to file an application with the Tribunal
(c) Not less than 100 members of the company or not less than one-tenth of the total
number of its members, whichever is less. i.e. 50 members are required to file an
application with the Tribunal.
(d) Not less than 100 members of the company or not less than one-tenth of the total
number of its members, whichever is higher i.e. 100 members are required to file an
application with the Tribunal.
3.2 On what grounds the application of Dharmesh was accepted by the Tribunal:
(a) Dharmesh is one of the shareholder of the Company.
(b) Dharmesh is having the majority of shares in the company.
(c) Dharmesh is having more than one-tenth share in the share capital of the company.
(d) Dharmesh is Member of Parliament.
3.3 Whether Tribunal have powers to remove the Managing Director, who was appointed by the
Board and the shareholders in the General Meeting:
(a) No, Tribunal do not have the powers to remove any official.
 (b) The Tribunal can only order for the winding up of the company if it is just and equitable
for the company.
(c) The Tribunal may after observing the mal-practices of the MD, can ask not to repeat it.
(d) The Tribunal can terminate the service agreement arrived at between the company and
the MD.
3.4 Whether Gyan Singh, the Managing Director can demand compensation from the company from
the date of removal to the remaining period:
(a) The MD can demand the compensation from the date of removal to the remaining period.
(b) The MD can be relieved by notice with three month’s salary.
(c) The MD can be relieved by notice with one month’s salary.
(d) The MD cannot demand any compensation for loss of office.
3.5 Whether Gyan Singh after being terminated from this company, can apply to any other company
for the post of director or any other office:
(a) After termination from this company, Gyan Singh can apply to any other company for the
post of director or any other office.
(b) After termination from this company, Gyan Singh cannot apply to any other company
for the post of director or any other office, a period of one year.
(c) After termination from this company, Gyan Singh cannot apply to any other company
for the post of director or any other office, a period of three years.
(d) After termination from this company, Gyan Singh cannot apply to any other company
for the post of director or any other office, a period of five years.
4. Based at Shivamogga, Karnataka, Lotus Switchgears Limited (LSL) is a noted manufacturer, exporter
and supplier of electrical products like Miniature Circuit Breakers (MCBs), Molded Case Circuit
Breakers (MCCBs), Residual Current Circuit Breakers (RCCBs), Electric Leakage Circuit Breakers
(ELCBs), Solar water Pumping Systems, Wires and Cables, etc. and has a good network of factories
and distribution channels. The business grew by leaps and bounds due to the sincere and dedicated
efforts of the said founding directors in the following capacity:
Arjun Managing Director
Ramakrishnan Promoter
Ravi Bhatt Promoter
Ramesh Whole-time Director
Ripudaman Whole-time Director

However, the company is facing some difficult times for the past four years or so.
In a quest to overcome the difficulties faced by the company, Raghuram, a visionary, was appointed
as the Executive Director at the EGM held on 12th January, 2020.
Shruthi Components Private Limited (SCPL) is one of the subsidiaries of LSL. The Board of Directors
of LSL wished to exercise the power to dispose of its whole investment in SCPL. Accordingly,
Mahadevan, whole-time Company Secretary of the company was directed to ascertain the procedure
for disposing of company’s investment in SCPL.
Following data was extracted from the Audited Financial Statements of LSL for the year ending
31.03.2023:
 S. No. Description Amount
(Rs. in Crore)
1 Paid -up Capital 50
2 General Reserves 54
3 Securities Premium Account 5
4 Accumulated Losses 7
5 Revaluation Reserves created out of revaluation of assets 30
6 Deferred Revenue Expenditure & Miscellaneous Expenditure not 2
written off
7 Investment in SCPL 25
Based on the above data and considering Section 2 (57) of the Companies Act, 2013, Mahadevan
calculated the ‘net worth’ of LSL as under:
Particulars Amount
(Rs. in Crore)
Paid-up Capital 50
Add: General Reserves 54
Add: Securities Premium Account 5
Less: Accumulated Losses 7
Less: Deferred Revenue Expenditure & Miscellaneous Expenditure not written 2
off
Net Worth 100

In view of the ‘net worth’ of Rs. 100 crore, Mahadevan informed the Board that as per the relevant
provisions, SCPL was an undertaking of LSL.
Earlier during April, 2022, in the course of normal business, LSL entered into a contract for the
continuous supply of some consumables and components with Anant Supplies Private Limited (ASPL)
for a period of 3 years to be renewed with mutual consent thereafter. Ramesh, the Whole-time Director
of LSL, was not an interested party at the time of entering into this Supply Contract with ASPL.
However, during the second year of the Supply Contract, Rajesh, son of Ramesh, purchased about
30% of the equity shares of ASPL through one of his family owned business entities and also lent
Rs.25 lakh as unsecured loan to ASPL. Ramesh did not inform LSL or the Board of Directors regarding
the new developments since he was of the opinion that there was no need for such d isclosure.
However, the Company Secretary and the Board had their own reservations, after the matter came to
their knowledge from a third party.
During the statutory audit for the F.Y. 2022-23, while verifying the earlier years’ documents in
connection with certain matter, the newly appointed auditors observed that the appointment of
Raghuram as an Executive Director was invalid by reason of certain defects and also disqualification.
During the month of August, 2023, the statutory auditors discussed the issue of irregular appointment
with the Board of Directors of LSL.
The Board apprised the auditors that since his appointment as Executive Director of the company,
Raghuram had participated in several Board Meetings and assented to various decisions, which had
both pecuniary and operational impact. In addition, the Board had also passed several resolutions
during that period. Accordingly, the Board, in one of its meetings, decided by passing a resolution that
the wrongfully appointed Director Raghuram shall make good the losses, if any, for the period he
remained Executive Director but all the resolutions passed during his period shall be valid and stand
good.
One of the investors, Raman had invested substantially in the equity shares of LSL. However, he was
quite worried about his investment after going through the latest Audited Financial Statements of 2022-
23, for he found that there was continuous downward trend in earning per share (EPS). He was of the
opinion that the Directors of LSL have been getting exorbitant remuneration, resulting in lesser profits
for the company.
Accordingly, he approached the Registered Office of the company at Shivamogga and requested for
inspection of the copies of the recent Service Contracts of Arjun, the Managing Director as well as
Ramesh and Ripudaman, the Whole-time Directors of the company. He was utterly surprised when he
was informed by the official concerned that the Service Contracts with Arjun, Ramesh and Ripudaman
were not in writing and therefore, could not be produced for inspection. However, he was also informed
that only copies of the written Memorandum setting out the terms and conditions of the service could
be provided for inspection. Raman was not convinced and thought it to be a fraudulent practice for
which the company and every defaulting officer of the company must be pu nished.
LSL, after complying with the required legal formalities, had made some political contributions and had
incurred certain expenses during the financial year 2022-23. The details are as under:
(a) Payment of Rs.10,00,000 as contributions to LMS party.
(b) Donation of Rs.2,00,000 for a public function and a dance program of Ravi Shankar, a film star
and it can be reasonably presumed that his activities support Janta Welfare Party.
(c) Publication cost of Rs. 1,00,000 incurred for inserting an advertisement in the Souvenir
published on behalf of Janta Welfare Party.
(d) Publication of pamphlets costing Rs.1,00,000 though not meant for any political party but
incurred for promoting a candidate of political party who is going to contest in upcoming
elections.
LSL disclosed in its financial statements Rs.11,00,000 as political contributions and Rs.3,00,000 as
‘Advertisement and Business Promotion Expenses’.
Multiple Choice Questions [10 Marks]
4.1 Raman, who had invested substantially in LSL, was informed that only copies of the written
Memorandum setting out the terms and conditions of the service could be provided for
inspection as no written Service Contracts with Arjun (Managing Director) as well as Ramesh
and Ripudaman (Whole-time Directors) were available. Raman was not convinced and thought
it to be a fraudulent practice for which the company and every defaulting officer of the company
must be punished.
In the light of the requirement of the relevant legal provisions under the given circumstances,
choose the most appropriate remedy available to Raman as per the Companies Act, 2013:
(a) Raman can hold liable to the Company and its every officer who is in default, for non-
production of Written Service Contracts for inspection.
(b) Raman finds that availability of only copies of the written Memorandum setting out the
terms and conditions of the service, for inspection, is in order.
(c) Raman have remedy only against Arjun, Ramesh and Ripudaman, for non-production of
Service Contracts for inspection.
(d) Raman have no remedy, as to production of Service Contracts for inspection, as it is
not necessitated.
4.2 According to Mahadevan, whole-time Company Secretary, SCPL was an undertaking of LSL. If
the Board of Directors of LSL decided to dispose of its investment in SCPL, considering SCPL
as an undertaking of LSL, which of the following options shall be applic able:
(a) The Board of Directors of LSL shall exercise the power of disposing of its investment in
SCPL, considering SCPL as an undertaking of LSL, by means of a Board Resolution
assented to by all the Directors present at a duly convened Board Meeting.
(b) The Board of Directors of LSL shall exercise the power of disposing of its investment in
SCPL, considering SCPL as an undertaking of LSL, only with the consent of the company
by an Ordinary Resolution.
(c) The Board of Directors of LSL shall exercise the power of disposing of its investment in
SCPL, considering SCPL as an undertaking of LSL, only with the consent of the company
by a Special Resolution and thereafter, by seeking approval of the jurisdictional Registrar
of Companies.
(d) The Board of Directors of LSL shall exercise the power of disposing of its investment in
SCPL, considering SCPL as an undertaking of LSL, only with the consent of the company
by a Special Resolution.
4.3 According to the case scenario, the Board of Directors of LSL stated that since January, 2020
Raghuram had participated in several Board Meetings and assented to various decisions, which
had both pecuniary and operational impact. In addition, the Board had passed several
resolutions during that period. Accordingly, the Board, in one of its meetings, decided by
passing a resolution that the wrongfully appointed Director, Raghuram shall make good the
losses, if any, over the period he remained Executive Director and all the resolutions passed
during his period and assented to by him shall be valid and stand good.
Specify which amongst the following decision taken by the Board is valid as per the requirement
of the Companies Act, 2013:
(a) The decision of the Board is correct because no act done by a person as a Director shall
be deemed to be invalid if it was subsequently noticed that his appointment was invalid
by reason of any defect or disqualification, etc.
(b) The Board is required to get all the resolutions passed during the tenure of Raghuram
and assented by him, ratified by an Ordinary Resolution at a General Meeting of the
shareholders.
(c) The Board is required to get all the resolutions passed during the tenure of Raghuram
and assented by him, ratified by a Special Resolution passed at a General Meeting of
the shareholders.
(d) The Board is required to cancel all the resolutions passed during the tenure of Raghuram
and assented by him since they were void and inoperative ab-initio.
4.4 The case scenario states that LSL, after complying with the required legal formalities, made
some political contributions and incurred some expenses during the financial year 2022 -23. LSL
showed in its financial statements Rs.11,00,000 as political contributions and Rs.3,00,000 as
‘Advertisement and Business Promotion Expenses’. From the following options choose the
correct statement as regards the disclosure of political contribution :
(a) The disclosure made by LSL in its financial statements showing Rs. 11,00,000 as
political contributions and Rs. 3,00,000 as ‘Advertisement and Business Promotion
Expenses’ is correct.
 (b) LSL was required to disclose Rs. 10,00,000 as political contributions and Rs. 4,00,000
as ‘Advertisement and Business Promotion Expenses’.
(c) LSL was required to disclose all the sums totaling Rs. 14,00,000 as political
contributions.
(d) LSL was required to disclose Rs.12,00,000 as political contributions and Rs. 2,00,000
as ‘Advertisement and Business Promotion Expenses’.
4.5 Ramesh, the Whole-time Director of LSL, was not an interested party at the time of entering
into this Supply Contract with ASPL. However, during the second year of the Supply Contract,
Rajesh, (son of Ramesh) purchased about 30% of the equity shares of ASP L through one of
his family owned business entities and also lent Rs.25 lakh as unsecured loan to ASPL. Then
also Ramesh did not inform LSL or the Board of Directors regarding the new developments
since he was of the opinion that there was no need for such disclosure.
Comment upon the validity of the statement as to the non- disclosure of interest of Ramesh in
compliance with the Companies Act, 2013:
(a) Ramesh opinion is correct stating that there is no need for such disclosure of the interest
of his son, Rajesh, as compliance is only w.r.t the director of the company.
(b) Ramesh need to disclose as he is indirectly (due to his shareholding and granting of loan
by his son) concerned in a Supply Contract with ASPL at the meeting of the Board in
which the contract or arrangement is discussed forthwith when he becomes concerned
or interested. Statement of Ramesh as to non-disclosure is invalid.
(c) Ramesh was not interested or concerned in a Supply Contract with ASPL at the time of
entering into this Supply Contract. A non –disclosure of interest by him is the valid
statement.
(d) As Rajesh is the concerned or interested person in the Supply Contract to ASPL, being
a shareholder of ASPL and also indebted Rs.25 lakh as unsecured loan to ASPL. A non
-disclosure of interest is the invalid statement.
5. Paavan Nidhi Limited having its Registered Office at Karol Bagh, New Delhi, has been declared as
Nidhi by notification published in the Official Gazette. The company is incorporated with the object of
cultivating the habit of thrift and savings among its members, receiving deposit from, and lending to,
its members only, for their mutual benefit.
Paavan Nidhi Limited has six Directors, namely, Padam, Prakash, Puneet, Pratima, Poorva and Piyush
and two hundred fifty members. All the Directors are shrewd businessmen having full dedication to the
cause of the company. They are committed to run the company in accordance w ith the Nidhi Rules,
2014 and being law-abiding persons shall not do anything which is not permitted in case of a Nidhi like
carrying on the business of chit fund or hire-purchase finance or leasing finance or insurance, etc.
Padam is the senior-most Director with vast experience in the field of finance and therefore, he has
been honoured by the company to hold Directorship for a term up to ten consecutive years.
The company offers following services for the benefit of its members:
1. Fixed Deposit Plans of different maturities;
2. Recurring Deposit Plans for members who do not wish to deposit lump-sum;
3. Opening of Savings Accounts in the name of members;
4. Gold Loans to the needy members on easy terms;
5. Mortgage Loans, etc.
PQR Traders Private Limited, having its Registered Office at Munirka, New Delhi, was incorporated
last year. It had a chance to go through the operations of Paavan Nidhi Limited and finding them to be
on sound footing, it applied for becoming its member. The Nidhi company is analysing the proposals
received.
During the current year, Mr. Kshitij, a member of Paavan Nidhi Limited deposited ` 1,00,000 in the
name of his minor son Rudra who is of 12 years of age. Mr. Kshitij also desires that Rudra becomes a
member of Paavan Nidhi and for that purpose he is negotiating with the company. As regards the
validity of this matter, Piyush, one of the Directors has raised certain objections. The company wants
to sort out the issue amicably.
Multiple Choice Questions: (10 Marks)
5.1 From the case scenario, it is observed that PQR Traders Private Limited has applied for
becoming a member of Paavan Nidhi Limited. From the following options, choose the one which
is applicable in such a situation:
(a) PQR Traders Private Limited cannot become a member of Paavan Nidhi Limited.
(b) PQR Traders Private Limited can become a member of Paavan Nidhi Limited by investing
minimum ` 5,00,000 as capital.
(c) PQR Traders Private Limited can become a member of Paavan Nidhi Limited by
including a clause in its Articles of Association which permits it to become a member of
a Nidhi company.
(d) PQR Traders Private Limited must be in existence for a minimum period of three years
to be eligible for becoming member of a Nidhi company.
5.2 Piyush, one of the Directors of Paavan Nidhi Limited has raised objection on acceptance of
deposit amounting to ` 1,00,000 in the name of Rudra, a minor, and negotiations initiated by
his father Mr. Kshitij to make him a member of the Paavan Nidhi. From the following options
choose the one which is applicable in the given situation:
(a) Paavan Nidhi Limited can neither accept deposit in the name of Rudra, a minor, nor can
make him a member.
(b) Paavan Nidhi Limited may accept deposit in the name of Rudra, a minor, since it is made
by Mr. Kshitij, a member and the father of Rudra but being minor, he cannot be made a
member.
(c) Paavan Nidhi Limited cannot accept deposit in the name of Rudra exceeding ` 25,000
but he can become a member by contributing minimum amount.
(d) Paavan Nidhi Limited can accept deposit in the name of Rudra up to ` 2,00,000 and he
can become a member of the company.
5.3 From the case scenario, it is evident that Padam, the senior-most Director, has been honoured
by Paavan Nidhi Limited to hold Directorship for a term up to ten consecutive years. After
relinquishing his office as Director at the expiry of ten years, when can Padam be re-appointed
as Director of the company.
(a) Padam shall be eligible for re-appointment only after the expiry of two years of ceasing
to be a Director.
 (b) Padam shall be eligible for re-appointment only after the expiry of one year of ceasing
to be a Director.
(c) Padam shall be eligible for re-appointment only after the expiry of six months of ceasing
to be a Director.
(d) Padam shall not be eligible for re-appointment once he ceases to be a Director.
5.4 If M/s A & A Associates, a firm of auditors, has been appointed as auditors of Paavan Nidhi
Limited for a term of five years commencing from FY 2016-17 to FY 2020-21 and if the company
is desirous of re-appointing the said firm of auditors for another term of five years commencing
from FY 2021-22, then which of the following options is applicable in such an eventuality:
(a) M/s A & A Associates cannot be re-appointed as auditors for another term of five years
since no Nidhi company shall appoint or reappoint any auditing firm for two terms of five
consecutive years.
(b) M/s A & A Associates can be re-appointed as auditors for another term of five years
since a Nidhi company is permitted to appoint or reappoint any auditing firm for two terms
of five consecutive years.
(c) M/s A & A Associates cannot be re-appointed as auditors for another term of five years
since no Nidhi company is permitted to re-appoint any auditing firm before the expiry of
two years if an auditing firm ceases to be its auditors after completion of the term of five
years.
(d) M/s A & A Associates cannot be re-appointed as auditors for another term of five years
since no Nidhi company is permitted to re-appoint any auditing firm before the expiry of
one year if an auditing firm ceases to be its auditors after completion of the term of five
years.
5.5 The rate of interest charged on loan given by Nidhi can be;
(a) Five per cent above the highest rate of interest offered on deposits by Nidhi and shall
be calculated on reducing balance method
(b) Five per cent above the highest rate of interest offered on deposits by Nidhi and shall
be calculated on as flat rate basis
(c) Seven and half per cent above the highest rate of interest offered on deposits by Nidhi
and shall be calculated on reducing balance method
(d) Seven and half per cent above the highest rate of interest offered on deposits by Nidhi
and shall be calculated on as flat rate basis
6. GenTech Engineering and Consultancy Limited (GECL), having its Registered Office in Kolkata, West
Bengal, was incorporated way back in January, 2011. The Central Government holds 21% of its paid -
up share capital while the State Government of Gujarat and Navyug Engineering Limited, a
government company, hold 23% and 10% respectively.
As GECL was interested in ascertaining the market value of its assets, it invited tenders and after
thorough scrutiny it shortlisted the following Registered Valuers:
(1) Mr. Anant: He has set up his valuation practice in London for the last 5 years. He came to visit
India on December 24, 2021, for a short span of around one month during which, in terms of
the tender submitted by him, he was proposed by GECL to undertake the assignmen t relating
to valuation of its assets.
(2) Mr. Aloknath: He is a valuer member of a registered valuers’ organisation and is one of the
partners of M/s ALP & Associates, a Kolkata based valuation firm. Mr. Aloknath was given
second preference by GECL if Mr. Anant refused the assignment relating to the valuation of
assets.
(3) M/s MNC Valuers & Associates, LLP: It is a Limited Liability Partnership, based at Kolkata,
and all the partners of the firm are valuer members of a registered valuers’ organisation. It was
given third preference by GECL for undertaking the valuation of its assets.
GECL holds 15% paid-up share capital of Prayas Marketing Limited (PML). However, the jurisdictional
Registrar of Companies (RoC), having reasonable cause to believe that the PML was not carrying on
any business or operations, ordered a physical verification of the Registered Office of PML.
After physical verification of the Registered Office of PML, the Registrar formed an opinion that the
company, in actuality, was not carrying on any business or operations and therefore, he issued a
notice to the company and all of its Directors indicating his intention to remove the name of the
company from the Register of Companies, if no explanation along with copies of relevant documents
were filed within a period of 30 days from the date of the notice. Since no cause to the contrary was
shown by the company and its Directors, the Registrar, after following the requisite procedure,
removed the name of the PML from the Register of Companies and a notice dated 30.10.2021 to this
effect was published in the Official Gazette. On publication of this notice i n the Official Gazette and
also its placement on the official website of the Ministry of Corporate affairs, PML was dissolved.
After dissolution as above of the PML effective from 30.10.2021 under Section 248 of the Companies
Act, 2013, it ceased to operate as a company and Certificate of Incorporation was deemed to have
been cancelled from such date.
Multiple Choice Questions: (6 Marks)
6.1 From the case scenario, it is observed that the share of the Central Government in the paid -up
share capital of GECL is 21% while the State Government of Gujarat and Navyug Engineering
Limited, a government company, respectively hold 23% and 10% of its paid-up capital. Which
one of the following options is applicable in such a situation:
(a) GECL is a Government Company since both the Central Government and the State
Government of Gujarat hold more than 25% of its paid-up share capital.
(b) GECL is not a Government Company since the Central Government, the State
Government of Gujarat and Navyug Engineering Limited, a Government Company, hold
only 54% of its paid-up share capital which is less than the threshold limit of 55%.
(c) GECL is a Government Company since the Central Government, the State Government
of Gujarat and Navyug Engineering Limited, a Government Company, hold 54% of its
paid-up share capital which is more than the threshold limit of 51%.
(d) GECL is not a Government Company since the Central Government and the State
Government of Gujarat together hold 44% of its paid-up share capital which is less than
the threshold limit of 51%.
6.2 Which one of the following options is applicable in case Mr. Anant was preferred to be given
the valuation assignment of valuing the assets of GECL.
(a) Mr. Anant cannot act as a valuer being a person not resident in India.
(b) Mr. Anant cannot act as a valuer since process of valuation of goodwill is a tedious and
time-consuming task.
 (c) Mr. Anant can act as a valuer being a valuer member of a registered valuers’
organisation in London and is more knowledgeable than others.
(d) Mr. Anant can act as a valuer being a valuer member of a registered valuers’
organisation in London and is out of India for less than seven years.
6.3 In case PML is aggrieved by the order dated 30-10-2021 of the Registrar of Companies that led
to the removal of its name from the Register of Companies and its dissolution and therefore, it
desires to file an appeal to the National Company Law Tribunal (NCLT), which one of the
following options shall be applicable in such a situation:
(a) PML is permitted to file an appeal to the National Company Law Tribunal (NCLT) within
a period of one year from the date of the order of the Registrar of Companies.
(b) PML is permitted to file an appeal to the National Company Law Tribunal (NCLT) within
a period of two years from the date of the order of the Registrar of Companies.
(c) PML is permitted to file an appeal to the National Company Law Tribunal (NCLT) within
a period of three years from the date of the order of the Registrar of Companies.
(d) PML is permitted to file an appeal to the National Company Law Tribunal (NCLT) within
a period of five years from the date of the order of the Registrar of Companies.
7. Mr. Atul is an employee of the company ABC Limited, and an investigation is going on him under the
provisions of Companies Act, 2013. The company wants to terminate Mr. Atul as investigation is going
against him. The company has filed the application with the Tribunal for approval of Mr. Atul’s
termination. The company has not received any reply from the Tribunal within 30 days of filling an
application. After expiry of 30 days, the company considered it as deemed approval and terminated
Mr. Atul.
On the basis of the Companies Act, 2013, answer the following questions: (4 Marks)
7.1 Can ABC Limited terminate Mr. Atul, an employee of the company, if no reply is received from
the Tribunal?
(a) No, the termination of Mr. Atul is not valid, and company has attracted penal provisions
under the Law.
(b) No, the termination of Mr. Atul is not valid because the company cannot consider the
non-reply of the Tribunal as deemed approval.
(c) Yes, the termination of Mr. Atul made by the company is totally valid in law and the
company can do so by considering deemed approval of tribunal.
(d) Yes, the termination of Mr. Atul made by the company is totally valid in law as filing an
application to the Tribunal is not required in this case and the company on its own can
terminate Mr. Atul.
7.2 Regarding termination of employment of Mr. Atul by ABC Limited, what is the remedy available
with Mr. Atul?
(a) Mr. Atul can file an appeal to the Appellate Tribunal within 30 days of his termination.
(b) Mr. Atul can file an appeal to the Appellate Tribunal within 45 days of his termination.
(c) Mr. Atul can file an appeal to the Court having jurisdiction within 30 days of his
termination.
(d) Mr. Atul has no remedy available to him.
 Section B: Securities Laws
8. FLY-FISH Limited is a listed company provided the following month-wise grievance position of the
investors' complaints for the financial year 2022-2023.
Nos. Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
22 22 22 22 22 22 22 22 22 23 23 23
Opening unresolved 12 10 18 15 20 8 6 15 18 20 24 12
grievances
Grievances received 16 14 12 14 18 12 20 17 15 14 15 14
during the month
Grievances redressed 18 6 15 9 30 14 11 14 13 10 27 20
during the month
Closing unresolved 10 18 15 20 8 6 15 18 20 24 12 6
grievances

Requirement: Referring to the applicable Regulation made under the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, advise the Company about the grievance redressal
position of investors' complaints to be filed during the month of April 2023 w ith the recognised stock
exchanges where the securities of the Company are listed by answering the following Multiple Choice
Questions: (4 Marks)
8.1 State within how many days FLY-FISH Limited is required to file a statement giving the status
relating to Quarter 4 of the financial year 2022-2023 as to the investors complaints- mentioning
number of complaints, pending complaints, disposed complaints and those remaining
unresolved at the end of each quarter-
(a) It has to file the detailed status as to the investors complaints, by 30 th day of April, 2023.
(b It has to file the detailed status as to the investors complaints for the financial year 2022-
2023 within 3 months from the end of the financial year.
(c) It has to file the detailed status as to the investors complaints relating to the each Quarter
of the financial year 2022-2023 within 15th day of the next quarter, hence for quarter 4
by 15th day of April, 2023.
(d) It has to file the detailed status as to the investors complaints relating to Quarter 4 of the
financial year 2022-2023 within 21st day of April, 2023.
8.2 Ascertain how many complaints redressed during the relevant quarter of the financial year
2022-2023 as per the requirements of the mentioned quarter in above question -
(a) 10
(b) 20
(c) 27
(d) 57
9. Pawan Limited operates in the aerospace segment and is planning to roll out an Initial Public Offer.
One of its 12 directors was barred from assessing the capital market by SEBI. Though restrictions
were imposed upon the promoter group as well, they were later removed after representations made
by them in this regard. A subsidiary company of Pawan Limited, Vayu Limited, defaulted on the
repayment of the deposit around nine months ago, which is now rectified.
Fire Limited is among the major suppliers of Pawan Limited. It also offers consultancy services on
energy management and space shuttle technology, in addition to trading in solar energy -based
devices. Mr. Alok, CFO of Fire Limited, which is a listed entity, heard from someone that composite
issues can be made on the Indian Stock Market.
He seeks input from Mr. Bhavesh, the Company Secretary, regarding the type of securities specified
to be issued in this way and what nature of issue or placement can be composed together. He is also
not sure and has promised to revert after consulting the expert on the matter.
Finally, Fire Limited issued the red prospectus on the stock exchange, where its securities were not
listed earlier. But made revisions to the price band notified earlier. Mr. Bhavesh suggests to the Board
that they need to extend the bidding period from the current tenor of 5 days. Mr. Alok asked him to do
the needful to extend the bidding.
Unfortunately, Fire Limited fails to obtain listing or trading permission from the stock exchanges where
the specified securities were to be listed. Mr. Bhavesh is aware of the regulation that it shall refund
through verifiable means the entire monies received upon receipt of the intimation from stock
exchanges rejecting the application for listing of the specified securities, hence, he started making the
necessary arrangements.
Multiple Choice Questions: (6 Marks)
You are an expert on Securities Laws, and are professionally engaged to answer the following
questions by identifying the most appropriate option based upon provisions contained in the Securities
and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.
9.1 In regards to intent of Fire Limited which is listed issuer, to proceed with composite issue of
specified securities. Advise Mr. Bhavesh and Mr. Alok what type of issue or placement can be
composed together.
(a) Public cum private placement
(b) Public cum right allotment
(c) Bonus cum right allotment
(d) Public cum preferential allotment
9.2 Which of the following options is representing the correct set of reasons or disqualifications due
to which Pawan Limited become ineligible to make an initial public offer?
i. if the issuer or any of its promoters or directors is a wilful defaulter or a fraudulent
borrower.
ii. if the issuer, any of its promoters, promoter group or directors or selling shareholders
are debarred from accessing the capital market by the SEBI.
iii. if any of the promoters or directors of the issuer is a promoter or director of any other
company which is debarred from accessing the capital market by the SEBI.
(a) i and ii only
(b) ii only
(c) ii and iii only
(d) All of i, ii, and iii
9.3 Regarding the revision made by Fire Limited in the price band, it shall extend the bidding (issue)
period disclosed in the red herring prospectus for;
(a) A minimum period of five working days
(b) A minimum period of three working days
 (c) A minimum period of two working days
(d) No extension is required
10. Venus Limited is a listed company that manufactures and trades in perfumes, attars, essential oils,
natural extracts, and fragrance-based cosmetic and personal care items. It has the largest
manufacturing plant for rose water extractions in Kannauj, the pe rfume capital of India and often
referred to as the Grasse (France) of the East.
Venus Limited has 12 directors on its board, and Mr. Vinod Kapadia was appointed as managing
director just a month ago. Mars Limited, another listed company, holds 12% of the equity shares and
paid-up share capital of Venus Limited.
An Audit Committee was constituted, consisting of six directors, of whom three are independent and
one is non-executive. Ms. Krishna, who is an independent director, was appointed as the chairperson
of the Audit Committee. The Audit Committee of Venus Limited during 2021–22 and 2022–23 met on
following dates:
Meeting Date & Place of the meeting No. of member of committee, who attended the
meeting
A 18th May 2021, RO All 6 members
B 10th August 2021, RO All 6 members
C 30th October 2021, RO 5 members including 3 independent directors
D 10th Jan 2022, RO All 6 members
E 15th March 2022, RO All 6 members
1 12th April 2022, RO All 6 members
2 17th June 2022, RO 5 members including 3 independent directors
3 8th July 2022, Shimla (HP, India) 4 members including 2 independent directors
5 members including 2 independent and 1 non-
4 11th Nov 2022, RO
executive directors
28th December 2022, Kannuaj 3 director including 1 independent and 1 non-
5
(UP, India) executive directors
6 13th Jan 2023, Grasse (France) All 6 members
7 10th March 2023, RO 1 independent and 1 non-executive director only

Since Mr. Vinod Kapadia is appointed as MD recently hence he is willing to know about the time within
which the quarterly results need to be reported from end of the quarter in ordinary course of business.
Multiple Choice Questions: (10 Marks)
You are an expert on securities laws, who is being professionally engaged to answer the following
questions (specified as MCQs) by identifying the most appropriate option based upon provisions
contained in the Securities and Exchange Board of India (Listing Obligation and Disclosure
Requirements) Regulations, 2015.
10.1. Whether Mars Limited and Venus Company are related parties to each other?
(a) No, because Mars Limited is not a related party as defined under sub -section (76) of
section 2 of the Companies Act, 2013.
(b) No, because Mars Limited is not a related party to Venus limited under the applicable
accounting standards.
 (c) No, because equity shares held by Mars Limited in Venus Limited is less than the
threshold of 20%.
(d) Yes
10.2 Whether constitution of Audit Committee is in order in case of Venus Limited?
(a) No, because Audit Committee shall consist of at least 3 directors with independent
directors forming a majority.
(b) No, because Audit Committee shall consist of at least 3 directors out of which at least
2/3 shall be independent directors.
(c) Yes, because Audit Committee shall consist of at least 3 directors out of which at least
1/3 shall be independent directors.
(d) Yes, because Audit Committee shall consist of at least 3 directors with at -least 2
independent directors and/or non-executive directors.
10.3 Which of following is the correct option that represents those meetings of audit committee
convened during 2022-23, which was supposed to be adjourned for want of quorum?
(a) Only 7th meeting.
(b) 5th and 7th meetings only.
(c) 3rd, 5th and 7th meeting only.
(d) None of the meeting.
10.4 How many instances of default by Venus Limited in context to number of meetings of audit
committee and time gap between such meetings took place during 2021-22 and 2022-23;
(a) Not even once in both the years
(b) Once each during 2021-22 and 2022-23
(c) Once only in 2021-22
(d) Once only in 2022-23
10.5 Financial results of first quarter of 2023-24 need to be reported to stock exchange by Venus
Limited within;
(a) 15th July, 2023
(b) 30th July, 2023
(c) 14th August, 2023
(d) 29th August, 2023
Section C: Economic Laws (30 Marks)
11. Mr. Raman resident in India had gone to London [UK] on a temporary visit in August 2022 and to
Bhutan in February 2023. He brought in India at the time of his return, currency notes of Government
of India and RBI Notes Rs. 20,000 from London in the denomination of Rs. 200 and Rs. 1,00,000 from
Bhutan in the denomination of Rs. 500.
Referring to the provisions of the Foreign Exchange Management Act, 1999, answer the following
questions: (4 Marks)
11.1 Whether import of Indian currency of Rs. 20,000 in the denomination of Rs. 200 from London
by Mr. Raman is permissible under the provisions of FEMA?
(a) lmport of currency notes of Government of India and RBI notes of Rs. 20,000 is not
permissible as it exceeds the limit of Rs. 10,000, denomination of currency is immaterial.
 (b) lmport of currency notes of Government of India and RBI notes of Rs. 20,000 is
permissible as it does not exceeds the limit of Rs. 25000, denomination of currency is
immaterial.
(c) lmport of currency notes of government of India and RBI notes of Rs. 20,000 is not
permissible as import of Indian currency can be done of denomination only upto Rs. 100.
(d) lmport of currency notes of government of India and RBI notes of Rs. 20,000 is not
permissible as no import of Indian currency is allowed as per Regulations.
11.2 Whether import of Indian currency of Rs. 1,00,000 in the denomination of Rs. 500 from Bhutan
by Mr. Raman is prohibited under the provisions of FEMA?
(a) lmport of currency notes of government of India and RBI notes of Rs. 1,00,000 is not
prohibited as there is no ceiling limit as per Regulations
(b) lmport of currency notes of government of India and RBI notes of Rs. 1,00,000 is
prohibited as import of Indian currency can be done of denomination only upto Rs. 100.
(c) lmport of currency notes of government of India and RBI notes of Rs. 1,00,000 is not
prohibited as denomination of currency is immaterial.
(d) lmport of currency notes of government of India and RBI notes from Bhutan is prohibited.
12. Upalayam Old Student Association was formed with the object of providing Coaching & Hostel facilities
to the students studying in the government school. Mr. Murugan, an Indian Origin, acquired American
citizenship and settled in USA. However, he is an overseas citizen of India cardholders. Mr. Murugan
donated Rs. 10 Lakh to the said Association from his personal savings earned in USA through the
normal banking channel. Referring to the provisions of the Foreign Contribution (Regulation) Act, 2010,
answer the following: (4 Marks)
12.1 Whether the donation made by Mr. Murugan is a Foreign Source?
(a) No, as Mr. Murugan is a person of Indian Origin, the donation made by him is not a
foreign source.
(b) No, as Mr. Murugan is an overseas citizen of India cardholders, the donation made by
him is not a foreign source.
(c) No, as he has donated his personal savings, it is not a foreign source.
(d) Yes, Donation from Mr. Murugan, a Person of Indian origin who has acquired American
citizenship and also is an Overseas Citizen of India cardholder, will be treated as foreign
contribution.
12.2 In case Mr. Murugan still holds Indian Citizenship, state whether the donation made by Mr.
Murugan is a Foreign Source?
(a) The said donation will be treated as foreign contribution as Mr. Murugan is settled in
USA and he is a foreigner.
(b) The said donation will not be treated as foreign contribution as Mr. Murugan holds Indian
citizenship and he is not a foreigner.
(c) The said donation will be treated as a foreign contribution as Mr. Murugan has donated
from his personal savings earned in USA.
(d) The said donation will be treated as a foreign contribution as it is received from any
country other than India.
13. Narsee Monjee is among the leading management institute of country. It offers state of art facilities in
addition to global learning opportunities to its pupils through students exchange programme, wherein
student has option to complete maximum upto two final semesters of their study program from any
one of Ivy League foreign universities with which it has MOUs. Even faculty exchange program also
in place to offer best blend of knowledge and teaching.
Ramesh Dayal and Manish Kandpal, two students (who are friends as well) of master level
management program decided to complete final semester of their degree from one such foreign
university under student exchange program. Therefore both of them left India on 23rd December, 2021.
Despite earlier they have plan to come back to mother land by the June 30 th of 2022 i.e. after the end
of the final semester, but Manish got good job placement there and decided to start working there only.
He returned to India in X-mas holidays in 2022 to meet his family, while Mr. Ramesh Dayal who also
got placement offer, denied to employment there and returned to India as per plan.
To support studies of his son, the father of Manish remit him USD 64,000 during 2021-22 and USD
17,800 during 2022-23, while his tuition fee at such Higher Educational Institutions (HEI) is only USD
27,500 (including all).
Canada chapter of alumni association of Narsee Monjee organised a re-union function. Narsee
Monjee’s alumni club (constituted internally as part of university organisation structure) remit
sponsorship (100000 Canadian dollars approximately equal to USD 75,000) of cultural evening as part
of such re-union function.
Narsee Monjee’s faculty of management also offers consultancy and Ministry of Defence
Polices (MDPs). Recently (11 th May to 20th May 2022) it delivered one such professional development
in UAE to train the professionals their prior to roll out of Direct Tax. The invoice raised by MDP
department on 22 nd May for USD 10,000. (8 Marks)
Multiple Choice Questions
13.1 In regard to remittance of an amount equivalent to USD 81,800 (USD 64,000 in 2021-22 and
USD 17,800 in 2022-23) against the tuition fee of only USD 27,500 (including all), by father of
Mr. Manish in foreign currency to his son (Mr. Manish), identify the correct option as per
applicable law;
(a) Violate the permissible limit during 2021-22
(b) Violate the permissible limit during 2022-23
(c) Violation in both the years 2021-22 as well as 2022-23
(d) There is no violation, neither in 2021-22 nor 2022-23
13.2 Regarding the realisation of proceed of Development Program Conducted in UAE the proceed
of export of services (professional development program), in view of the changed economic
scenario in the country, Vasuki, one of the Executive Directors of PISCO Electronics, requested
the company for change in his borrowing terms i.e. to reduce the interest rate to 8% per annum
from the existing 9% per annum and to increase the period of repayment from the present 20
instalments to 30 instalments. Which of the following options is applicable in such a situation:
(a) The amount representing the full export value of services exported shall be realised
within six months or within such period as may be specified by the Reserve Bank, in
consultation with the Government, from time to time, from the date of export.
(b) The amount representing the full export value of services exported shall be realised and
repatriated to India within six months or within such period as may be specified by the
 Reserve Bank, in consultation with the Government, from time to time, from the date of
export.
(c) The amount representing the full export value of services exported shall be realised
within nine months or within such period as may be specified by the Reserve Bank, in
consultation with the Government, from time to time, from the date of export.
(d) The amount representing the full export value of services exported shall be realised and
repatriated to India within nine months or within such period as may be specified by the
Reserve Bank, in consultation with the Government, from time to time, from the date of
export.
13.3 Quantify the amount of penalty, if applicable, if father of Ramesh, Mr. Narottam remit him USD
275,000 in 2021-22 through authorised dealer. Ramesh also studied in same HEI, where his
friend Manish did and required to pay same amount of tuition fee:
(a) Mr. Narottam doesn’t violate any provision, because he remitted the amount through
authorised dealer.
(b) Mr. Narottam violates the provisions, therefore liable for penalty up to USD 25000.
(c) Mr. Narottam violates the provisions, therefore liable for penalty up to USD 75000.
(d) Mr. Narottam violates the provisions, therefore liable for penalty up to USD 247500.
13.4 Regarding the residential status of Mr. Ramesh Dayal identify the correct statement out of
following;
(a) Mr. Ramesh is person resident in India for both FY 2021-22 and 2022-23.
(b) Mr. Ramesh is person resident outside India for both FY 2021-22 but person resident in
India for FY 2022-23.
(c) Mr. Ramesh is person resident in India for FY 2021-22 but person resident outside India
for FY 2022-23.
(d) Mr. Ramesh is person resident outside India for both FY 2021-22 and 2022-23.
14. Amol Open University of Languages, is a private university established under a State Act. The
objective behind the establishment of university was to provide degree/ diploma/ certificate course to
the students, an online leaning platform to learn all the prominent languages, which are being spoken
in the major part of the world. This will generate to the employability of the students in different part of
the world, since they are familiar with the language of that country. Since this being an online lea rning
platform, the students can pursue the programme simultaneously with doing their regular academic /
professional course. The examination will also be held online, by sitting at home, through their PC/
Laptop in a protected environment, after completing certain hours of learning modules.
The University has made a tie up arrangements with experts in the foreign languages. They guide the
students online and also through the pre-recorded videos.
Several Foreign Governments intend to offer donations / contributions for the development of their
language. The respective countries have offered to give foreign currency contribution for the promotion
of these languages.
Based on the above scenario, answer the following questions: (4 Marks)
14.1 The Certificate of Registration to the University was given only for the purpose of preparing the
educational material (print or soft copy), paying of honorarium to teachers and IT related
 infrastructure for online classes only. Whether Certificate of Registration can be used for
receiving foreign contribution for building the infrastructure of the University Campus:
(a) The funds once received can be utilised for any other purposes.
(b) The funds are being utilised for building construction i.e. for University’s objective so it
can be used.
(c) No, the purpose for which the Certificate of Registration has been granted, cannot be
diverted. The end use of the funds has to ensured to utilise in that purpose only.
(d) It is on the discretion of the University Officials, how to utilise it.
14.2 Whether Foreign contribution so received by the University can be invested in any Mutual Fund
Scheme:
(a) Mutual Fund Scheme are safe, hence can be invested
(b) All Mutual Fund Schemes are not safe and very volatile in nature.
(c) The surplus funds can invested only debt based secure investments
(d) It depends upon the discretion of the University officials.
15. Hangout Casa was a very prominent chain of Chinese restaurant with presence all around the nation.
Most of its outlets/restaurants are operating on franchise model, but some are company owned as well
and operating at lease-hold premises. Hangout Casa had a great reputation, its outlets have award-
winning chefs and tastefully designed interiors. Much of its business came from weekend parties and
get-to-gathers.
Due to health–related-awareness among the people at large, the consumption level of fast food is
declining. Covid also jolted the liquidity position badly. The competition from low price alternative
options also dented the sales revenue of almost all the retail outlets. It tried to widen the range of item
offered, likewise recently it started selling ice creams of Rim Jim Brand. Effort to negotiate with lessor
to reduce the rent were largly unsuccessful. Eventually the business became insolvent.
Suppliers of food, beverages and utilities were unpaid for supplies provided in the previous 45 -60
days, amounting to around Rs. 9,50,000. There were lease rental arrears that included the rent for
one month amounting to Rs. 50,000 towards landlord, Mr. Deepak (the landlord had received advance
rent for three months, lease deed provided for one-month rent as security and one-month rent as
advance). Amount of Rs. 78,000 is also due towards Rim Jim Limited, whose ice-cream it sells. Though
somehow it managed to pay bank dues to avoid any legal actions.
Hangout Casa also had a secured creditor, ‘Punji Bank’. The bank indicated that it did not wish to
appoint a receiver/ file for insolvency as the accounts were regularly maintained. For most of its own
outlets the salaries due to employees (chef, assistant chef, waiters and house-keeping staff) were paid
in half since the past three months.
Hangout Casa went insolvent and CIRP was initiated. Ms. Naziya Khatoon was appointed as interim
resolution professional and later as resolution professional. Ms. Naziya while forming committee of
creditor was not sure about inclusion and exclusion of certain creditors who own both operational and
financial debt.
Rim Jim Limited a cash rich outlet chain of Ice-cream Parlors is currently looking for expansion of their
business and diversification thereof. Board of Rim Jim, decided to submit a resolution plan and being
resolution applicant it submitted a resolution plan along with an affidavit stating that he is eligible under
section 29A of the IBC, to the resolution plan prepared on the basis of the information memorandum.
Some resolution plans also received by Resolution Professional.
A meeting of committee of creditor was convened a week later, wherein the selected resolution plans
that confirm the conditions referred to in sub-section (2) to section 30 were to be considered. Rim Jim
Limited is of view that it can through its representative attend such meeting of committee of creditor
and is allowed to vote as well.
Multiple Choice Questions: (10 Marks)
15.1 Regarding the view point of Rim Jim Limited, that it’s representative shall also be allowed to
attend the meeting of the committee of creditors in which the resolution plan of the applicant is
considered. Identify the correct statement in the light of the Insolvency and Bankruptcy Code,
2016:
(a) Rim Jim Limited may attend the meeting of the committee of creditors in which the
resolution plan of the applicant is considered and allowed to vote.
(b) Rim Jim Limited may attend the meeting of the committee of creditors in which the
resolution plan of the applicant is considered, but not allowed to vote.
(c) Rim Jim Limited shall not attend the meeting of the committee of creditors in which the
resolution plan of the applicant is considered.
(d) Rim Jim Limited may attend the meeting of the committee of creditors in which the
resolution plan of the applicant is considered, and vote if allowed by resolution
professional.
15.2 Under IBC there are two types of debt, Operational and Financial. Identify the correct statement
regarding the nature of lease rental arrears:
(a) Lease rental arrear is financial debt in all cases, for the purpose of IBC, 2016.
(b) Lease rental arrear is financial debt only if lease period is more than 3 years, for the
purpose of IBC, 2016.
(c) Lease rental arrear is operational debt in all cases, for the purpose of IBC, 2016.
(d) Lease rental arrear can be operational or financial debt as per mutual understanding
between lessor and lessee, for the purpose of IBC, 2016.
15.3 It is specified in the fact of case scenario that the suppliers of food, beverages and utilities were
unpaid for supplies provided in the previous 45-60 days, amounting to around Rs. 9,50,000.
Largest among such suppliers is Man Mohan Diary to whom Rs. 2,11,390 is due, who gave
notice two week back for payment but no payment was made by Hangout Casa. Can Man
Mohan Diary file an application under section 9 of the Code?
(a) Yes, because amount outstanding or in default is more than Rs.1 lakh.
(b) Yes, because he served the notice and 10 days has been elapsed but no payment has
been made.
(c) No, because amount outstanding or in default is less than Rs. 10 lakh.
(d) No, because amount outstanding or in default is less than Rs. 100 lakh.
15.4 For most of its own-run (Owned and Operated Hangout Casa; other than franchised) outlets
the salaries due to employees (chef, assistant chef, waiters and house-keeping staff) were paid
in half since the past three months. What is nature of outstanding empl oyee’s dues?
(a) These are neither operational debt nor financial debt
(b) These are financial debt in all the case for the purpose of IBC
 (c) These are operational debt in all the case for the purpose of IBC
(d) These are operational debt if is in arrear for less than 3 month and beyond, classified as
financial debt.
15.5 Ms. Naziya Khatoon, Resolution Professional for Hangout Casa, need your advice regarding
constitution of committee of creditors. Advise her regarding correctness of following statements
pertaining to committee of creditors.
i. Committee of creditor shall be constituted by interim resolution professional after
collation of all the claim received against corporate debtor and determination of financial
position.
ii. Committee of creditor shall comprise of all the creditors.
iii. Related party shall not have right to representation at committee of creditors.
iv. Those who own both financial as well operational debt, shall also, included in committee
of creditors; but only to the extent of financial debt owed by Hangout Casa to such
creditors.
(a) Only statement i, ii and iii are correct
(b) Only statement ii, iii and iv are correct
(c) Only statement i, iii and iv are correct
(d) All the statements are correct
 Set- A- Corporate and Economic Laws
Answers

Answer Key 1
Question Answer Reasoning
No.
1.1 (c) According to Section 151 of the Companies Act, 2013 read with Rule 7 of
the Companies (Appointment and Qualification of Directors) Rules, 2014,
A listed company may, upon notice of not less than:
(a) one thousand small shareholders; or
(b) 1/10th of the total number of such shareholders,
whichever is lower, have a small shareholders' director elected by the small
shareholders.
However, a listed Company may opt to have a director on suo moto
representing small shareholders.
The term "small shareholders" means a shareholder holding shares of
nominal value of not more than Rs. 20,000 or such other sum as may be
prescribed.
According to Rule 7, no holding of shares is necessitated for the proposed
person to be appointed as SSD.
Proposal to appoint Mr. Amar as a Small Shareholders' Director
In the instant case, since 50 small shareholders have proposed to appoint
Amar as their representative, the said proposal is valid and can be adopted
as 1/10th of 500 small shareholders comes to 50 and also no holding of
shares is necessitated for appointment of Mr. Amar as SSD.
1.2 (b) According to Section 151 of the Companies Act, 2013 read with Rule 7 of
the Companies (Appointment and Qualification of Directors) Rules, 2014,
A listed Company may opt to have a director on suo moto representing
small shareholders.

Answer Key 2

Question Answer Reasoning

No.
2.1 (b) As per Section 2(78) of the Companies Act, 2013, (the Act) the term
"Remuneration "means any money or its equivalent given or passed to any
 person for services rendered by him and includes perquisites as defined
under the Income Tax Act, 1961.
Further, as per Section 197(13) of the Act, where any indemnification
insurance is taken by a Company on behalf of Managing Director or other
managerial personnel, the premium therefor paid by the Company shall not
form part of the remuneration payable to any such personnel, if that person
is proved not to be guilty during the year of insurance coverage.
In the light of the provided information in the problem and as per Section 197
read with Schedule V to the Companies Act, 2013, the computation of the
amount that would constitute the yearly remuneration of Mr. Vivek in PCR
Limited for the FY 2021-2022 will be as under:
Sl.No. Particulars In `
(proportionate
to 10 months as
the MD has
taken charge of
the post w.e.f.
01.06.2021)
1. Salary 50,00,000
2. Rent Free Accommodation 5,00,000
3. Children Education Allowance 2,50,000
4 Leave Travel Concession Package (not pro- 3,00,000
rated for 2021-22 as per the question)
Total yearly remuneration of Mr. Vivek 60,50,000
2.2 (b) Computation of excess Remuneration paid to Mr. Vivek
It is provided that the Company has suffered losses during the FY 2020-
2021 and 2021-2022 and the effective capital of the Company as at 31 st
March, 2021 is in negative. So, as per the Act read with Schedule V, the
maximum yearly managerial remuneration payable to Mr. Vivek shall be `60
Lakhs including perquisites.
From the above table of computation, the total yearly remuneration of Mr.
Vivek is arrived `60,50,000 (pro-rated) and whereas, for the year 2021-2022,
Mr. Vivek will be entitled for maximum remuneration payable not exceeding `
50 lakhs per annum (pro-rated for 10 months).
Thus, the excess remuneration paid to Mr. Vivek is Rs. 10,50,000/- [i.e.Rs.
60,50,000 (-) Rs.50,00,000].
2.3 (d) As per Sections 197(9) and 197(10) of the Companies Act, 2013, where the
remuneration received by any director is in excess of the limit it shall be
refunded to the Company by such director and till that time he holds it in trust
for the Company.
The Company shall not waive the recovery of any sum which is refundable to
it unless the waiver is approved by a Special Resolution passed by the
Company within two years from the date the sum becomes refundable.
Answer Key 3

Question Answer Reasoning

No.
3.1 (c) As per section 244 of the Companies Act, 2013-

(1) provides that the following members of a company shall have the right to
apply under section 241, namely:—
(a) in the case of a company having a share capital, not less than one
hundred members of the company or not less than one-tenth of the total
number of its members, whichever is less, or
any member or members holding not less than one tenth of the issued share
capital of the company, subject to the condition that the applicant or applicants
has or have paid all calls and other sums due on his or their shares.

3.2 (c) Again coming to section 244(1) which provides that-

The following members of a company shall have the right to apply

under section 241, namely:—
(a) in the case of a company having a share capital, not less than one
hundred members of the company or not less than one-tenth of the total
number of its members, whichever is less, or
any member or members holding not less than one tenth of the issued share
capital of the company, subject to the condition that the applicant or applicants
has or have paid all calls and other sums due on his or their shares.

Here, Dharmesh alone is having more than one-tenth share capital i.e. 2 lakh
shares of having the face value of Rs 20 lakh, hence he is eligible to apply to
the Tribunal.

3.3 (d) Section 242(2) provides that –

(2) Without prejudice to the generality of the powers under sub-section (1), an
order under that sub-section may provide for—

(e) the termination, setting aside or modification, of any agreement, howsoever

arrived at, between the company and the managing director, any
other director or manager, upon such terms and conditions as may, in the
opinion of the Tribunal, be just and equitable in the circumstances of the case;

(f) the termination, setting aside or modification of any agreement between

the company and any person other than those referred to in clause (e):

Provided that no such agreement shall be terminated, set aside or modified

except after due notice and after obtaining the consent of the party concerned.
 3.4 (d) Section 243 (1) provides that-

Where an order made under section 242 terminates, sets aside or modifies an
agreement such as is referred to in sub-section (2) of that section,—

(a) such order shall not give rise to any claims whatever against
the company by any person for damages or for compensation for loss of office
or in any other respect either in pursuance of the agreement or otherwise.

3.5 (d) Section 243 (1A) provides that the person who is not a fit and proper person
pursuant to sub-section (4A) of section 242 shall not hold the office of
a director or any other office connected with the conduct and management of
the affairs of any company for a period of five years from the date of the said
decision.

Section 242(4A) provides that at the conclusion of the hearing of the case in
respect of sub-section (3) of section 241, the Tribunal shall record its decision
stating therein specifically as to whether or not the respondent is a fit and
proper person to hold the office of director or any other office connected with
the conduct and management of any company.

Answer Key 4
Question Answer Reasoning
No.
4.1 (b) (b) It shall be in order, if the Company provides copies of the written
Memorandum setting out the terms and conditions of the services for
inspection.
Reason – Section 190 (1)
Every company shall keep at its registered office a contract of service with a
managing or whole-time director is in writing, a copy of the contract; and
where such a contract is not in writing, a written memorandum setting out
its terms.
It is worth noting that the copies of the contract or the memorandum kept
under sub-section (1) shall be open to inspection by any member of the
company without payment of fee.
4.2 (d) The Board of Directors of SL shall exercise the power of disposing of its
investment in SCPL, considering SCPL as an undertaking of LSL, only with
the consent of the company by a Special Resolution.
Reason – Section 180(1)(a)
The Board of Directors of a company shall exercise the powers to sell,
lease or otherwise dispose of the whole or substantially the whole of
the undertaking of the company or where the company owns more than
one undertaking, of the whole or substantially the whole of any of such
undertakings only with the consent of the company by a special
resolution.
4.3 ((a) (a) The decision of the Board is correct because no act done by a person as
a Director shall be deemed to be invalid if it was subsequently noticed that
his appointment was invalid by reason of any defect or disqualification, etc.
 Reason – Section 176
No act done by a person as a director shall be deemed to be invalid,
notwithstanding that it was subsequently noticed that his appointment was
invalid by reason of any defect or disqualification or had terminated by
virtue of any provision contained in this Act or in the articles of the
company.
4.4 (c) SL was required to disclose all the sums totaling Rs. 14,00,000 as political
contributions.
Reason – Section 182 (2)
Political Contribution shall include a donation or subscription or payment
caused to be given by a company on its behalf or on its account to a person
who, to its knowledge, is carrying on any activity which, at the time at which
such donation or subscription or payment was given or made, can
reasonably be regarded as likely to affect public support for a political party
shall also be deemed to be contribution of the amount of such donation,
subscription or payment to such person for a political purpose; or/and The
amount of expenditure incurred, directly or indirectly, by a company on an
advertisement in any publication, being a publication in the nature of a
souvenir, brochure, tract, pamphlet or the like, shall also be deemed, where
such publication is by or on behalf of a political party, and where such
publication is not by or on behalf of, but for the advantage of a political
party.
4.5 (a) Ramesh opinion is correct stating that there is no need for such disclosure
of the interest of his son, Rajesh, as compliance is only w.r.t the director
of the company.
Reason: As per section 184 of the Companies Act, every director of a
company who is in any way, whether directly or indirectly, concerned or
interested in a contract or arrangement or proposed contract or
arrangement entered into or to be entered into—
(a) with a body corporate in which such director or such director in
association with any other director, holds more than two per cent
shareholding of that body corporate, or is a promoter, manager, Chief
Executive Officer of that body corporate; or

(b) with a firm or other entity in which, such director is a partner, owner or
member, as the case may be,

shall disclose the nature of his concern or interest at the meeting of the
Board in which the contract or arrangement is discussed and shall not
participate in such meeting.

Answer Key 5
 Question Answer Reasoning
No.
5.1 (a) PQR Traders Private Limited cannot become a member of Paavan Nidhi
Limited.
Reason – Rule 8 (1) of Nidhi Rules 2014
A Nidhi shall not admit a body corporate or trust as a member. Therefore
PQR Traders Private Limited (being body corporate) cannot become a
member of Paavan Nidhi Limited.
5.2 (b ) (b) Paavan Nidhi Limited may accept deposit in the name of Rudra, a minor,
since it is made by Mr. Kshitij, a member and the father of Rudra but being
minor, he cannot be made a member.
Reason – Rule 8 (3) of Nidhi Rules 2014
A minor shall not be admitted as a member of Nidhi.
Further proviso to said rule suggests that deposits may be accepted in the
name of a minor, if they are made by the natural or legal guardian who is
a member of Nidhi.
5.3 Padam shall be eligible for re-appointment only after the expiry of two years
(a) of ceasing to be a Director.
Reason - Rule 17 (3) of Nidhi Rules 2014
The Director of Nidhi shall be eligible for re-appointment only after the
expiration of two years of ceasing to be a Director.
5.4 M/s A & A Associates can be re-appointed as auditors for another term of
(b) five years since a Nidhi company is permitted to appoint or reappoint any
auditing firm for two terms of five consecutive years.
Reason - Rule 19 (2) of Nidhi Rules 2014
No Nidhi shall appoint or re-appoint an audit firm as auditor for more than
two terms of five consecutive years.
It is worth noting that an auditor (whether an individual or an audit firm) shall
be eligible for subsequent appointment after the expiration of two years from
the completion of his or its term.
5.5 (c) Seven and half per cent above the highest rate of interest offered on
deposits by Nidhi and shall be calculated on reducing balance method.
Reason - Rule 16 of Nidhi Rules 2014
The rate of interest to be charged on any loan given by a Nidhi shall not
exceed seven and half per cent above the highest rate of interest offered
on deposits by Nidhi and shall be calculated on reducing balance method.

Answer keys 6

Question Answer Reasoning

No.
6.1 (d) GECL is not a Government Company since the Central Government and the
State Government of Gujarat together hold 44% of its paid-up share capital
which is less than the threshold limit of 51%.
Reason - Section 2(45) of the Companies Act, 2013
Government company means any company in which not less than fifty-
one percent of the paid-up share capital is held by the
  Central Government, or
 Any State Government or Governments, or
 Partly by the Central Government and partly by one or more State
Governments,
and
Includes a company which is a subsidiary company of such a Government
company.
Since Union Government (21%) and Government of Gujarat (23%) together
hold only 44% of paid-up share capital, which less than 51%; hence not a
government company.
6.2 (a) Mr. Anant cannot act as a valuer being a person not resident in India.
Reason – Rule 3(1)(h) of Companies (Registered Valuers and
Valuation) Rules, 2017
A person shall be eligible to be a registered valuer if he is a person resident
in India.
It is worth noting that for the purposes of these rules ‘person resident in
India’ shall have the same meaning as defined in clause (v) of section 2 of
the Foreign Exchange Management Act, 1999 (42 of 1999) as far as it is
applicable to an individual;
6.3 (c) PML is permitted to file an appeal to the National Company Law Tribunal
(NCLT) within a period of three years from the date of the order of the
Registrar of Companies.
Reason – Section 252(1)
Any person aggrieved by an order of the Registrar, notifying a company as
dissolved under section 248, may file an appeal to the Tribunal within a
period of three years from the date of the order of the Registrar

Answer keys 7
Question Answer Reasoning
No.
7.1 (c) The provision of Section 218 states that, the company shall require to take
approval of the tribunal before taking action against the employee if there is any
pendency of any proceedings against any person concerned in the conduct and
management of the affairs of the company.
The company shall require approval in the following circumstances:
discharge or suspension of an employee; or
punishment to an employee by dismissal, removal, reduction in rank or
otherwise; or
change in the terms of employment to the disadvantage of employee(s);
The Tribunal shall notify its objection to the action proposed in writing.
In case, the company, other body corporate or person concerned does not
receive the approval of the Tribunal within 30 days of making the application, it
 may proceed to take the action proposed against the employee. That means it
can be considered as a deemed approval by the tribunal.
7.2 (d) Mr. Atul has not any remedy available. As per the provision of the law, appeal
to the appellate tribunal can be made only if the person is dissatisfied with the
objection raised by the tribunal. Hence, in this case the tribunal has not replied
Mr. Atul cannot refer to an appeal to Appellate Tribunal.

Answer keys 8
Question Answer Reasoning
No.
8.1 (d) As per the Regulation 13(3) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the listed companies are required to file
with the recognized stock exchange(s) on a quarterly basis, within 21 days
from the end of each quarter a statement giving the number of investors
complaints pending at the beginning of the quarter, disposed of during the
quarter and those remaining unresolved at the end of each quarter. In terms
of the above Regulation, FLY-FISH Limited has to file the following details
relating to Quarter 4 of the financial year 2022-2023 within 21st day of April,
2023 with the recognised stock exchange(s) with which its securities are
listed.
8.2 (d) No. of Complaints redressed during the 4 quarter of the Financial year 2022-
2023 is 57.

Answer Key 9
Question No. Answer Reasoning
9.1 (b) Clause (h) to regulation 2(1) of the Securities and Exchange Board of
India (Issue of Capital and Disclosure Requirements) Regulations, 2018
“composite issue” means an issue of specified securities by a listed
issuer on public-cum-rights basis, wherein the allotment in both public
issue and rights issue is proposed to be made simultaneously.
9..2 (d) Regulation 5(1) of the Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2018
An issuer shall not be eligible to make an initial public offer
1. If the issuer, any of its promoters, promoter group or directors or selling
shareholders are debarred from accessing the capital market by the Board.
2. If any of the promoters or directors of the issuer is a promoter or
director of any other company which is debarred from accessing the capital
market by the Board
3. If the issuer or any of its promoters or directors is a wilful defaulter or
a fraudulent borrower.
4. If any of its promoters or directors is a fugitive economic offender.
 9.3 (b) Regulation 46(2) of the Securities and Exchange Board of India (Issue
of Capital and Disclosure Requirements) Regulations, 2018
Regulation 46 deals with period of subscription
Sub-regulation 2 provides in case of a revision in the price band, the issuer shall
extend the bidding (issue) period disclosed in the red herring prospectus, for a
minimum period of three working days, subject to the provisions of sub-
regulation (1).
Here it is important to note that sub-regulation 1 provides except as otherwise
provided in these regulations, an initial public offer shall be kept open for at
least three working days and not more than ten working days.

Answer Key 10
Question Answer Reasoning
No.
10.1 (d) First proviso to the Regulation 2(1) (zb) of the Securities and Exchange
Board of India (Listing Obligation and Disclosure Requirements)
Regulations, 2015
Related party means a related party as defined under sub-section (76)
of section 2 of the Companies Act, 2013 or under the applicable
accounting standards
First proviso provided that following shall be deemed to be related party
(a) any person or entity forming a part of the promoter or promoter
group of the listed entity; or
(b) any person or any entity, holding equity shares (i) of twenty per cent
or more; or (ii) of ten per cent or more, with effect from April 1, 2023; in
the listed entity either directly or on a beneficial interest basis as
provided under section 89 of the Companies Act, 2013, at any
time, during the immediate preceding financial year.
10.2 (b) No, because audit committee shall consist of at least 3 directors out of
which 2/3 shall be independent directors.
Reason – Regulation 18(1) of the Securities and Exchange Board of
India (Listing Obligation and Disclosure Requirements) Regulations,
2015
Every listed entity shall constitute a qualified and independent audit
committee in accordance with the terms of reference, subject to the
following
The audit committee shall have minimum three directors as members.
At least two-thirds of the members of audit committee shall be
independent directors
While in given case 3 out of 6 audit committee members are
independent directors that amounts to ½ only, whereas requirement is
of at least 2/3rd.
10.3 (b) Regulation 18(2)(b) of the Securities and Exchange Board of India
(Listing Obligation and Disclosure Requirements) Regulations, 2015
The quorum for audit committee meeting shall either be two members
or one third of the members of the audit committee, whichever is
greater, with at least two independent directors.
 In case of both 5th and 7th two independent directors were not present,
hence these two meetings was supposed to be adjourned for want of
quorum.
10.4 (d) Regulation 18(2)(a) of the Securities and Exchange Board of India
(Listing Obligation and Disclosure Requirements) Regulations, 2015
The audit committee shall meet at least four times in a year and not
more than one hundred and twenty days shall elapse between two
meetings.
The time gap between 3th (8th July 2022) and 4th meeting (11th Nov
2022) is more than 120 days.
10.5 (c) Regulation 33(3)(a) of the Securities and Exchange Board of India
(Listing Obligation and Disclosure Requirements) Regulations, 2015
The listed entity shall submit quarterly and year-to-date standalone
financial results to the stock exchange within forty-five days of end of
each quarter, other than the last quarter.
Forty five days from end of first quarter i.e. 30th June 2023 last on 14th
August 2023.

Answer Key 11
Question Answer Reasoning
No.
11.1 (b) As per Regulations related to Import of goods and services under
FEMA:
Any person resident in India who had gone out of India on a temporary
visit, may bring into India at the time of his return from any place outside
India (other than from Nepal and Bhutan), currency notes of
Government of India and Reserve Bank of India notes up to an amount
not exceeding ` 25,000 (Rupees Twenty Five Thousand only).
11.2 (b) As per Regulations related to Import of goods and services under
FEMA, A person may bring into India from Nepal or Bhutan, currency
notes of Government of India and Reserve Bank of India for any amount
in denominations up to ` 100/- without any ceiling.

Answer Key 12
Question Answer Reasoning
No.
12.1 (d) Foreign Contribution is defined under Section 2(1)(h) of the Foreign
Contribution (Regulation) Act, 2010 (FCRA, 2010), to mean the
donation, delivery or transfer made by any foreign source. Section
2(1)(j) only speaks about citizen of a foreign country while inclusively
defining foreign source. A donation, delivery or transfer of any article,
currency or foreign security by any person who has received it from any
foreign source, either directly or through one or more persons is a
foreign contribution.
 Donation from Mr. Murugan, a Person of Indian origin who has acquired
American citizenship and also is an Overseas Citizen of India
cardholder, will be treated as foreign contribution.
12.2 (b) Contributions made by a citizen of India living in another country i.e.
'Non-resident Indians' from his personal savings through normal
banking channels is not to be treated as foreign contribution. In case if
Mr. Murugan holds Indian citizenship, he is not a foreigner and
therefore, donation given by Mr. Murugan, will not be treated as foreign
contribution.

Answer Key 13
Question Answer Reasoning
No.
13.1 (d) As per item number viii in part 1 to schedule III of Foreign Exchange
Management (Current Account Transactions) Rules 2000 individual can
avail foreign exchange facility within a limit of USD 250000 without prior
approval of RBI for the purpose of studies abroad.
It is worth noting that the Liberalised Remittance scheme, allow
remittance more than UDS 250000 for the purpose of study abroad (if
fee of such academic institute is higher than threshold of USD 250,000).
Since in none of the years, the amount of remittance above the
threshold, hence provisions not violated.
13.2 (d) The amount representing the full export value of services exported shall
be realised and repatriated to India within nine months or within such
period as may be specified by the Reserve Bank, in consultation with the
Government, from time to time, from the date of export.
Reason – Rule 9(1) of the Foreign Exchange Management (Export
of Goods & Services) Regulations, 2015
The amount representing the full export value of goods / software/
services exported shall be realised and repatriated to India within nine
months or within such period as may be specified by the Reserve Bank,
in consultation with the Government, from time to time, from the date of
export.
13.3 (c) Mr. Narottam violates the provisions, therefore liable for penalty up to
USD 75000.
Reason - As per item number viii in part 1 to schedule III of Foreign
Exchange Management (Current Account Transactions) Rules 2000
individual can avail foreign exchange facility within a limit of USD 250000
without prior approval of RBI for the purpose of studies abroad.
Further sub-section 1 to section 13 of the Foreign Exchange
Management Act 1999, provides if any person contravenes any provision
of this Act, or contravenes any rule, regulation, notification, direction, or
order issued in exercise of the powers under this Act, or contravenes any
condition subject to which an authorisation is issued by the Reserve
Bank, he shall, upon adjudication, be liable to a penalty up to thrice the
sum involved in such contravention where such amount is quantifiable,
or up to two lakh rupees where the amount is not quantifiable, and where
such contravention is a continuing one, a further penalty which may
 extend to five thousand rupees for every day after the first day during
which the contravention continues.
Here in present case since the amount involved in the contravention is
quantifiable, which arrives at USD 25000, because the amount
permissible by Schedule III is USD 250000. Hence amount of penalty
can be up to USD 75000 (i.e. 3 times of USD 25000)
Note - Since university fee was a mere USD 27500 hence, the
Liberalised Remittance scheme has no importance here, which
otherwise, allow remittance more than UDS 250000 for the purpose of
study abroad.
13.4 (a) Section 2(v) of FEMA 1999
Ramesh Stays more than 182 in each of FY 2021-22 and 2022-23
therefore person resident in India for both the FY 2022-23 and 2023-24.

Answer Key 14
Question Answer Reasoning
No.
14.1 (c) Section 8(1) of The FCRA, 2010 provides that every person, who is
registered and granted a certificate or given prior permission under this Act
and receives any foreign contribution,—

(a) shall utilise such contribution for the purposes for which the
contribution has been received.

Provided that any foreign contribution or any income arising out of it shall
not be used for speculative business:

Provided further that the Central Government shall, by rules, specify the
activities or business which shall be construed as speculative business for
the purpose of this section;

(b) shall not defray as far as possible such sum, not exceeding twenty
per cent. of such contribution, received in a financial year, to meet
administrative expenses:

Provided that administrative expenses exceeding twenty per cent. of

such contribution may be defrayed with prior approval of the Central
Government.

(2) The Central Government may prescribe the elements which shall be
included in the administrative expenses and the manner in which the
administrative expenses referred to in sub-section (1) shall be calculated.

14.2 (c) No. Speculative activities have been defined in Rule 4 of FCRR – 2011
as under:-

1. (a) any activity or investment that has an element of risk of appreciation

or depreciation of the original investment, linked to marked forces, including
investment in mutual funds or in shares;
 (b) participation in any scheme that promises high returns like investment in
chits or land or similar assets not directly linked to the declared aims and
objectives of the organization or association.

(2) A debt-based secure investment shall not be treated as speculative

investment.

Answer Key 15
Question Answer Reasoning
No.
15.1 (d) (d) Rim Jim Limited may attend the meeting of the committee of
creditors in which the resolution plan of the applicant is considered, but not
allowed to vote.
Reason – Section 30(5) of IBC 2016
The resolution applicant may attend the meeting of the committee of
creditors in which the resolution plan of the applicant is considered.
But the resolution applicant shall not have a right to vote at the meeting of
the committee of creditors unless such resolution applicant is also a
financial creditor.
Mind it Rim-Jim Limited is an operational creditor not the financial creditor.
15.2 (c) Section 5 (21) of IBC 2016
Operational debt means a claim in respect of the provision of goods or
services including employment or a debt in respect of the repayment
payment of dues arising under any law for the time being in force and
payable to the Central Government, any State Government or any local
authority
Lease is service, and the lessor who rents out space to an entity is an
operational creditor to whom the entity owes rent; therefore lease rentals
for business purposes fall under the definition of 'Operational Debt' as per
Section 5(21) of the IBC.
15.3 (d) Section 4 of IBC 2016
The Part II of code (i.e. Insolvency resolution and liquidation for corporate
persons) shall apply to matters relating to the insolvency and liquidation of
corporate debtors where the minimum amount of the default is one lakh
crore:
Note - Earlier (till 24.03.2020) the threshold was one lac.
But proviso to section empower the Central Government to specify the
minimum amount of default of higher value which shall not be more than
one crore rupees, by notification in this regard.
In exercise of the powers conferred by such proviso, the Central
Government through Notification No. SO 1205(E) dated 24 th March 2020,
specifies one crore rupees as the minimum amount of default for the
purposes of the said section.
15.4 (c) Section 5 (21) of IBC 2016
Operational debt means a claim in respect of the provision of goods or
services including employment or a debt in respect of the repayment
payment of dues arising under any law for the time being in force and
 payable to the Central Government, any State Government or any local
authority
15.5 (b) Sub-section 1, 2 and 4 of section 21 of IBC, 2016
Sub-section 1 requires interim resolution professional shall after collation
of all claims received against the corporate debtor and determination of the
financial position of the corporate debtor constitute a committee of
creditors.
Sub-section 2 provides the committee of creditors shall comprise all
financial creditors of the corporate debtor, but the proviso further read as
"a financial creditor or the authorized representative of the financial creditor
referred to in subsection (6) or sub-section (6A) or sub-section (5) of
section 24, if it is a related party of the corporate debtor, shall not have any
right of representation, participation or voting in a meeting of the committee
of creditors.
Sub-section 4 (a) further provides that where any person is a financial
creditor as well as an operational creditor, then such person shall be a
financial creditor to the extent debt owed by corporate debtor, and shall be
included in the committee of creditors, with voting share proportionate to
the extent of financial debts owed to such creditor.
CA FINAL – LAW SPOM SET A Nov 2024

“QUESTIONS”
Q1. M Pvt. Ltd incorporated on 23rd Oct, 2017. As per compliance requirement, Company shall
hold its AGM in 9 months from date of closure of FY & file financial statements with MCA in due
date. What is due date for holding a Board meeting for approval of financial statements?

A) 30th September, 2018

B) 30th December, 2018
C) 31st December, 2018
D) 31st March, 2019

Q2. Mr. N was appointed as Additional Director of XYZ Limited in July, 2015. Immediately
after his appointment in July, 2015, on behalf of Company he entered in agreement with NY
Private Limited for supplies of raw material. Later he was regularized as a Director in ensuing
annual general meeting. In 2016 he signed Contract with LUX vendors. At end of year, in Dec
2016, management came to know that his appointment was not valid as he was disqualified to act
as a Director of any Company. He signed one more agreement in Jan 2017 with SUZI vendors. In
such scenario, what will be status of contract/agreements he signed on behalf of XYZ Limited?

A) All agreement/ contracts will become invalid

B) All agreement/ contracts will be valid
C) All agreement/ contracts before December 2016 will be valid
D) All agreement/ contracts before December 2016 will be invalid

Q3. Every individual whose name is so included in the data bank of directors shall pass an online
proficiency self-assessment test conducted by the institute within a period of …………… from the
date of inclusion of his name in the data bank, failing which, his name shall stand removed from the
databank of the institute. (SELF DRAFTED)

A) 3 years
B) 1 year
C) 3 years
D) 2 years

Q4. Mr. N, MD resigned w.e.f. 13th March, 2014 due to preoccupation. Mr. M, Whole Time
Director & Mr. O, Director, resigned w.e.f. 20th March, 2015 on reconstruction of company. Mr.
M & Mr. O made application to Board for compensation for loss of office. When Mr. N came to
know that he also asked for compensation. Who eligible for such compensation?

A) Mr. N
B) Mr. M
C) Mr. N & Mr. M
D) Mr. M & Mr. O

Compiled by APNAMENTOR [1] “APNA MENTOR” 976-040-0350

CA FINAL – LAW SPOM SET A Nov 2024

Q5. Mr. A is independent director & he wants to appoint alternate director as he is leaving
country for few months. Which of below can be appointed as his alternate director?

A) Mr. B who is Alternate Director for Mr. X

B) Mr. C who is qualified to be appointed as independent Director
C) Mr. D who is qualified to be appointed as executive Director
D) Mr. E who is ready to be appointed Alternate Director for 1.5 months

Q6. XYZ Ltd Company needs to appoint independent Director of company. company has a gold
JEWELLERY business. Company shortlisted Mr. Bajaj, Mr. Dh & Mr. Anmol Parekh for vacant
post. Mr. Bajaj was auditor of subsidiary company of XYZ Ltd Company. But he resigned from
his post two years ago. Mr. Dh who is a professional goldsmith & has experience of more than 20
years. Mr. Anmol Parekh has a pecuniary relation with promoters, 3 years preceding current
financial year. Who can be appointed as Independent Director from above people?

A) Mr. Bajaj
B) Mr. Dh
C) Mr. Anmol Parekh
D) Mr. Dh & Mr. Anmol Parekh

Q7. AB Institute is authorized by Central government to maintain databank of preceding

Directors. Institute has prepared list of 32 independent directors who can be appointed by
companies. Infoline Company wants to appoint 3 Directors on basis of this data. Company decided
to appoint Independent Director on May 9, 2017. Next general meeting is on May 18, 2017. What is
process of appointment for director?

A) Appointment of independent director be approved at Board meeting before May 18, 2017
B) Appointment of independent director be approved by company in GM
C) Appointment of independent director be approved by company before GM by May 17, 2017
D) Appointment of independent director be approved by company in 3 months of his appointment.

Q8. MNO, Public Ltd. incorporated on June 11, 2007. It selected Mr. Ajay, Mr. Ro, Mr. R &
Mr. Ravi to be appointed as Director of company in GM on August 15, 2007. All 4 directors gave
their consent by September 12, 2007. But Mr. R & Mr. Ro were not having DIN. They both
applied for DIN. By what time they will be able to get their DIN?

A) 30 days
B) 1 month
C) 2 month
D) 3 month

Q9. S Pvt. Ltd. is engaged in manufacturing of tyres. Company was incorporated in year 2001
with its head office located at Chennai. Mr. Rakesh Kumar was Director of company. He
committed a fraud of around 1 Crore. He was terminated by company for his act. After
termination he shifted to Delhi. Mr. Kumar applied for a new Director Identification number with
his Delhi based address. Will he be allotted a new DIN?

Compiled by APNAMENTOR [2] “APNA MENTOR” 976-040-0350

CA FINAL – LAW SPOM SET A Nov 2024

A) Yes, since he changed his state so he can be allotted a new DIN by State government
B) No, he cannot be allotted a new DIN because it is prohibited by Act.
C) Yes, he can apply for a new DIN with prior permission of Central government
D) No, he has to wait for three years before applying for a new DIN

Q10. Mr. X is director of a company. He is hospitalized day before meeting. As per Company Act,
can Mr. X attend this meeting called for company merger via video conferencing?

A) Yes, he can only attend meeting

B) Yes, he can attend meeting but has no right to vote
C) No, he cannot attend meeting
D) Not Sure

Q11. Without approval of Central Govt. a person cannot be appointed as a Manager or full time
Director if he is continuous resident of India for: -

A) 3 months prior to his appointment

B) 6 months prior to his appointment
C) 8 months prior to his appointment
D) 12 months prior to his appointment

Q12. Mr. B got DIN allotted on May 6, 2017. By what date he to intimate his DIN to his
Company?

A) By June 6, 2017
B) By June 5, 2017
C) By July 6, 2017
D) By July 5, 2017

Q13. LG Pvt. Ltd pays remuneration to its Directors on yearly basis. Company has WTD on
Board. Currently they appointed Mr. X as MD & now Company to keep in mind that overall
remuneration to Directors including MD, WTD & manager shall not exceed max cap limit under
act. If there is more than 1 MD/ WTD/ Manager, how much max remuneration allowed in a FY.

A) 5% of net profits
B) 10% of net profits
C) 11% of net profits
D) 15% of net profits

Q14. XYZ, listed Public Company, having paid up share capital 12 Crore. How many
independent directors to be there when total numbers of directors are 13?

A) 2
B) 4
C) 5
D) 6

Compiled by APNAMENTOR [3] “APNA MENTOR” 976-040-0350

CA FINAL – LAW SPOM SET A Nov 2024

Q15. A financial creditor, by assignment agreement assigned here debt to X trust. X trust filed
petition for initiation of Corporate Insolvency resolution process against Corporate debtor. State
correct statement w.r.t. competency of X trust in filing of petition in above case: -

A) X Trust is not a competent applicant as per section 6 of IBC, 2016

B) X Trust is being authorized by FC to file application
C) X Trust in capacity of financial creditor can file a valid petition.
D) None of above

Q16. ABC, Private Ltd., with 10 Board of directors was served notice of board Meeting, 7 days
prior to said meeting on their postal addresses. Mr. M is hospitalized due to some severe illness.
Mr. Y is going to London before Board meeting. Mr. X & Mr. B went to Australia for some
company business. Mr. A is busy with his daughter’s marriage & unable to attend meeting. Mr.
E’s mother is hospitalized so he is busy taking care of his mother but he assures to attend meeting
via video conferencing. Mr. D & Mr. P were scheduled to arrive for meeting at 2 pm on same day
however flight got delayed by 8 hours. Mr. G & Mr. H are in town & available for scheduled board
meeting. Could Board meeting be held?

A) Meeting can be held in evening & Director D & Director P can join later on
B) Meeting cannot be held because of quorum is incomplete
C) Quorum is complete & directors can proceed with meeting
D) Meeting is postponed.

Q17. Find out correct statement?

A) Resolution by circulation deemed duly passed by board or committee member when such resolution
is passed by one third of total majority of member present & voting on resolution
B) Resolution by circulation deemed passed by board or committee, when such resolution circulated in
draft with necessary paper, to all directors or member of committee & approved by majority, who are
entitled to vote on resolution
C) Resolution by circulation deemed passed by board or committee, when such resolution circulated in
draft together with necessary paper, to all directors or member of committee & approved by 2/3rd of
majority of director who are entitled to vote on resolution
D) Resolution by circulation deemed passed by board or committee, when such resolution circulated in
draft with necessary paper, to all directors or member & approved by 2/3rd of majority of members
who are entitled to vote on resolution

Q18. Find out correct statement?

A) Audit committee with 2/3rd majorities of members & chairperson are required to have ability to read
& understand financial statements.
B) 2 director & 1 independent director with chairperson in audit committee shall have ability to read &
understand financial statements
C) Only 1/3rd member of audit committee & its chairperson shall have ability to read & understand
financial statements
D) Min 3 directors with independent directors forming majority, constituting Audit Committee shall
have ability to read & understand financial statements.

Compiled by APNAMENTOR [4] “APNA MENTOR” 976-040-0350

CA FINAL – LAW SPOM SET A Nov 2024

Q19. AB, listed Company was constituted in 2012. It has 8 directors Mr. N, Mr. K, Mr. Ram, Mr.
S, Mr. A, Mr. B, Mr. Raheem & Mr. Das. Out of these directors Mr. Ram, Mr. S, Mr. A & Mr. N
has a good financial knowledge. audit committee constituted by company included Mr. K, Mr.
Das, Mr. A & Mr. Raheem as its chairpersons. After commencement of Companies Act, 2013, it
was required for every audit committee of a company existing before commencement of this Act,
shall be reconstituted in 1 year of such commencement. Find correct statement w.r.t. this
situation?

A) Committee needs to reconstitute as majority members are not experienced in field of Finance
B) Committee needs to reconstitute as 2/3rd of its members aren’t experienced in field of Finance
C) Committee needs to reconstitute as 50 % of its members aren’t experienced in field of Finance
D) Committee needs to reconstitute as majority of board members are not included in it.

Q20. Ram Pvt. Ltd. Company was incorporated on January 12, 2018. company needs to pass a
resolution for purchase of raw material. copy of resolution along with all necessary documents
were circulated to all directors. company has 10 directors Mr. Ram, Mr. Kamal, Mr. Raj, Mr. F,
Mrs. N, Mr. Bharat, Mr. Vinod, Mrs. R, Mr. Kapoor & Mr. J. Mr. Raj & Mr. Ram were abroad
at time of passing resolution. Mr. Ram, Mr. Raj, Mrs. N & Mr. Kamal took objection before
chairman against passing of resolution & want to discuss it further in meeting. Find correct
statement?

A) Since resolution is passed by majority of members there is no need for further discussion on it as it
was duly circulated to all directors.
B) Mr. Ram & Raj can’t raise any objection as they were out of India while passing resolution.
C) Objection is sustainable as it is made by 1/3rd of members of board & meeting is held for further
discussion
D) Objection is sustainable as it is made by 2/3rd of members of board & meeting is held for further
discussion

Q21. I f a p erson acc ep ts an ap p oi n tm ent as a d i recto r i n vi ol ati on of secti on 1 6 5,

h e s h al l b e l i ab l e to a p en al ty of ₹ …… for each d ay aft er th e fi rst d u ri n g wh i ch
s u ch vi ol ati on con ti n u es, sub ject to a m axim um of ₹ ……….. (S E L F DRAFT E D)

A) 2000, 1 Lakh
B) 2000, 2 Lakhs
C) 2000, 5 Lakhs
D) 5000 , 3 Lakhs

Q22. Mr. B, director of XRL Company from 2006. He got his DIN allotted to him on May 6, 2017.
By what date he should have intimated his DIN to XRL Company?

A) Before May 20, 2017

B) Before June 6, 2017
C) Before July 6, 2017
D) Before August 6, 2017

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Q23. Mr. Raman, is appointed as VALUER in April, 2018 in ABC Ltd. He undertook valuation of
assets in 2018. In case Mr. Raman becomes interested in any property, stock etc. of company, he
may be not eligible to undertake valuation in such property of company till: -

A) 2019
B) 2020
C) 2021
D) He will never be appointed as Registered VALUER of ABC Ltd.

Q24. PQR Company give its assent to give guarantee to ABZ Company on taking of loan from
financial institution. According to Co Act, 2013, said act should be approved by Board of
Directors. State mode of approval adopted by board of directors of PQR company: -

A) Board shall give approval for giving guarantee on loan by simple majority
B) Board shall give approval by passing circular resolution.
C) Board shall give approval by passing resolution through special majority
D) Board shall give unanimous approval.

Q25. Mr. X, a director of company, intimated of his participation in meeting scheduled on

August, 2018. He declared his participation through electronic mode, in April 2017. State whether
Mr. X is entitled to participate in meeting to be conducted in August 2018: -

A) Yes, intimation about such participation was made at beginning of calendar year
B) No, because intimation was made in previous calendar year
C) Yes, because company was intimated of its participation in meeting.
D) No, because valid period of declaration (i.e., 1 year) of his participation expired.

Q26. In compliance to Companies Act, 2013, at least 1 Woman director shall be on Board of such
class or classes of companies as may be prescribed. Ms. Riya is keen to hold office of woman
director in a company. She has selected some companies in which there is a vacancy for woman
director. Advice Ms. Riya in selecting companies which are mandatorily required to appoint a
woman director: -

A) PQR Limited which is a unlisted company & having paid up share capital of 150 crore rupees as per
last date of latest audited financial statements.
B) ABC Ltd which is a listed company & having a turnover of 150 crore rupees as per last date of latest
audited financial statements.
C) XYZ Limited which is unlisted company & having a turnover of 350 crore rupees as per last date of
latest audited financial statements.
D) All of above **

Q27. A director of XYZ, a Pvt. Ltd. takes a loan from its company. Due to some reasons, he fails
to repay debt in given time period. He requested board of directors to give him time for repayment
of debt. Which of below statements is correct w.r.t. exercise of power in given case?

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A) Power to fix time limit to repay debt due from director can be exercised only by members by special
resolution at a general meeting.
B) Power to fix time limit to repay debt due from director can be exercised by Board of company itself.
C) Power to fix time limit for repayment of any debt due from director can be exercised with prior
permission of company in general meeting while taking debt.
D) Board not exercise this power if provision on repayment of debt is contained in AOA of company

Q28. Under what circumstances meeting of creditors may be dispensed by NCLT?

A) If 70% of creditors in value agree & confirm to scheme by way of affidavit

B) If 80% of creditors in value agree & confirm to scheme by way of affidavit
C) If 90% of creditors in value agree & confirm to scheme by way of affidavit
D) None of above

Q29. When can application be made to Tribunal for constitution of winding up committee to
assist & monitor progress of liquidation proceedings by Liquidator in carrying function?

A) In 2 weeks from date of passing of winding up order

B) In 3 weeks from date of passing of winding up order
C) In 4 weeks from date of passing of winding up order
D) In 6 weeks from date of passing of winding up order

Q30. A Ltd, appointed Mr. A & Mr. B as directors of Company, by passing of single resolution
for election of these two. Later on it came in notice of Company that there might be some confusion
regarding compliance of applicable provisions. State correct statement in light of Co Act, 2013 as
to appointment & to validity of acts of said appointed directors?

A) Void Appointment & acts of directors void ab-initio.

B) Void Appointment & acts of directors valid until defect in appointment shown to Company.
C) Valid Appointment & so acts valid.
D) Appointment valid subject to ratification by shareholder in general meeting.

Q31. Mr. M returned from abroad with unspent $ USD 1,000. This amount he can retain:

A) For 60 days
B) For 90 days
C) For 120 days
D) For 180 days

Q32. RAB Bank Ltd, banking company, has defaulted in payment of dues to their catering
contractor. Can contractor, as operational creditor initiate insolvency process against bank: -

A) Yes, operational creditors are entitled

B) No, financial service providers are excluded
C) Yes, banking companies are covered under this code
D) No, catering is excluded service under Code

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Q33. Time line of 180 days for Corporate Insolvency Resolution process commences from: -

A) Date of Debt
B) Date of preferring application
C) Date of admission of application by NCLT
D) 90 days after debt is due

Q34. ABC & Co, tax consultants of X Limited, for which interim resolution professional – Mr. A,
has been appointed under Corporate Insolvency resolution process has refused to furnish
information to Mr. A on grounds of client confidentiality. Are they right?

A) Yes, they are right

B) No, Code provides powers to IRP to access all information from various parties
C) Partly right, they can do so only after consent of directors
D) Mr. A is not right in even asking for this info

Q35. Operational creditors entitled to receive notice of meetings of Committee of creditors if their
aggregate dues are not less than ...............% of Total debts of corporate debtor.

A) 20%
B) 10%
C) 15%
D) 5%

Q36. According to Co Act, 2013, draft minutes of a Board meeting held by audio visual means
shall be circulated among all directors in .....................................of meeting.

A) 10 days
B) 15 days
C) 30 days
D) One month

Q37. Minimum threshold prescribed for applicability of Pre-pack Insolvency is: –(SELF DRAFTED)

A) 1 Lakh
B) 20 Lakhs
C) 100 Lakhs
D) 10 Lakhs

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Q38. Ruby Ltd. filed application to NCLT stating that corporate insolvency resolution process
against him, cannot be completed in 90 days under fast track insolvency resolution process.
Considering application & on being satisfied, NCLT ordered to extend period of such process by
30 days. Later, again Ruby Ltd. initiated application for further extension of time period of
insolvency process by 15 days. Decide in given situation, whether NCLT, can extend time by
further 15 days.

A) Yes, because extension of duration in total, is not exceeding 45 days.

B) Yes, depends of facts, if it is justified, NCLT may extend timelines.
C) No, extension of fast track insolvency resolution process shall not be granted more than once.
D) (A) & (B)

Q39. KDS Agro Pvt. Ltd., a newly incorporated company has not mentioned names of first
directors of company in its Articles of Association. Referring provisions of Companies Act, 2013,
who shall be deemed to be first directors of company?

A) Members of company shall be deemed to be first directors of company.

B) Subscribers of company shall be deemed to be first directors.
C) None shall be deemed to be first directors of company.
D) Shareholders shall appoint first directors in General Meeting.

Q40. Turnover of XYZ Ltd as on last date of latest audited financial statements is 400 crore.
Intermittent vacancy of women director on 15th June, 2018. Immediate Board meeting held on 14th
Oct, 2018. vacancy of women director shall be filled up by …………: -

A) Appointment of women director is not mandatory

B) 14th August, 2018
C) 14th September, 2018
D) 14th October, 2018

Q41. All three directors of Cygnus Wires Limited generally remain out of India for developing
connections and securing business opportunities on behalf of the company. However, the company
must strictly follow the legal requirement that at least one of its directors must stay for the
specified statutory period in India. To reckon as ‘resident director’ for the financial year 2018-19,
advise company as to which period spent in India shall count towards statutory period.

A) Period spent in India during the previous financial year 2017-18.

B) Total of 50% each of the period spent in India during the financial year 2016- 17 and 2017-18.
C) Period spent in India during the financial year 2018-19.
D) Total of 50% each of the period spent in India during the financial year 2017 - 18 and 2018-19.

Q42. X Ltd is unlisted company engaged in manufacturing of fabrics. Turnover of company as on

last date of latest audited financial statements is 100 Crore. company is having 7 directors in its
Audit Committee. Advice company by choosing correct option for company regarding

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requirement of appointment of independent director & minimum number of independent
directors if required?
A) Appointment of independent directors mandatorily required under XYZ Limited & min number of
independent directors is 2.
B) Appointment of independent directors mandatorily required under XYZ Limited & minimum number
of independent directors is 3.
C) Appointment of independent directors mandatorily required under XYZ Limited & minimum number
of independent directors is 4.
D) Appointment of independent directors not mandatorily required under XYZ Limited.

Q43. Amar Textiles Limited, a listed company, engaged in production of furniture & fittings in
Pune. company is having 50,000 small shareholders. small shareholders wanted to elect a small
shareholders’ directors amongst themselves so that their issues are resolved during Board
meetings at earliest. 500 small shareholders served a notice for appointment of a small shareholder
in Board. Decide validity of notice by small shareholders: -

A) Notice by 500 small shareholders is valid & company may appoint a small shareholder director.
B) Notice by 500 small shareholders is not valid & company may appoint a small shareholder ‘director
on requisition of 1000 small shareholders.
C) Notice by 500 small shareholders is not valid & company may appoint a small shareholder director
on requisition of 5000 small shareholders.
D) Small Shareholders director cannot be appointed in company as company doesn’t fulfil condition for
appointment of small shareholders’ director.

Q44. ST Ltd engaged in manufacturing of mobiles. Board of Directors consist of 8 directors i.e.
Mr. Ram (Director), Mr. S (Director), Mr. Mohan (Director), Mr. Vijay (Director), Mr. N
(Director), Mr. Ashish (Independent Director), Mr. N (Independent Director) & Mr. Anil (Small
shareholders’ director). Calculate number of directors to retire at AGM on 15th Sept, 2018.

A) One
B) Two
C) Three
D) Four

Q45. P Ltd. desires to appoint additional director on its Board of directors. Articles of company
confer upon Board to exercise power to appoint such a director. As such M is appointed as
additional director on 12th December, 2017. AGM ought to have been held on 17th August, 2018
but adjourned to 5th October, 2018. Decide date up to which M can continue as director in P Ltd.?

A) 17th August, 2018

B) 30th September, 2018
C) 5th October, 2018
D) Appointment of additional director is not valid.

Q46. Mr. Q, a Director of PQR Limited proceeding on a foreign tour for six months, appointed
Mr. Y as alternate director to act for him during his absence. articles of company provide for

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appointment of alternate directors. Mr. Q claims that he has a right to appoint alternate director.
Examine validity of Mr. Q claim.
A) Claim by Mr. Q is valid as Articles provide for appointment of alternate directors
B) Claim by Mr. Q is not valid as authority to appoint alternate director has been vested in board of
directors only & that too subject to empowerment by Articles
C) Mr. Y can’t be appointed as alternate director as Mr. Q proceeds on a foreign tour for six months only
D) None of above

Q47. XYZ Ltd is listed public company having paid-up capital of 20 Crore as on 31st March, 2017
& Turnover of 150 Crore in year ended 31st March, 2017. Total number of directors is 13. State
minimum number of independent directors that company should appoint.

A) 2
B) 3
C) 4
D) 5

Q48. Seafood Limited, a public ltd company was incorporated on 1st April, 2016. Company has
conducted four Board Meetings during FY 2016-17 i.e. on 6th April, 2016, 28th Aug, 2016, 30th Sep,
2016 & 30th March, 2017. Decide on validity of frequency of Board Meeting: -

A) No contravention of provision related to holding of board meeting as 4 board meetings has been held
during year.
B) No contravention of provision related to holding of board meeting as 1st board meeting was held in 30
days of incorporation.
C) Contravention w.r.t. conduct of board meetings as gap between 2 consecutive board meetings (6th
April & 28th August) is 143 days & gap between 2 consecutive board meetings (30th September &
30th March) is 181 days.
D) Contravention w.r.t. conduct of board meetings as gap between 2 consecutive board meetings (6th
April & 28th August) is 123 days & gap between 2 consecutive board meetings (30th September &
30th March) is 141 days.

Q49. There are 9 directors in a company & out of which 2 officers of directors have fallen vacant.
What will be quorum for board meeting?

A) 2
B) 3
C) 4
D) 5

Q50. Board of Directors of A. Limited is desirous to delegate some of its powers to its committee
of directors as they find it difficult to manage everything on their own. Advice Board amongst
following powers which they can delegate to its committee of directors: -

A) To authorize buy-back of securities

B) To invest funds of company

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C) To diversify business of company

D) To take over a company or acquire a controlling or substantial stake in another company

Q51. Board of directors of Well Ltd., wants to contribute 60,000 to a charitable organization
during FY 2017-2018. During FY 2015-2016, company suffered losses. directors are contemplating
to contribute said amount in spite of losses. In this connection, state whether directors can do so?

A) No, Well Ltd. cannot contribute 60,000 in 2017-2018 as company suffered losses in 2015-2016.
B) No, board of directors are not authorized to contribute to bona-fide charitable & other funds.
C) No, Permission of company in GM be required for contribution to bona-fide charitable & other funds
D) Yes, Well Ltd. Can contribute 60,000 to a charitable organization in-spite of losses in 2015- 2016
provided it is to a bona-fide charitable fund.

Q52. Mr. Ruff was appointed as a Managing Director in the government company, Constant
Limited. He was of 70 years with good experience in the field of finance. He was appointed for 6
years. State the correct statement as to term of appointment of Mr. Ruff in the said company: -

A) He cannot be appointed at all

B) He can be appointed by passing special resolution for the period not exceeding 5 years
C) Central government may appoint on application of Board to him for the period of 5 years
D) He can be appointed by passing special resolution, or where no such special resolution is passed,
appointed by Central Government on an application made by the Board, for period exceeding 5 years.

Q53. In IBC, 2016, resolution plan is prepared by ………… & submitted to …………: -

A) Committee of Creditors, Adjudicating Authority

B) Resolution applicant, Committee of creditors
C) Resolution applicant, Resolution Professional
D) Committee of Creditors, Resolution Professional

Q 54. Committee of creditors of Corporate debtors was constituted on 17.3.2018. Time limit, in
which 1st meeting of committee of creditors should be held, is: -

A) 20.3.2018
B) 22.3.2018
C) 24.3.2018
D) 31.3.2018

Q55. R plan to visits USA. He can carry foreign currency in cash for travel abroad: -

A) USD 2000
B) USD 3000
C) USD 5000
D) USD 10,000

Q56. Capable Limited appoints Mr. V as MD of company. Board of directors entrusted him with
some powers. Mr. V is not ready to do such administrative acts authorized by Board of Directors

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keeping in view that he shall be entrusted with substantial powers of management. Decide acts
which Mr. V can undertake: -

A) To draw & endorse any CHEQUE on account of company in any bank

B) To sign financial statements of company
C) To draw & endorse any negotiable instrument
D) To Sign any certificate of share

Q57. Mr. X appointed as MD for life by AOA of Pvt. company incorporated on 1st June, 2018.
Examine in this connection, Can Mr. X be appointed for life as MD?

A) Yes, Mr. X can be appointed as managing director for life in a private company
B) No, Mr. X cannot be appointed as managing director for life in private company as only public
companies are allowed to appoint managing director for life
C) No, Mr. X cannot be appointed as managing director for life in private company as term of managing
director cannot exceed five years at a time
D) No, Mr. X cannot be appointed as managing director for life in private company as private companies
are not allowed to appoint managing director

Q58. Any article gifted to a person for his personal use whose market value in India on the date of
such gift does not exceed ₹ …………….. shall not be a foreign contribution within the meaning of
sub-clause (i) of clause (h) of sub-section (1) of section (2) of FCRA. (SELF DRAFTED)

A) 5,00,000
B) 2,00,000
C) 1,00,000
D) 50,000

Q59. Mr. R & Mr. V are shareholders of NY Private Limited. Mr. R is out of Country for
business purpose. They have to have a Board meeting through video conference to comply with
requirements. Which of following items they cannot discuss in such meeting?

A) Convening of General meeting.

B) All the matters can be done now through Video conferencing
C) Approval of Board report
D) Transfer of Shares.

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Q60. P Ltd & L Ltd Proposed Scheme of Amalgamation between them u/s 232 of Co Act 2013.
They seek your advice on which of following approvals can be asked for in petition to be filed
before NCLT for proposed scheme. Petition for proposed Scheme of Amalgamation can seek
approval for: -

A) Change in Main Object Clause of Memorandum of Association

B) Reduction of Share Capital
C) Dissolution of Transferor Company without winding up
D) All of above.

Q61. You are WTD of Choco-chips Pvt. Ltd who wishes to appoint Mr. Vanilla SEQUERA as its
MD who has attained age of 72 years. Board has got to know about fact that no company shall
appoint or continue employment of any person as MD, WT or Manager who is below age of 21
years or has attained age of 70 years. You are requested by board to evaluate situation & suggest
on whether he can be appointed as MD?

A) Yes, he can be appointed as MD by Board of Directors

B) No, he cannot be appointed as MD at all

C) Yes, he can be appointed as MD by shareholders through Special Resolution
D) Yes, he can be appointed as MD by making application to NCLT.
Q62. ABP Ltd. is Company having paid up Capital of INR 100,000,000. It needs to appoint key
managerial personnel. It can use combination of: -
i) CEO, CS & Manager ii) CEO, CS & CFO
iii) MD, CS & Manager iv) MD, CS & CEO
Which options are available for Company?

A) (i) (ii) & (iii)

B) (ii) (iii) & (iv)
C) (i) (ii) & (iv)
D) (i) (iii) & (iv)

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Q63. Mr. A appointed as a Manager of PQR Ltd for period of 5 years on 20th June, 2015.
Considering his performance & dedication, before completion of his tenure, management decided
to re-appoint him as a manager. On which date his re-appointment will be considered valid?

A) 24th June 2019

B) 1st February 2019
C) 12th March 2018
D) 10th September 2018

Q64. Mr. M is a businessman & he owns number of companies. As of now, he is Director in 21

Companies. As his number of Directorship contravenes provision of Act, his consultant have asked
him to resign from 2 Companies. However, there is one more condition regarding number of
Directorship in Public Companies. What is that Condition?

A) Max number of public companies in which a person can be appointed as a director not be > 10
B) Max number of public companies in which a person can be appointed as a director shall not be > 5
C) Max number of public companies in which a person can be appointed as a director shall not be > 15
D) Max number of public companies in which a person can be appointed as a director shall not be > 20

Q65. Mr. N decided to resign from m Pvt. Ltd due to preoccupation. He sent his Resign letter
dated 12th June, 2017 to Company stating that he will resign w.e.f. 15th June, 2017. Due to non-
receipt of any communication from Company he dropped a mail on 17th June, 2017, to confirm
whether Company has received his letter. Finally, company received his letter on 25th June, 2017.
In this case, from which date his resignation will be effective?

A) 12th June, 2017

B) 15th June, 2017
C) 17th June, 2017
D) 25th June, 2017

Q66. S u p p o s e a b a n k w h o h a d g i v e n a l o a n o f R s . 5 0 L a k h s t o t h e c o r p o r a t e
debtor. For that loan, if the bank gets equity shares.
Will the bank become a related party and can’t takes decision in CoC?
Give your answer under Insolvency code 2016. (SELF DRAFTED)

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A) Yes, bank will be a related party after getting equity shares

B) Bank can’t become a part of CoC
C) Both A and B
D) No, Bank will not become a related party solely on account of conversion of debt into equity. It can take
representation in CoC.

Q67. What shall not be the duties of a Registered VALUER??

A) To make an impartial, true and fair valuation of any assets which may be required to be valued
B) To exercise due diligence while performing the functions as VALUER
C) To undertake valuation of any assets in which he has a direct or indirect interest or becomes so
interested at any time during or after the valuation of assets.
D) To make the valuation in accordance with such rules as may be prescribed

Q68. Mr. Nagar decided to resign from MGT Private Limited due to preoccupation. He sent his
resignation letter dated 12th June, 2017 to Company stating that he will resign w.e.f. 15th June,
2017. Due to non-receipt of any communication from Company he dropped mail on 17th June,
2017, to confirm whether Company has received his letter. Finally, Company received his letter on
25th June, 2017. In this case, from which date resignation effective?

A) 12th June, 2017

B) 15th June, 2017
C) 17th June, 2017
D) 25th June, 2017

Q69. If committee of creditors of corporate debtors was constituted on 17.3.2018. Time limit, in
which first meeting of committee of creditors should be held, is: -

A) 20.3.2018
B) 22.3.2018
C) 24.3.2018
D) 31.3.2018

Q70. Under IBC, resolution plan shall be approved by Committee of Creditors by a vote of not
less than percent of voting share of financial creditors.

A) 51%
B) 66%

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C) 75%
D) 95%

Q71. ABHI Limited is a wholly owned subsidiary company of E Limited. E Ltd., makes an
application for merger of Holding & Subsidiary Companies under 232 of Companies Act, 2013.
CS of E Ltd., states that company cannot apply for merger under section 232 of said Act.
He further stated that company shall have to apply for merger as per section 233 i.e. Fast Track
Merger. State correct statement in terms of validity of difference in opinion of CS: -

A) Opinion of CS of E Ltd is valid holding that merger shall be as per 233.

B) Opinion of CS of E Ltd. is invalid as merger shall be possible only as per 232.
C) Opinion of CS of E Ltd. is invalid as fast track merger 233 are of optional nature.
D) Opinion of CS of E Ltd. is invalid as fast track merger in 233 made between only small companies.

Q72. ABC & Co., tax consultants of X Limited for which an interim resolution professional – Mr.
A, has been appointed under Corporate Insolvency resolution process has refused to furnish
information to Mr. A. on grounds of client confidentiality. Are they right?

A) Yes, they are right

B) No, Insolvency Code provides powers to IRP to access all information from various parties
C) Partly right, they can do so only after consent of directors
D) Mr. A is not right in even asking for this information

Q73. AAKAAR Solar Energy Private Limited was allowed status of a ‘dormant company’ after a
certificate to this effect was issued on 1st July 2018 by Registrar of Companies, Delhi & Haryana.
Mention latest date after which Registrar is empowered to initiate process of striking off name of
company if AAKAAR Solar Energy continues to remain as a dormant company.

A) After 30th June, 2023.

B) After 30th June, 2019.
C) After 30th June, 2020.
D) After 30th June, 2021.

Q74. Jupiter Shopping Mall Limited was incorporated on 3rd December, 2016. As on 31st March
2018, it had free reserves of 50 lacs & its Securities Premium Account showed a balance of 7.50
lacs. One of its directors, R has a leaning towards a particular political party in which his other
family members are actively involved. R convinced other 2 directors of company i.e. P & Q to
contribute 10 lacs to this political party. Accordingly, Board of Directors held a meeting on 16th
December, 2018 & passed a resolution to contribute decided amount. Advise company on how
much amount they can contribute to a political party in FY 2018 -19.

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A) Company cannot contribute any amount to a political party in FY 2018 -19.

B) Company can contribute maximum 2.50 Lac in FY 2018-19.
C) Company can contribute maximum 3.75 Lac in FY 2018-19.
D) Company can contribute maximum 5.00 Lac in FY 2018-19.

Q75. ASTISTAV Private Limited is company with ten shareholders. A member holding less than
one-tenth of share capital of company apply to Tribunal for relief against oppression &
mismanagement? State whether a member have a right to apply to tribunal in above situation: -

A) A single Member cannot apply to Tribunal for relief against oppression & mismanagement
B) A member cannot apply as he is holding less than one-tenth of share capital of company
C) A member can apply being one-tenth of total number of members.
D) A member cannot apply as requirement of at least hundred members is not complied with.

Q76. N Private Limited was incorporated on 9th June, 2017. For financial year 2017-2018, it did
not file its financial statements & annual returns. For time being company desires to be treated as
‘inactive company’ since it does not intend to carry on business permitted by its Memorandum. As
to when ROC can issue certificate of status of dormant company to ‘N’ on basis of non-submission
of financial statements if company makes an application to Registrar in this respect.

A) After non-submission of financial statements for 2 FY i.e. 2018-19 & 2019-20.

B) After non-submission of financial statements for next FY i.e. 2018-19.
C) After non-submission of financial statements for 3 FY i.e. 2018-19, 2019-20 & 2020-21.
D) After non-submission of financial statements for 4 FY i.e. 2018-19, 2019-20, 2020-21 & 2021-22.

Q77. Mr. KG filed a complaint against Mr. P alleging that Mr. P has communicated unpublished
price sensitive information to Mr. X. Mr. P took a plea that Mr. X requested him for such
information & it was done bonafidely. State correct statement as to liability of Mr. P here: -

A) Mr. P not liable as he communicated about unpublished price sensitive info on request of Mr. X
B) Mr. P not liable as he communicated about unpublished price sensitive information to Mr. X, in
ordinary cause of business
C) Mr. P not liable as he communicated about unpublished price sensitive information to Mr. X, as it
was done without any mala-fide intention.
D) Mr. P liable as he communicated about unpublished price sensitive information to Mr. X, whether
with or without his request for such information.

Q78. Mr. X filed an application for initiation of insolvency process before NCLT on 1st Feb, 2019.
On ascertaining commission of default by corporate debtor on 10th Feb,2019, NCLT admitted
application & declared moratorium. From which date does Corporate Insolvency Resolution
Process commence?

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A) CIRP process shall commence from date of initiation of insolvency process

B) CIRP process shall commence from date of occurrence of default
C) CIRP process shall commence from date of declaration of moratorium
D) CIRP process shall commence from date of admission of application
E)
Q79. S Limited, incorporated on 30th Oct, 2018, has 10 subscribers to Memorandum out of which
2 are Pvt. Ltd companies & remaining individuals. There is no mention in any of documents as to
who shall be first directors. Advise on appointment of first directors to manage affairs of company.

A) All subscribers to Memorandum shall be deemed to be first directors.

B) 2 Private limited companies being subscribers to Memorandum decide to who shall be first directors.
C) All individual subscribers to Memorandum shall be deemed to be first directors.
D) As company requires minimum three directors, eight individual subscribers shall choose 2 from
among themselves & one shall be chosen by two private limited companies from among themselves.

Q80. Group of creditors of X Ltd makes complaint to ROC. They asserted that Mgt. indulged in
destruction & falsification of accounting records. Complainants request Registrar to take
immediate steps to stop Mgt. to tamper with records. Complaint received in morning on 1st
January 2019 & ROC entered premises in half hour for search. Course of action by Registrar are:

A) Registrar may enter & search place where such books or papers are kept & seize them
B) Registrar may enter & search place where such books or papers are kept & can seize only after
obtaining an order from special court
C) Registrar may enter & search place where such books or papers are kept only on order of special
court
D) Registrar may enter & search place where such books or papers are kept & give an opportunity to
company to represent why such documents may not be seized.

Q81. With whom CG file application if it’s of opinion scheme not in public or creditors interest?

A) Cannot move an application

B) It may file an application before Tribunal
C) It may file an application before Parliament
D) It may file through Special Petition before Supreme Court.

Q82. When can a winding up order not be called a notice of discharge?

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A) When business of company is continued

B) When business of company is closed since 2 years.
C) On discretion of management
D) Till a provisional Liquidator is appointed
Q83. In case a Valuer becomes interested in any property, stock etc. of company, he may be
appointed as Registered Valuer of company after a cooling off period of: -

A) 3 years
B) 5 years
C) 1 year
D) He will never be appointed as Registered Valuer of company

Q84. Any person who is aggrieved by order of Appellate Tribunal (NCLAT) may approach to
Supreme Court on any question of law within: -

A) 30 Days
B) 45 Days
C) 60 Days
D) 90 days

Q85. State incorrect statement w.r.t to withdraw of corporate Insolvency Resolution process: -

A) Withdraw of CIRP is allowed after post admission

B) Approval of 66 % voting shares of CoC is required
C) Adjudicating authority is concerned authority for Withdraw
D) Withdraw is of admitted application made under section 7, 9, and10

Q86. Person who provided goods or services & payment for same is due from corporate debtor:

A) Financial Creditor
B) Operational creditor
C) Corporate applicant
D) Both (a) & (b)

Q87. The nature of liabilities of entity which comes from a transaction on operation, are: -

A) Debt
B) Financial debt
C) Operational debt
D) Both (b) & (c)

Q88. Peter a citizen and resident of India, in 2011, got job in a MNC in Germany. He planned to
shift. On 23rd March 2017, Peter, along with his wife and daughter reached India from Germany.
Due to travelling and shifting, studies of his daughter Lisa was effected a lot, so he decided to
admit her into Mayo College at Ajmer for her further studies. On 22nd April 2017, Lisa got

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admission in the college and since then she is living in India only. Peter and his wife returned
Germany on 1st May 2017. Peter did not visited India during the financial year 2017-18, however
his wife was in India from 2nd December 2017 to 2nd January 2018. During financial year 2018-
19, Peter was in India for 185 days due to his deployment and Lisa’s ill health. From following who
will be treated as person resident in India for the financial year ended on 2018-19: -
A) Lisa
B) Peter
C) Peter’s wife
D) Lisa and Peter’s wife

Q89. Rahul, Son of Mr. Manish was going to USA under cultural exchange program of his college.
For meeting Rahul’s expenses in USA, Mr. Manish purchased 5000 USD from authorized person
on 15th February 2018. Rahul came back to India on 15th March 2018. At time of his return to
India he was having 1850 USD unspent with him. Which option is best suited for above situation: -

A) Unspent forex surrendered to authorized person in 180 days from date of return to India
B) Unspent forex surrendered to authorized person in 180 days from date of purchase of forex.
C) Unspent forex surrendered to authorized person in 90 days from date of return to India.
D) Unspent forex not exceeding 2000 USD may be retained by a person resident in India.

Q90. The bank shall report to the Central Government within …………….. hours any
transaction in respect of receipt or utilization of any foreign contribution by any person
whether or not such person is registered or granted prior permission under the Act.
(SELF DRAFTED)

A) 48
B) 24
C) 72
D) 12

Q91. Mr. Jigar is director of PQR Ltd., which had accepted deposits from public. Financial
position of PQR Ltd. declined which resulted in failure to repay deposits. It became due for
payment on 10th April, 2017 and such repayment not made till 5th May, 2018. Another company
JKL Ltd. wants to appoint said Mr. Jigar as its director at its annual general meeting to be held on
6th August 2018. State correct statement as to appointment of Mr. Jigar as director of JKL Ltd.

A) Mr. Jigar can be appointed in JKL Ltd. as it is other than the defaulted company
B) Mr. Jigar cannot be appointed at all in JKL Ltd. or any other company.
C) Mr. Jigar will not be eligible to be appointed as a director of JKL Ltd. on the scheduled AGM but
may be after expiry of five years from the date of default.
D) Mr. Jigar will not be appointed as a director of JKL Ltd. before 6 months from the date of default.

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Q92. D, a professional architect, had been approached by N Builders Limited – a company formed
by her distant relatives but with whom she has good rapports – to accept the directorship in the
company. However, she could not immediately agree to take post of director as she did not possess
DIN. She applied for DIN but her application was found to be incomplete and she received e-mail
on 3rd January, 2019 which directed her to rectify defects by resubmitting application. Advise D
regarding the latest date by which she must resubmit application after fully rectifying it.
A) Latest by 10th January, 2019.
B) Latest by 16th January, 2019.
C) Latest by 18th January, 2019
D) Latest by 23rd January, 2019.

Q93. B’ north Motors and Spares Limited, a listed company, has 4500 small shareholders but till
date there is no director who can represent them. Accordingly, some of such shareholders have
approached the company for appointment of their director on the Board. By choosing the correct
option, advise as to minimum how many small shareholders must group together so that they
succeed in their objective.

A) Minimum 1000 small shareholders must group together for getting appointed their director on Board.
B) Minimum 900 small shareholders must group together for getting appointed their director on Board.
C) Minimum 450 small shareholders must group together for getting appointed their director on Board.
D) Minimum 235 small shareholders must group together for getting appointed their director on Board.

Q94. Rati holds 2,500 equity shares of 10 each (5 paid up) in Uranus Glass Limited which is listed
on National Stock Exchange as well as Bombay Stock Exchange. In the same company her mother
Rachna holds 2,000 equity shares on which 7 have been paid up. Her brother Ruchir has also been
allotted 3,000 equity shares by the Uranus but till date, similar to Rati, he has paid only 5 as
application and allotment money. All three claim to be small shareholders and want to participate
in process of appointing small shareholders’ directors. Advise them whether they could be
categorized as small shareholders.

A) Only Rati is small shareholder and therefore, she can participate in process of appointing small
shareholders’ directors.
B) Only Rachna is small shareholder and therefore, she can participate in the process of appointing
small shareholders’ directors.
C) Only Ruchir is small shareholder and therefore, he can participate in the process of appointing
small shareholders’ directors.
D) All the three are small shareholders and therefore, they can participate in the process of appointing
small shareholders’ directors.

Q95. Ruby Diamonds Limited is required to establish ‘Vigil Mechanism’ though it is neither a
listed company nor a company which has accepted deposits from the public. Name the third
criterion because of which it is necessitated that the company needs to create ‘Vigil Mechanism’

A) As per the last audited statements, the subscribed capital of the company is in excess of 50 crores.
B) As per the last audited statements, the paid up capital of the company is in excess of 50 crores
C) As per the last audited statements, the turnover of the company is in excess of 50 crores
D) None of the above

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Q96. Mr. Raman is a Managing Director of SLR Ltd. He was proposed to be appointed as
director in the same company. Mr. Raman got better opportunity and joined the other company
“Alternate Ltd.”. He left the office of managing director of SLR Limited. State the correct legal
position as to holding of offices of Mr. Raman in companies: -

A) He will hold directorship both in SLR Ltd and Alternate Ltd.

B) He cannot hold office in Alternate Ltd. being employed as managing director in SLR Ltd.
C) He will validly hold all the designated offices in both SLR and Alternative Ltd.
D) He can hold directorship only in Alternate Ltd.

Q97. Mr. X, director of BRT Ltd. entered into an arrangement with his friend and acquired asset
on name of the BRT Ltd. Prior approval for such arrangement was required by a resolution of the
company in general meeting. The notice for approval of resolution by company included
particulars of arrangement along with the value of the assets duly calculated by registered
VALUER. Later Board of company discovered the loss arising out of incorrect statement in the
report made by the VALUER. State the liability of the VALUER in the given situation: -

A) Valuer can claim immunity stating that company is not bound to accept his opinion being an expert.
B) The valuer shall be punishable with fine only for the incorrect statement given in the report
C) Valuer is liable to be convicted for the incorrect statement given in the report made with intent to
defraud the company or its members.
D) Valuer cannot be held liable for damages to company as company have seek prior approval in GM

Q98. State which is not a valid situation for the vacation of the office of director amongst given: -
(i) When directors absent himself from 3 consecutive meetings of BODs held during 12 months
(ii) Director entering into a contract in which he is uninterested
(iii) Order disqualifying him as Director has been made by Court or NCLT
(iv) If he is convicted by a Court of any offence, whether involving moral turpitude or otherwise,
and sentenced to imprisonment for not less than 6 months.

A) (i) & (ii)

B) (ii) & (iii)
C) (iii) & (iv)
D) (i) & (iv)

Q99. In case of contravention of resolution plan, application for liquidation can be made by: -

A) Only the original applicant

B) Only by the corporate debtor
C) By any person other than the corporate debtor whose rights have been prejudicially affected
D) By the financial creditors only

Q100. For initiation of Voluntary liquidation, a declaration of solvency (no debts or assets are
sufficient to discharge liabilities) should be given by

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A) Two directors
B) Two directors and 80% shareholders
C) Two directors and 80% shareholders and statutory auditors
D) Majority of the directors

Q101. Which of below is restriction on transferee company in event of merger or amalgamation?

A) Hold any shares in its own name
B) Hold any shares in the name of any trust on its behalf
C) Hold any shares in the name of any trust on behalf of any of its subsidiary
D) All of the above

Q102. Where the Registrar has reasonable cause to believe, he shall send a notice to the company
and all the directors of the company, of his intention to remove the name of the company from the
register of companies and requesting them to send relevant details within a period of ---------- days
from the date of the notice.

A) 15
B) 30
C) 45
D) 21

Q103. Who shall make an application to the Tribunal for constitution of a winding up committee
to assist and monitor the progress of liquidation proceedings by the Company Liquidator in
carrying out the function?

A) No application required
B) Company Liquidator
C) Management
D) Members

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“MCQ Questions – RTP NOV 19”

Q104. Mr. Satya, file a petition for default of non –payment of the debt against Mr. X. The amount
in default claimed by petitioner was 30 Lac. Mr. X (Respondent) pleaded before adjudicating
authority that the amount of claim was not belonging to applicant/petitioner. Mr. Satya, asserted
that he himself with his son owns 26 Lac to the respondent. Though nowhere in the petition and
the supportive documents, he admitted that he himself with his Son owns 26 Lakh to respondent.
Considering above facts in light of IBC, state action that will be taken by Adjudicating Authority: -

A) NCLT will admit application of Mr. Satya, as he jointly with his son owned debt to Mr. X, so he is a
valid petitioner.
B) NCLT will admit the application filed by Mr. Satya on behalf of his son.
C) NCLT will reject the application considering that no default has occurred against Mr. Satya, and his
stand as a financial creditor is not proved in the petition.
D) NCLT will dismiss the application on the ground of non- existence of dispute against Mr. Satya

Q105. How many times Corporate Insolvency Resolution Process period can be extended?

A) shall not be granted more than once

B) shall be granted more than once
C) shall be granted more than twice on the reasonable cause
D) cannot be granted at all

Q106. Mr. Ram had resided in India during Financial Year 2017-2018 for less than 183 days. He
again came to India on 1st May, 2018 for higher studies & business & stayed up to 15th July, 2019.
State correct answer as to residential status of Mr. Ram in light of given fact as per FEMA, 1999.
(1) Mr. Ram can be considered as 'Person resident in India' during financial year 2018-2019
(2) Mr. Ram cannot be considered as ‘Person resident in India' during financial year 2018-2019
(3) Mr. Ram can be considered as ‘Person resident in India' in financial year 2019-2020

A) Both the statement (1) & (3) are correct

B) Both the statement (2) & (3) are correct
C) Only statement (1) is correct

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D) Only statement (2) is correct.

Q107. F Garments Limited has 3 independent directors besides 8 others of its own. Due to urgency
of transacting certain important business, a Board Meeting was called by giving a shorter notice
than legally required. None of the independent directors was present at Meeting to deliberate upon

motion related to that business. Despite absence of all Independent directors, a board resolution
was passed for operationalizing the business by the directors personally present at that Meeting
who were much more than the required quorum. Advise, whether the resolution passed at Board
Meeting called at a shorter notice was valid

A) Resolution so passed is valid, for it was passed at Board Meeting where required quorum was present.
B) To be valid the resolution so passed needs to be circulated to all the directors and further, it is
required to be ratified by all the three independent directors.
C) To be valid the resolution so passed needs to be circulated to all the directors and further, it is
required to be ratified by at least two independent directors.
D) To be valid the resolution so passed needs to be circulated to all the directors and further, it is
required to be ratified by at least one independent director.

Q108. S Interior Decorators and Furnishers Limited which has not accessed the primary market
so far, is required to appoint whole-time Key Managerial Personnel (KMPs) in view of fact that it
has surpassed the threshold limit which necessitates such appointment. Out of the three whole-time
KMPs which it is obligated to keep on roll, it has already appointed a Managing Director (MD)
and a Company Secretary. From the given options, choose the third KMP which needs to be
appointed by the company under the given circumstances.

A) Chief Executive Officer (CEO)

B) Chief Financial Officer (CFO)
C) Whole-time Director (WTD)
D) Chief Manager (CM)

Q109. X Ltd. amalgamated with Y Ltd. The transferee company decided to dispose of the books
and papers of the X Ltd. in order to come up with maintenance of revised book and papers under
the name of the transferee company to bring all the financial details of the amalgamated company
also in the records. State the correct statement as to decision of the transferee company on the
disposal of the Books and papers of the X Ltd.

A) Decision of Transferee Company is invalid, as books and papers of the amalgamated company shall
be maintained for at least three years.
B) Decision of Transferee Company is invalid, as books and papers of amalgamated company shall be
maintained for at least eight years.
C) Decision of Transferee Company will be valid only on sanction of the prior permission of the Central
Government.

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D) Decision of Transferee Company will be valid only after seeking prior permission of the requisite
number of the creditors/shareholders of the amalgamated company.

Q110. Mr. Z was appointed as representative of ABC Company for a corporate program
organized in USA. During the said period in USA, he was diagnosed with the severe kidney disease,
so decided to have a kidney transplant done in USA. State the maximum amount that can be
drawn by Mr. Z as foreign exchange for the medical treatment abroad.

A) USD 1,25,000
B) USD 2,25,000
C) USD 2,50,000
D) As estimated by a medical institute offering treatment

Q111. Mr. Raj, a resident of India went to Australia for business deal in January 2019. He realized
foreign exchange for bearing expenses while staying there for the business purpose. After maturing
the deal, he returned back to India in 28th of February, 2019. Mr. Raj was left with certain unused
foreign exchange. He retained the foreign exchange with him for future use. Mr. Raj have to
return the unused foreign exchange: -

A) Latest by 27th August 2019

B) Latest by 28th August 2019
C) Latest by 29th August 2019
D) Latest by 31st August 2019

Q112. S Sweets Private Limited was incorporated on 5th November, 2018 with authorized capital
of 10.00 lacs. Advise, regarding the latest date by which the first meeting of the Board of Directors
is required to take place.

A) Latest by 15th November, 2018.

B) Latest by 20th November, 2018.
C) Latest by 5th December, 2018.
D) Latest by 20th December, 2018.

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Q113. Mr. Ingenious, registered as an Intermediary, fails to enter into an agreement with his client
and hence penalized by SEBI under the SEBI Act. Advise Mr. Ingenious as to what remedies are
available to him against the order of SEBI.

A) He may be given extension on basis of reasonable ground for not entering agreement with his client
B) He shall be liable to a penalty for not entering into an agreement with his client which is required
under this Act.
C) He shall be liable for imprisonment for not entering into an agreement with his client which is
required under this Act.
D) Both (b) & (c)

Q114. Limit of yearly remuneration payable shall not exceed (in rupees) in case of other director, if effective
capital is ₹ 75 crores. (SELF DRAFTED)

A) 12 Lakhs
B) 15 Lakhs
C) 17 Lakhs
D) 24 Lakhs

Q115. In case of any contravention of the provisions of section 177 and section 178 , the
company shall be liable to a penalty of ₹ ……………. and every officer of the company

who is in default shall be liable to a penalty of ₹ …………? (SELF DRAFTED)

A) 5 Lakhs, 2 Lakhs
B) 10 Lakhs, 5 Lakhs
C) 5 Lakhs, 1 Lakh
D) 2 Lakhs ,1 Lakh

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“ARTICLESHIP - SAMPLE MCQS”

“For Additional Reference & Practice”
Q 116. Mr. X, a director of the company, intimated of his participation in meeting scheduled
on August, 2018. He declared his participation through electronic mode, in June 2017. State
whether Mr. X is entitled to participate in the meeting to be conducted in August 2018: -

A) Yes, intimate about such participation was made at the beginning of the calendar year
B) No, because intimation was made in previous calendar year
C) Yes, because company was intimated of its participation in the meeting.
D) No, because valid period of declaration (i.e., 1 year) of his participation expired.

Q 117. In compliance to Co Act, 2013, at least 1 Woman director shall be on Board of such class or
classes of companies as prescribed. Ms. Riya is keen to hold office of woman director in a
company. She has selected some companies in which there is vacancy for woman director. Advice
Ms. Riya in selecting the companies which are mandatorily required to appoint a woman director:

A) PQR Limited which is unlisted company and having paid up share capital of one 50 crore rupees as
per the last date of latest audited financial statements.
B) ABC Limited which is a listed company and having a turnover of 150 crore rupees as per the last date
of latest audited financial statements.
C) XYZ Limited which is unlisted company and having a turnover of 350 crore rupees as per the last date
of latest audited financial statements.
D) Both in ABC Limited and XYZ Limited.

Q 118. RUKMANI, a fresh science graduate, wants to make available the farmers good quality
seeds and manure. For her business she is contemplating to form a company and is weighing
various options. Sometimes before, she came to know that a ‘1 Person company’ has minimum one
member and one director whereas a private company has minimum two members and two
directors. As regards a public company, she has vague idea that there should be minimum three
directors but she does not know about the minimum members required in this case. Advise.

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A) When there is requirement of minimum three directors, the public company can be formed by
minimum three persons.
B) There should be minimum five persons for formation of a public company though requirement of
minimum directors shall remain three.
C) There should be minimum seven persons for formation of a public company though requirement of
minimum directors shall remain three.
D) There should be minimum nine persons for formation of a public company though requirement of
minimum directors shall remain three.

Q 119. Ravi is the owner of a grocery store. In March 2018, he got the idea of forming a ‘One
Person Company’ and convinced his sister RUCHIKA, an Indian citizen who resides in London
but visits India from time to time, to become nominee in his OPC. In the year 2017, RUCHIKA
first came to India on 10th January and left for London on 26th February. Thereafter, she again
visited India on 7th June and remained here till 10th October and boarded an evening flight for
London on the same day. From then onward she did not visit India in the year 2017 but on 2nd
January 2018 she came to India for a short duration and left for London on 14th February, 2018.
Is it possible for Ravi to appoint RUCHIKA as nominee?

A) RUCHIKA can be appointed as nominee by Ravi because she is a natural person, an Indian citizen
and resided in India for more than 90 days during the year 2017.
B) RUCHIKA can be appointed as nominee by Ravi because she is a natural person, an Indian citizen
and resided in India for more than 182 days during the years 2017 and 2018 i.e. prior to March 2018
when Ravi contemplated to form his OPC.
C) Ravi cannot appoint RUCHIKA as nominee in his OPC because she did not reside in India for 182
days or more during the year 2017 though she is a natural person and also an Indian citizen.
D) Since Ravi is the sole member of his OPC who will look after all its affairs and the appointment of
nominee is just a formality, a visit to India during 2017 for any number of days would make
RUCHIKA eligible to be appointed as nominee.

Q 120. A director of XYZ, a Pvt. Ltd. takes a loan from its company. Due to some reasons, he fails
to repay the debt within the given time period. He requested board of directors to give him time for
repayment of debt. State which of the below statements is correct with respect to the exercise of the
power in the given situation as per the Companies Act, 2013?

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A) Power to fix the time limit for repayment of any debt due from director can be exercised only by
members by special resolution at a general meeting.
B) Power to fix the time limit for repayment of any debt due from director can be exercised by Board of
the company itself.
C) Power to fix the time limit for repayment of any debt due from director can be exercised with the
prior permission of the company in general meeting while taking debt.
D) Board shall not exercise this power if the provision related to repayment of debt is contained in the
articles of the company.

Q 121. On 30th June 2017, the liability side of Balance Sheet of X Ltd. showed balance of paid up
share capital of 65 lacs, free reserve of 10 lacs, share premium account of 20 lacs, deposits of 25
lacs, repayable in the current financial year, during the month of September 2017.In July 2017,
company was in need of some short term funds to the tune of 20 lacs for a period of 6 months. The
maximum amount which the company may hold as deposit together with existing deposits will be?

A) 33.25 Lac
B) 11.25 Lac
C) 95 Lacs
D) 9.5 Lac

Q 122. RUCHIR MARCONS Ltd. which provides marketing and consultancy services is keen to
have a ‘significant influence’ in RUCHIKA Marketing Ltd. so that it becomes its ‘associate
company’. For having ‘significant influence’ RUCHIR MARCONS Ltd. needs to control certain
percentage of total voting power of RUCHIKA Marketing Ltd. What is that?

A) For creating ‘significant influence’ RUCHIR MARCONS Ltd. must control at least five per cent of
total voting power of RUCHIKA Marketing Ltd.
B) For creating ‘significant influence’ RUCHIR MARCONS Ltd. must control at least ten per cent of
total voting power of RUCHIKA Marketing Ltd.
C) For creating ‘significant influence’ RUCHIR MARCONS Ltd. must control at least fifteen per cent of
total voting power of RUCHIKA Marketing Ltd.
D) For creating ‘significant influence’ RUCHIR MARCONS Ltd. must control at least twenty per cent
of total voting power of RUCHIKA Marketing Ltd.

Q 123. JATIN is desirous of forming a ‘One Person Company’ for which he wants to nominate his
wife Jasmin who in the event of his death shall become the member of OPC. However, he is not
aware of as to which document should contain the name of the nominee. Advise him in the matter.

A) Name of nominee should be mentioned in the Articles of Association after the names of the directors.
B) Name of the nominee should be mentioned in the Memorandum of Association
C) Either Articles of Association or Memorandum of Association may contain the name of the nominee.
D) There is no need to mention the name of the nominee in either Articles of Association or MOA; a
simple consent letter obtained from the nominee and kept in the records is sufficient.

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Q 124. PRIYANK & PRIYANKA, got reserved a name and thereafter a private limited company
was formed using the reserved name on 1st June, 2018. Later on, a registered proprietor of a trade
mark noted that the name of this private limited company was identical to the trade mark he had
earlier got registered under the Trade Marks Act, 1999. Advise as to latest by which date, the
proprietor of the registered trade mark can move an application to the Central Government
against this anomaly?

A) Latest by 30th November, 2018, the registered proprietor of trade mark should move an application to
the Central Government for rectification of this anomaly.
B) Latest by 30th May, 2019, the registered proprietor of trade mark should move an application to the
Central Government for rectification of this anomaly.
C) Latest by 30th May, 2020, the registered proprietor of trade mark should move an application to the
Central Government for rectification of this anomaly.
D) Latest by 30th May, 2021, the registered proprietor of trade mark should move an application to the
Central Government for rectification of this anomaly.

Q 125. Oasis Water Solutions Limited (“Company”) have finalized an arrangement with its
members. To initiate the process Company has to make an application to tribunal. A creditor’s
responsibility statement is a mandatory attachment for that application. Which format is to be
used as creditor’s responsibility statement?

A) Form No. CA1

B) Form No. CAA1
C) Form No. BA1
D) Form No. BAA1
E)
Q 126. You are conducting a session of corporate law for CA students. One of the students asked you
about special notice required for certain resolutions. You explained the meaning of special notice and
how notice of the intention to move such resolutions is required. As per the provision of the Act, who is
eligible to give special notice to the Company?

A) Members holding not less than one percent of total voting power or holding shares on which an aggregate
sum of not less than five lakh rupees has been paid up on the date of the notice
B) Members holding not less than five percent of total voting power or holding shares on which an aggregate
sum of not less than five lakh rupees has been paid up on the date of the notice
C) Members holding not less than one percent of total voting power or holding shares on which an aggregate
sum of not less than ten lakh rupees has been paid up on the date of the notice
D) Members holding not less than five percent of total voting power or holding shares on which an aggregate
sum of not less than ten lakh rupees has been paid up on the date of the notice.

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Q 127. Annual General Meeting (AGM) of MOGLI Private Limited shall be held before 30th
September, 2018. Twenty once days’ notice of the meeting has to be given either in writing or in
electronic mode. However, management missed this time limit. Now they want to call Annual
General Meeting on shorter notice. AGM cannot be called on shorter notice unless consent is
received by members for the same. How many members have to give their consent for holding
AGM on shorter notice?

A) a. Seventy-one per cent of the members

B) b. Seventy-five per cent of the members
C) c. Ninety-one per cent of the members
D) d. Ninety-five per cent of the members.

“NEW SM Qs”
“+87” Additional MCQ from Revised Module applicable from
May 20 exams
Q 128. In addition to listed company, which other company is required to appoint woman director

A) Company having paid–up share capital of ₹ one hundred crore

B) Company having turnover of ₹ three hundred crore
C) Company meeting both the parameters mentioned at (a) and (b)
D) Company meeting any one of the parameters i.e. either (a) or (b)

Q 129. Independent director who has tendered resignation from the Board shall be replaced by a
new independent director within from the date of such resignation?

A) One month
B) Two months
C) Three months
D) Four months

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Q 130. A shareholder holding shares of nominal value of not >---------------- is a small shareholder.

A) 5,000
B) 10,000
C) 15,000
D) 20,000

Q 131. Person appointed as director to give his written consent in DIR-2------------------ to Company.

A) On or before his appointment as director

B) Within 10 days of his appointment as director
C) Within 20 days of his appointment as director
D) None of the above

Q 132. In case articles of public company do not provide for retirement of all directors at every
AGM, not less than of total number of directors shall be liable to retire by rotation.

A) One-third
B) Two-thirds
C) One-fourth
D) One-half

Q 133. Independent director shall hold office for a term up to------------on the Board of a company.

A) Three consecutive years

B) Four consecutive years
C) Five consecutive years
D) None of the above

Q 134. Every company is required to furnish Director Identification Numbers of all its directors to
the Registrar within __ of the receipt of intimation regarding DIN from the directors.

A) 10 days
B) 15 days
C) 20 days
D) 30 days.

Q 135. 1,00,000 deposited by a proposed director (other than a retiring director) to be refunded to
him if he gets more than of total valid votes cast either on show of hands or on poll.

A) 10%
B) 15%
C) 25%
D) None of the above

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Q 136. Additional director appointed by the Board of Directors shall continue to hold the office up
to the due date of the next _ _.

A) Board meeting
B) AGM
C) EGM
D) None of the above

Q 137. Person is permitted to hold office as director (including any alternate directorship) in
maximum twenty companies of which maximum number of public companies in which he can be
appointed as director shall not exceed _ .

A) Five
B) Eight
C) Ten
D) Twelve

Q 138. The appointment of whole-time CS mandatory when paid-up share capital of company is?

A) Two crores
B) Three crores
C) Five crores
D) Ten crores

Q 139. A Whole-time key managerial personnel of a company can hold office in another company
if the other company is?

A) its holding company

B) its subsidiary company
C) its associate company
D) a small company

Q 140. Board of Directors of C Tech Limited desires to appoint N, aged 22 years as the Managing
Director of the company. N is currently a director and the son of R, the immediate Managing
Director who expired in a car accident. State whether N can be appointed as Managing Director.

A) Yes; since he is above the age of 21 years

B) No; since he has not attained the age of 25 years
C) Since he has not attained the age of 25 years, permission of Registrar of Companies is to be obtained
for his appointment as MD
D) Since he has not attained the age of 25 years, permission of Central Government is to be obtained for
his appointment as MD

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Q 141. Max sitting fees per meeting that can be paid to a director of a company shall not exceed.

A) 1,00,000
B) 2,00,000
C) 2,50,000
D) 3,00,000

Q 142. In addition to a listed company which other public company is required to have whole-time
key managerial personnel?

A) which has paid-up share capital of 2 Crores

B) which has paid-up share capital of 3 Crores
C) which has paid-up share capital of 4 Crores
D) which has paid-up share capital of 10 Crore

Q 143. Is it permissible for whole-time key managerial personnel of a company to hold the office of
director in any company?

A) Yes; but with the permission of his Board of Directors

B) Yes; but with the permission of shareholders accorded by passing an ordinary resolution
C) Yes; but with the permission of shareholders accorded by passing a special resolution
D) Yes; but with the permission of shareholders accorded by passing an ordinary resolution which is
further ratified by the concerned Registrar of Companies

Q 144. Total managerial remuneration payable by a public company to its directors (including
MD, WTD & manager) in any financial year shall not exceed of its net profits for that FY

A) 5 percent
B) 7 percent
C) 10 percent
D) None of the above

Q 145. Due to non-compliance of certain requirements under the Companies Act, 2013 not
amounting to fraud, a company was required to re-state its financial statements for the financial
year 2016-17 during the current year. After the financial statements were re-stated it was found
that the Managing Director (MD) of that period, who is now retired, was paid excess remuneration
to the extent of 5,00,000. State whether such excess amount is recoverable?

A) Nothing can be recovered from the ex-MD

B) Excess amount shall be recovered irrespective of whether at present he is MD or not
C) Only 50% of excess amount is recoverable because no fraud is involved
D) Only 25% of excess amount is recoverable because no fraud is involved

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Q 146. The five directors of a non-listed public company are being paid ₹ 40,000 each as sitting fees
for every meeting. The two independent directors of this company shall also be paid not less than
each as sitting fees per meeting.

A) 40,000
B) 25% of 40,000
C) 50% of 40,000
D) 75% of 40,000

Q 147. Whole-time director can be appointed or re-appointed for a term not >-------------- at a time.

A) Two years
B) Three years
C) Five years
D) Seven years

Q 148. The provision regarding conducting of four Board meetings every year is not applicable to?

A) One Person Company (OPC), small company and dormant company

B) One Person Company (OPC), dormant company and associate company
C) Small company and dormant company
D) One Person Company (OPC) and small company

Q 149. A Board resolution cannot be passed by circulation when at least -------------of the total
members require it to be decided at a meeting of the Board.

A) 1/2
B) 1/3
C) 1/4
D) 1/5

Q 150 Board meeting needs to be called by at least days’ notice in writing sent to all
the directors at their addresses registered with the company.

A) 7

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B) 5
C) 3
D) None of the above

Q 151. CK Limited was incorporated on 25th June, 2018. When can it make political contributions?

A) After one year from the date of its incorporation.

B) After two years from the date of its incorporation.
C) After three years from the date of its incorporation.
D) After five years from the date of its incorporation.

Q 152. A company having minimum turnover of crores is required to constitute a

Nomination and Remuneration Committee.

A) 25
B) 50
C) 100
D) 200

Q 153. Where at any time the number of interested directors exceeds or is equal to _
of total strength of the Board of Directors, the quorum shall be the number of non-interested
directors who are present at the meeting and not less than two.

A) 1/2
B) 2/3
C) 1/3
D) None of the above

Q 154. In case of a company where minimum % members (in number) are relatives
of promoters or are related parties, they are not precluded from voting on a resolution for
approving any related party transaction.

A) 80
B) 85
C) 90
D) 95

Q 155. Under normal circumstances, a company is not permitted to make investment through
more than layer(s) of investment companies.

A) One
B) Two
C) Three
D) Four

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Q 156. The Board of Directors can exercise its powers by means of resolution, passed at a meeting
only and by no other means, to transact which of the following businesses?

A) Authorizing buy back of securities

B) Taking note of the disclosures of director’s interest and shareholding
C) Reviewing or changing the terms and conditions of public deposits
D) None of the above

Q 157. Out of the total strength of six directors of SQ Ltd, five are attending a Board meeting to
consider the investment of funds of the company. The resolution relating to investment shall be
taken as passed in which of the following cases: -

A) When all the five directors attending the meeting consent to it

B) When any four directors out of five consent to it
C) When any three directors out of five consent to it
D) Investment proposal must be consented to by the total strength of directors (six directors in this case

Q 158. In case of a Board meeting which is conducted through the means of video conferencing,
the draft minutes shall be circulated among all the directors within __ days of the
meeting either in writing or in electronic mode as may be decided by the Board.?

A) 5
B) 10
C) 15
D) 20

Q 159. Audit Committee may make omnibus approval for: -

A) Making of investment in other companies

B) Related party transactions proposed to be entered into by the company
C) Transferring of non-functional undertaking
D) All of the above

Q 160. In case a company enters into a transaction with a related party in the ordinary course of
business on an arm’s length basis, which authority specifically needs to approve such transaction:-

A) Board of Directors
B) Company by passing an ordinary resolution
C) Company by passing a special resolution
D) None of the above

Q 161. Which of below points is not related to omnibus approval to be made by Audit Committee:-

A) Audit Committee shall consider repetitiveness of the transactions (in past or in future);
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B) The indicative base price or current contracted price and the formula for variation in the price,
C) Omnibus approval shall be valid for a period not exceeding two financial years and shall require fresh
approval after the expiry of such financial year.
D) Omnibus approval shall not be made for transactions in respect of selling or disposing of the
undertaking of the company

Q 162. In case of transfer of whole of its undertaking by a company, no compensation is payable to

the directors for loss of office if: -

A) Company has failed to appoint additional director

B) Company has failed to pay dividend on preference shares
C) Company has failed to appoint all the directors as prescribed by its articles
D) None of the above

Q 163. Mr. S who was KMP (Manager) of XYZ Ltd. retired on 12th May 2018. On Examination of
final accounts of company for year ended on 31.3.18, ROC found some serious irregularities in
writing off of the huge amounts of bad debts and no satisfactory explanation was provided for the
same from the company. In such a situation the Registrar of Companies wants some explanation
from the company and Mr. Sharma. Can the ROC seek explanation from Mr. Sharma? Advice –

A) No, Mr. Sharma can’t be called upon, as he does not hold the position in company any more.
B) Mr. Sharma can be called upon within a period of one year from date of completion of his service.
C) Mr. Sharma can be called upon for necessary explanation within period of 180 days from the date of
leaving his office through a written notice served upon him.
D) Mr. Sharma can be called on by Registrar by written notice served on him without time period limit.

Q 164. A group of creditors of X Limited makes a complaint to the Registrar of Companies. They
asserted that the management of the company is indulged in destruction and falsification of the
accounting records of the company. The complainants request the Registrar to take an immediate
step to stop the management to tamper with the records. The complaint was received in the
morning on 1st January 2019 and the ROC entered the premises within half hour for the search.
The course of action that can be taken by Registrar are: -

A) Registrar may enter and search the place where such books or papers are kept and seize them.
B) Registrar may enter and search the place where such books or papers are kept and can seize only after
obtaining an order from the special court.
C) Registrar may enter and search place where such books or papers are kept only on order of NCLT.
D) Registrar may enter and search the place where such books or papers are kept and give an opportunity
to the company to represent why such documents may not be seized.

Q 165. Under what circumstances the meeting of the creditors may be dispensed by the NCLT?

A) If 70% of the creditors in value agree and confirm to the scheme by way of affidavit
B) If 80% of the creditors in value agree and confirm to the scheme by way of affidavit

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C) If 90% of the creditors in value agree and confirm to the scheme by way of affidavit
D) None of the above

Q 166. PQR Limited and LMN Limited have proposed Scheme of Amalgamation between them
under Section 232 of Companies Act 2013. They are seeking your advice on which of the following
approvals can be asked for in the petition to be filed before NCLT for the proposed scheme.

A) Change in Main Object Clause of Memorandum of Association

B) Reduction of Share Capital
C) Dissolution of the Transferor Company without winding up
D) All of the above.

Q 167. ABHI Limited is a wholly owned subsidiary company of ETERNAL Limited. ETERNAL
Ltd., makes an application for merger of Holding and Subsidiary Companies under the section 232
of the Companies Act, 2013. The Company Secretary of the ETERNAL Ltd., states that company
cannot apply for merger under section 232 of the said Act. He further stated that the company
shall have to apply for merger as per section 233 i.e. Fast Track Merger. State the correct
statement in terms of the validity of the difference in the opinion of the Company secretary: -

A) Opinion of CS of ETERNAL Ltd. is valid holding that merger shall be as per section 233.
B) Opinion of the Company Secretary of the ETERNAL Ltd. is invalid as merger shall be possible only
as per section 232.
C) Opinion of the Company Secretary of the ETERNAL Ltd. is invalid as the provisions given for fast
track merger in the section 233 are of the optional nature.
D) Opinion of the Company Secretary of the ETERNAL Ltd. is invalid as the provisions given for fast
track merger in the section 233 can be made between only small companies.

Q 168. A Private Limited is a company with ten shareholders. A member holding less than one-
tenth of the share capital of the company apply to the Tribunal for relief against oppression and
mismanagement? State whether member have a right to apply to the tribunal in above situation: -

A) A single Member cannot apply to the Tribunal for relief against oppression and mismanagement
B) A member cannot apply as he is holding less than one-tenth of the share capital of company
C) A member can apply being one-tenth of the total number of members.
D) A member cannot apply as the requirement of at least 100 members is not complied with.

Q 169. With whom will the Central Government file an application if it is of the opinion that such a
scheme is not in public interest or in the interest of the creditors?

A) Cannot move an application

B) It may file an application before the Tribunal
C) It may file an application before the Parliament
D) It may be through Special Petition before Supreme Court.

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Q 170. When can application be made to Tribunal for constitution of winding up committee to
assist and monitor progress of liquidation by Company Liquidator in carrying out the function?

A) Within two weeks from the date of passing of winding up order

B) Within three weeks from the date of passing of winding up order
C) Within four weeks from the date of passing of winding up order
D) None of the above.

Q 171. When can a winding up order not be called a notice of discharge?

A) When the business of the company is continued

B) When the business of the company is closed since 2 years.
C) On the discretion of the management
D) Till a provisional Liquidator is appointed

Q 172. The Central Government in consultation with the RBI notifies that the insolvency
resolution and liquidation proceedings of the NBFCs (which include housing finance
companies) with asset size of Rs……….. crore or more, as per last audited balance sheet will
be done as per IBC 2016. .(SELF DRAFTED)

A) 100
B) 200
C) 500
D) 10

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Q 173. Mr. KG filed a complaint against Mr. P alleging that Mr. P has communicated unpublished
price sensitive information to Mr. X. Mr. P took a plea that Mr. X requested him for such
information and it was done bonafidely. State the correct statement as to the liability of Mr. P: -

A) Mr. P will not be liable as he communicated about unpublished price sensitive information on the
request of Mr. X
B) Mr. P will not be liable as he communicated about unpublished price sensitive information to Mr. X,
in the ordinary cause of business
C) Mr. P will not be liable as he communicated about unpublished price sensitive information to Mr. X
as it was done without any mala-fide intention.
D) Mr. P will be liable as he communicated about unpublished price sensitive information to Mr. X,
whether with or without his request for such information.

Q 174. Number of independent directors in Audit committee: -

A) One-third of the members of audit committee.

B) Two-thirds of the members of audit committee shall be independent directors.
C) Minimum 2
D) Minimum 3

Q 175. For how much capital restructuring, the listed entity shall submit a statement showing
holding of securities and shareholding pattern with the stock exchange: -

A) Resulting in a change exceeding 1% of the total paid-up share capital

B) Resulting in a change exceeding 2% of the total paid-up share capital
C) Resulting in a change exceeding 2.5% of the total paid-up share capital
D) Resulting in a change exceeding 2% of the total issued share capital

Q 176. SEBI has imposed a penalty on Hotel L Ventures Ltd. for violation of Takeover Code. The
directors of Management seeking your advice to apprise them with the time period for filling an
appeal with SAT and Supreme Court? Suggest what will be the time period for filing appeal with
SAT and Supreme Court?

A) In case of filing appeal with SAT: Within 45 days from the date of order of the copy made by SEBI
or adjudicating officer and in case of filing appeal with Supreme Court: Within 60 days from the date
of communication of the decision or order of SAT.
B) In case of filing appeal with SAT: Within 60 days from the date of order of the copy made by SEBI
or adjudicating officer and in case of filing appeal with Supreme Court: Within 60 days from the date
of communication of the decision or order of SAT.
C) In case of filing appeal with SAT: Within 30 days from the date of order of the copy made by SEBI
or adjudicating officer and in case of filing appeal with Supreme Court: Within 60 days from the date
of communication of the decision or order of SAT.

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D) In case of filing appeal with SAT: Within 60 days from the date of order of the copy made by SEBI
or adjudicating officer and in case of filing appeal with Supreme Court: Within 45 days from the date
of communication of the decision or order of SAT

Q 177. Suppose SEBI has constituted its board as per requirements of section 4 of SEBI Act, 1992
with 3 whole time members under Section 4(1)(d) of SEBI Act, 1992, but one of them resigned and
to refill his post, it took 1 month. Examine acts done in in vacancy period, as per SEBI Act 1992

A) All acts become void ab-initio as per section 8 of the SEBI Act, 1992.
B) Only financial acts are void ab initio as per section 8 of the SEBI Act, 1992.
C) All acts are valid as per section 8 of the SEBI Act, 1992.
D) All acts should be rectified after composition of proper board as per section 8 of the SEBI Act, 1992.

Q 178. ABC & Co., CAs, is partnership firm, who is auditor of 1 of listed company Z ltd. for FY
18-19. Mr. B is engaging partner of that audit with a team of 15 members. While doing audit of
financial statement of the company, two members of team, who are CA, passed Info to their friends
and relatives that this year company’s profit is increasing by 25% as compared to last audited
financial year, before this info came in to public domain through the company. They made profit
from this information by purchase at low price and after financial statements came in public
domain and share prices raised, they sold shares at enhanced price. Please state whether it is a case
of insider trading. If yes, then how much penalty for this act, under SEBI Act, 1992.

A) No, it is not insider trading, because that these persons are not restricted to use the information to
benefit themselves.
B) No, it is not insider trading, because it is not price sensitive information.
C) Yes, it is insider trading and penalty u/s 15G would be minimum 10 Lacs which may extend up to 25
Cr. or 3 times of profit derived, whichever is higher.
D) Yes, it is insider trading & penalty 12A be 25 Cr. or 3 times of profit derived, whichever is lower

Q 179. A ltd., a listed company, wants to revise the rate of interest of its existing 12% bond by 1%
i.e. 13% bond from 14th August 2019, the said proposal is to be laid before board meeting to be
held on 14th July 2019. Up to which of following date, A Ltd. has to intimate to stock exchange as
per regulation 29 of SEBI (LODR), 2015?

A) 3rd July 2019.

B) 3rd August 2019.
C) 5th July 2019.
D) 5th August 2019

Q 180. Off-market trades shall be reported by the insiders to the company within ………..
working days. becoming aware of such information.

A) 10

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B) 15
C) 7
D) 2

Q 181. Application for cancellation or surrender or deactivation of Director Identification Number is

submitted to ROC in Form ……………..

A) DIR 3
B) DIR 6
C) DIR 1
D) DIR 5

Q 182. Mr. Raman, is appointed as VALUER in April, 2018 in ABC Ltd. He undertook valuation
of assets of company in 2018. In case Mr. Raman becomes interested in any property, stock etc. of
company, he may be not eligible to undertake valuation in such property of company till: -

A) 2019
B) 2020
C) 2021
D) He will never be appointed as Registered VALUER of ABC Ltd.

Q 183. A Solar Energy Private Limited was allowed the status of a ‘dormant company’ after a
certificate to this effect was issued on 1st July 2018 by ROC, Delhi and Haryana. Mention the
latest date after which the Registrar is empowered to initiate the process of striking off the name of
the company if A Solar Energy continues to remain as a dormant company.?

A) After 30th June, 2023.

B) After 30th June, 2019.
C) After 30th June, 2020.
D) After 30th June, 2021.

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Q 184. Nanny M Private Limited was incorporated on 9th June, 2017. For the financial year 2017-
2018, it did not file its financial statements and annual returns. For the time being the company
desires to be treated as ‘inactive company’ since it does not intend to carry on any business
permitted by its Memorandum. As to when ROC can issue certificate of status of dormant
company to ‘Nanny M’ on the basis of non-submission of financial statements if the company
makes an application to the Registrar in this respect.

A) After non-submission of financial statements for the two financial years i.e. 2018-19 and 2019-20.
B) After non-submission of financial statements for the next financial year i.e. 2018-19.
C) After non-submission of financial statements for 3 financial years 2018- 19, 2019-20 and 2020-21.
D) After non-submission of financial statements for 4 FYs 2018-19, 2019-20, 2020-21 and 2021-22

Q 185. Central Government for providing of speedy trial of offences under the Companies Act,
2013, shall establish/ designate such numbers of special courts in an area?

A) Only 1
B) Not more than 2
C) More than 2
D) As many as may be necessary

Q 186. Which of the following courts shall be deemed to be a special court for the prevailing of the
provisions of the Code of Criminal Procedure to the proceedings before a Special Court -
(1) Court of Session (2) Metropolitan Magistrate
(3) Judicial Magistrate of the First Class (4) Judicial Magistrate of the Second Class

A) 1, 2 & 4
B) 2, 3 & 4
C) 1, 2, & 3
D) 1, 3, & 4

Q 187. Which factors among the below given are taken into consideration while deciding the
quantum of fine/ punishment levied under this Act:
(1) failure in filing of any documents (2) size of the Company
(3) injury to employees of the company (4) nature of business carried on by the company

A) 1 & 2 only
B) 2 & 4 only
C) 1 & 4 only
D) 3 only

Q 188. Mr. R, employee of company filed a complaint against company for illegal issue & transfer
of securities before the special court. State the correct basis for rejection of the said complaint?

A) This is a non-cognizable offence, so out of the jurisdiction of the special court.

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B) The court is barred to entertain such complaint as is out of the jurisdiction of the special court.
C) Employee is not a competent person to file a complaint against the company for an offence relating to
issue and transfer of securities
D) Compliant can be filed by the Registrar, a shareholder or a member of the company, or of a person
authorized by the Central Government in respect to the same

Q 189. Any person who is aggrieved by the order of Appellate Tribunal may approach to Supreme
Court on any question of law within: -

A) 30 Days
B) 45 Days
C) 60 Days
D) 90 days

Q 190. In Sep 2016, Mr. P, went to USA, London and Germany on a month long business trip. For
this trip he got exchanged US$ 50000 from an authorized dealer. In December 2016 he remitted
US$ 50000 to his son in Canada, who was studying there. In January 2017 he sent his mother and
wife to America for his mother’s treatment and for the purpose he remitted US$ 75000 to his
younger brother, who was living there. In March 2017 his daughter got engaged and she opted for
a destination marriage to be held in May 2017, in Switzerland. While on trip to Dubai in the
March end, 2017, he spent US $ 35000 for his daughter’s shopping in Dubai. Later, the event
manager gave an estimate of US $ 250000 for the wedding. As per the provisions of FEMA, for
how much remittance does he need to take prior approval of the Reserve bank of India.

A) He does not need any prior approval at all

B) For US $ 210000
C) For US $ 250000
D) For US $ 15000

Q 191. Mr. Z was appointed as representative of ABC Company for corporate program organized
in USA. During the said period in USA, he was diagnosed with the severe kidney disease, so
decided to have a kidney transplant done in USA. State the maximum amount that can be drawn
by Mr. Z as foreign exchange for the medical treatment abroad.

A) USD 1,25,000
B) USD 2,25,000
C) USD 2,50,000
D) As estimated by a medical institute offering treatment

Q 192. Mr. Ram had resided in India during FY 2017-2018 for less than 183 days. He again came
to India on 1st May, 2018 for higher studies and business and stayed up to 15th July, 2019. State
correct answer as to residential status of Mr. Ram in light of given fact as per FEMA, 1999
(1) Mr. Ram can be considered as 'Person resident in India' during the financial year 2018-2019

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(2) Mr. Ram cannot be considered as ‘Person resident in India' during financial year 2018-2019
(3) Mr. Ram can be considered as ‘Person resident in India' during the financial year 2019- 2020?

A) Both the statement (1) & (3) are correct

B) Both the statement (2) & (3) are correct
C) Only statement (1) is correct
D) Only statement (2) is correct

Q 193. If a valuer contravenes the provisions of Section 247, he shall be liable for fine of ₹
………… (SELF DRAFTED)

A) 5,00,000
B) 1,00,000
C) 10,000
D) 50,000

Q 194. “Inactive Company” means a company which has not been carrying on any business
or operation, or has not made any significant accounting transaction during the last
………… financial years. (SELF DRAFTED)

A) 1
B) 5
C) 2
D) 3

Q 195. As per FCRA, restrictions on ‘foreign contribution’ are applicable if foreign contribution is
from ‘foreign source’. Who among following are excluded from purview of foreign source in Act-

A) United nations
B) World Bank
C) International monetary Fund
D) All of the above

Q 196. Surya Ltd., incorporated & registered in New Delhi with a foreign shareholding more than
50% due to liberalization in FDI policy. State correct statement as to the status of the Surya Ltd.?

A) Surya limited shall not be considered as foreign source because of its registration in India.
B) Surya Ltd would be ‘foreign source’ having foreign shareholding more than 50% of foreign company.
C) Surya Ltd would be ‘foreign source’ having foreign contribution by various international agencies.
D) Both (b) & (c)

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Q 197. Association was holding the certificate of registration making it eligible for acceptance of
foreign contribution established for the betterment of poor children. Central Government later
cancelled the certificate of the association for violation of the terms and conditions of certificate for
being not engaged in chosen activity for the poor children. Such association again applied for the
registration. State weather the association is eligible for registration-

A) Yes, it can apply freshly at any time

B) No, permanently becomes disqualified
C) yes, after 3 years from the date of cancellation of certificate
D) after reasonable opportunity of being heard, and on warning, same registration will be restored.

Q 198. RAB Bank Limited, a banking company, has defaulted in payment of dues to their catering
contractor. Can the contractor, as operational creditor initiate insolvency process against bank: -

A) Yes, operational creditors are entitled

B) No, financial service providers are excluded
C) Yes, banking companies are covered under this code
D) No, catering is an excluded service under the Code

Q 199. Time line of 180 days for the Corporate Insolvency Resolution process commences from: -

A) Date of Debt
B) Date of preferring the application
C) Date of admission of application by NCLT
D) 90 days after the debt is due

Q 200. Ruby Ltd. filed application to NCLT stating that corporate insolvency resolution process
against him, cannot be completed in 90 days under fast track insolvency resolution process.
Considering application and on being satisfied, NCLT ordered to extend period of such process by
30 days. Later, again Ruby Ltd. initiated application for further extension of time period of
insolvency process by 15 days. Decide, whether NCLT, can extend timelines by further 15 days.

A) Yes, because extension of duration in total, is not exceeding 45 days.

B) Yes, depends of the facts, if it is justified, NCLT may extend the timelines.
C) No, extension of the fast track insolvency resolution process shall not be granted more than once.
D) (a) & (b)

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Q 201. Can operational creditor can assign or legally transfer operational debt to financial creditor

A) Yes. However, transferee shall be considered as an operational creditor to such extent of transfer.
B) Yes, but the transferee shall be considered as a financial creditor in relation to such transfer.
C) No. Operational creditor cannot assign or legally transfer any operational debt to a financial creditor.
D) No. Operational creditor can assign or legally transfer operational debt only to operational creditor.

Q 202. _ shall be responsible for carrying out the entire Corporate Insolvency
resolution process and managing the operations of the corporate debtor during the process.

A) Committee of creditors
B) Adjudicating Authority
C) Insolvency professionals
D) Resolution Professional

Q 203. ABC and Co, the tax consultants of X Limited for which an interim resolution professional
– Mr. A, has been appointed under the Corporate Insolvency resolution process has refused to
furnish information to Mr. A on the grounds of client confidentiality. Are they right?

A) NCLT will admit the application of Mr. Satya, as he jointly with his son owned the debt to the Mr. X,
so he is a valid petitioner.
B) NCLT will admit the application filed by Mr. Satya on behalf of his son.
C) NCLT will reject the application considering that no default has occurred against Mr. Satya, and his
stand as a financial creditor is not proved in the petition.
D) NCLT will dismiss the application on the ground of non-clarity as to existence of dispute.

Q 204. Mr. Satya, file a petition for default of non –payment of the debt against Mr. X. Amount in
default claimed by petitioner was 30 Lac. Mr. X (Respondent) pleaded before adjudicating
authority that amount of claim was not belonging to the applicant. Mr. Satya, asserted that he
himself with his son owns 26 Lakh to the respondent. Though nowhere in petition he admitted that
he himself with his Son owns 26 Lakh to the respondent. State action by Adjudicating Authority-

A) Yes, they are right

B) No, the Code provides powers to the IRP to access all information from various parties
C) Partly right, they can do so only after consent of the directors
D) Mr. A is not right in even asking for this info

Q 205. Person who provided goods or services & payment for same is due from corporate debtor is

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A) Financial Creditor
B) Operational creditor
C) Corporate applicant
D) Both (a) & (b)

NOV 19 MTP – 19 MCQs”

Q 206. Three Directors, namely Sam, San and Sami intimated Pluto Plastic & Mechanical Toys
Limited about their participation in the Board Meetings through video conferencing at the
appropriate time of the year. However, after attending the first Board Meeting held in the
Financial Year 2019 -20 by means of video conferencing, Santosh wants to participate in the next
Meeting to be held at a future date in person. Is it possible for him to do so when consent given for
participation in meetings through video conferencing remains valid for full one year?

A) No, Santosh cannot attend future Board Meetings in person even if the company is intimated of suchintention
sufficiently in advance.
B) Yes, Santosh can attend future Board Meetings in person if he intimates the company of his intention
sufficiently in advance.
C) Yes, Santosh can attend future Board Meetings in person only if all the remaining directors consent tosuch
request.
D) Yes, Santosh can attend future Board Meetings in person but at least 75 percent of the remainingdirectors
(rounded off to next higher figure in case of a fraction) consent to such request.

Q 207. Ra, Re, Ru and Rh are directors in Z Tours and T Private Limited whose equity shares are partly paid-up. The
company required the shareholders to make payment of 3 per share (F.V. 10 per share) being the final call in respect of
shares held by them latest by 30th June, 2019. As director, Ru held individually 2,00,000 shares and also at the same
time held jointly 1,00,000 sharesalong with her brother Ra whose name appeared first in Register of Members. In
respect of 2,00,000 shares held individually by her, Ru duly made the payment before last date; however, in respect of
joint shareholding of 1,00,000 shares, Ra was unable to make payment even though six months also expired from the
last day i.e. 30th June, 2019. Advise whether Ru incurs any disqualification regarding her directorship in the company.

A) Since Ra name appears first in the Register of Members, he is primarily responsible for making payment
and therefore Ru incurs no disqualification regarding her directorship in the company fornon-payment of
required amount in respect of joint shareholding; moreover, she has already discharged her liability in
respect of shares individually held by her.
B) In case of joint shareholding, if Ru earlier made payment of 7 per share from her personal bank account
then she is also liable to pay 3 per share before expiry of 6 months from the last date ofpayment i.e. 30th
June, 2019; otherwise she is disqualified to be a director in the company irrespective of discharging her
liability in respect shares individually is held by her.
C) In case of joint shareholding, Ru as director is equally liable to get the payment made similar to her
individual shareholding before the expiry of six months from last date of payment i.e.30th June, 2019;
otherwise she is disqualified to be a director in the company.
D) In case of joint shareholding, Ru as director is liable to get the payment made in respect of 50% of thejoint
holding and if that is done before the expiry of six months from the last date of payment i.e. 30thJune, 2019,
she incurs no disqualification regarding her directorship in the company irrespective of whether the remaining
50% is received by the company or not

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Q 208. Kumar Ltd. filed a complaint to conduct an inquiry against the past employees who were in
whole time employment of the company for the entering into an arrangement of business of vested
interest. Registrar was of the opinion that further information was necessary to disclose the state of
affairs that existed in the company. A notice was served to company to furnish such information.
Which is correct statement of the following as to the conduct of enquiry in the said matter?

A) No enquiry can be conducted on said business arrangement because past employees are no more part
of the Kumar Ltd.
B) Enquiry can be conducted by seeking info by serving notice to the Kumar Ltd and all the officers.
C) Enquiry can be conducted by seeking required information from the past employees (officers who
were earlier in employment of the company) and they are bound to furnish information and
explanation to the best of their knowledge.
D) No enquiry can be conducted as central government is authorized to look into the matter.

Q 209. ABC & Co., CA, is a partnership firm, who is auditor of one of the listed company Z Ltd.
for the financial year 2018-19. Mr. B is engaging partner of that audit with a team of 15 members.
While doing audit of the financial statement of the company, two members of the team, who are
CA, passed the information to their friends and relatives that this year company’s profit is
increasing by 25% as compared to last audited financial year, before this information came in to
public domain through the company. They made profit from this information by purchase at low
price and after financial statements came in public domain and share prices raised, they sold
shares at enhanced price. Please state whether it is a case of insider trading. If yes, then how much
penalty for this act, under SEBI Act, 1992.

A) No, it is not insider trading, because that these persons are not restricted to use the information to
benefit themselves.
B) No, it is not insider trading, because it is not price sensitive information.
C) Yes, it is insider trading and penalty u/s 15G would be minimum 10 Lacs which may extend up to 25
cr. or 3 times of profit derived, whichever is higher.
D) Yes, it is insider trading & penalty u/s 12A be 25 cr. or 3 times of profit derived, whichever is lower.

Q 210. In case of contravention of resolution plan, an application for liquidation can be made by

A) Only the original applicant

B) Only by the corporate debtor
C) By any person other than the corporate debtor whose rights have been prejudicially affected
D) By the financial creditors only
Q 211. Infra Ltd. was winded up by an order of Tribunal dated 10th March, 2019 by the Tribunal.The
appointed official liquidator of company noticed that the MD of the Infra Ltd. had sold certain properties
belonging to company to a Supra Pvt. Ltd. in which his brother was interested on 15th October, 2018. This
caused loss to the Infra Ltd. to the extent of INR 60 lakhs. Examine thecourse of action, the official
liquidator can take in this matter.

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(1) The official liquidator can recover the sale of assets of the company as per the Section 328
(2) The transaction made will be regarded as invalid and restore the position of the company.
(3) This transaction made regarded as valid as being made under ordinary course of its business.

A) Only statement (1) is correct

B) Only statement (2) is correct
C) Only statement (3) is correct
D) Statements (1) & (2) are correct

Q 212. Mr. K, a Manager of XYZ Ltd. retired on 12th May 2019. On examination of the final
accounts of the company for the year ended on 31st March 2019, the Registrar of Companies
found some serious irregularities in writing off of huge amounts of bad debts and no satisfactory
explanation was provided for the same from the company. In such a situation ROC wants some
explanation from the company and Mr. K. Can the ROC seek explanation from Mr. K? Advice –

A) No, Mr. K can’t be called upon, as he does not hold the position in any office any more.
B) Mr. K can be called upon within a period of one year from the date of completion of his service.
C) Mr. K can be called upon for necessary explanation within a period of 180 days from the date of
leaving his office through a written notice served upon him.
D) Mr. K can be called upon by ROC by written notice served on him without any time period limit.

Q 213. State the required majority in the case where a company wants to file an application to the
registrar for removal of name of the company from the register of companies for its failure to
commence its business within one year of its incorporation?

A) Required consent of 51% members holding shares in the company

B) Required consent of 90% members holding shares in the company
C) Required consent of 75% members present in meeting approving for filing app for removal of names
D) Required consent of seventy-five per cent members in terms of paid-up share capital

Q 214. Vision Ltd., a foreign Company incorporated in Singapore, appointed Mr. X as a

representative in India for management of place of business in India. Due to unsatisfactory
services of Mr. X, Vision Ltd. replaced him and appointed Mr. Y. Vision Ltd. is required to
comply with which of the following requirement?

A) Vision Ltd. shall file return to ROC in India, within 30 days of the appointment of Mr. Y
B) Vision Ltd. being a foreign company does not require in Singapore, to give any such intimation of
replacement/ change made for management of place of business in India
C) Vision Ltd. shall intimate of such alteration at place where its registered in 15 days from alteration.
D) Vision Ltd. shall file return to Registrar, in 1 month of such alteration as to appointment of Mr. Y.

Q 215. Where VALUER has been convicted, he shall be liable to _

A) Refund of the remuneration received

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B) Pay damages to the company and to any person bearing loss by incorrect or misleading statements of
particulars made in his report
C) Both (a) & (b)
D) Only refund of remuneration to company and no payment of damages to company and to any person

Q 216. NCLT shall appoint an interim resolution professional within how many days from the
insolvency commencement date?

A) 7 days
B) 10 days
C) 14 days
D) 30 days

Q 217. Save as otherwise provided in IBC, 2016, all decisions of the committee of the creditors shall
be taken by a vote of not less than _ of voting share of the financial creditors.

A) 51%
B) 66%
C) 75%
D) 90%

Q 218. An unlisted company with total assets of not exceeding ₹ ……… eligible for fast-track
insolvency. (SELF DRAFTED)

A) 10 crores
B) 100 crores
C) 500 crores
D) 1 crore

Q 219. As per the audited financial statements of immediately preceding Financial Year, the paid-
up capital of A Metal Products Limited was 75 Crores (much below threshold limit) which did not
require appointing a woman director. However, the turnover during the same period was 334
Crores i.e. above the threshold limit which required appointing a woman director. Advise the
company whether to bring on the Board a woman director or not.

A) The company is not required to appoint a woman director since only one of the parameters have
crossed the threshold limit.
B) The company is required to appoint a woman director since any one parameter out of the two
exceeding the threshold limit shall necessitate such appointment.
C) The requirement of appointing a woman director arises only when paid up capital exceeds the
threshold limit and therefore, the company is not required to appoint a woman director.
D) In a situation where one parameter is below and the other is above the threshold limit, the company,
as per its discretion, may or may not appoint a woman director.

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Q 220. A highly reputed construction company of Mumbai, decided to launch an ultra-modern

residential project in Goa especially for non-resident HN1Indians. For the purpose, it appointed 4
agents worldwide to look for prospective buyers for 12 exclusive flats. The terms of their
appointment clearly mentioned that they themselves will be responsible for inward remittance on
the flats booked by them. As the project was one of its kind, so it got overwhelming response and
all the flats got booked. Only 2/3 of the price of each flat could be remitted into India through
proper channel during the financial year ended on 31st March 2019. Price per flat was USD
1500000 inclusive of all. From the following how much maximum commission can be given to each
agent, without any intervention of any authority. Each agent booked 3 flats.

A) 75000 USD
B) 150000 USD
C) 225000 USD
D) 300000 USD

Q 221. if the Registered valuer has defrauded the company, Maximum fine is… (SELF DRAFTED)

A) 5 Lakhs
B) 10 Lakhs
C) 1 Lakh
D) 3 Lakhs

Q 222 “Insolvency commencement date” means the date of admission of an application for initiating
corporate insolvency resolution process by the Adjudicating Authority. (SELF DRAFTED)

A) date of receipt of an application

B) date of appointment of IRP
C) date of admission of an application
D) None of the above

Q 223. Under what circumstances the meeting of the creditors may be dispensed by the NCLT?
A) If 70% of creditors in value agree and confirm to the scheme by way of affidavit
B) If 80% of the creditors in value agree and confirm to the scheme by way of affidavit
C) If 90% of the creditors in value agree and confirm to the scheme by way of affidavit
D) None of the above

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“MAY 20 RTP & MTP 6+4 Mcq”

Q 224. In case of Topica Sugar Mills Limited, necessary arrangements are in place for conducting
of Board Meetings through video conferencing, a facility which Vaibhav and Yukta, 2 directors out
of six intend to utilize by participating in such meetings through it. During which part of year they
should intimate company about their participation in Board Meetings through video conferencing?

A) At the beginning of the Financial Year.

B) At the beginning of the Calendar Year.
C) On 1st day of any month falling in the Financial Year.
D) Before the Board Meeting

Q 225. Blue Rose AGRI-Products Limited, which is inter-alia listed on recognized Stock Exchange,
has called an extra-ordinary general meeting (EGM) of the shareholders on 29th January, 2019 at
its Head Office in New Delhi to seek approval in respect of certain matters.

It so happened that the company received a notice on 25th January, 2019 from the requisite
number of small shareholders who proposed appointment of Shivank as their director but it
refused to entertain the notice as the same was served quite late. Advise the latest date by which
the small shareholders must have given the notice for the appointment of Shivank so that it was
not refused by the company.

A) The notice should have been served latest by 24th January, 2019.
B) The notice should have been served latest by 15th January, 2019.
C) The notice should have been served latest by 22nd January, 2019.
D) The notice should have been served latest by 19th January, 2019.

Q 226. The IRP appointed for M Ltd. is seeking your views on the constitution of the Committee
of creditors of M Ltd. M Ltd. does not have any financial debt other than loan obtained from Mr.
A, son of Mr. B, the managing director of M Ltd. Considering the above, identify the appropriate
constitution of the committee of creditors out of the following: -

A) Mr. A, 18 largest operational creditors, 1 representative of all workmen

B) 18 largest operational creditors, 1 representative of workmen and 1 representative of employees.
C) Only Mr. A since he is the only financial creditor
D) 18 largest operational creditors, 1 representative of workmen and 1 representative of employees and
the resolution professional.

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Q 227. Mr. V, brother of Mr. R, is a resident of Singapore and he owns an immovable property in
Chennai which he inherited from his father, who was a resident of India, Can Mr. V continue to
hold the property?

A) No, he cannot hold transfer or invest in India, since he is resident outside India.
B) Yes, he can continue to hold in India, since he is person of India Origin & property is located in India.
C) Yes, he can continue to hold property, since this was inherited from person who was resident in India
D) Yes, he can continue to hold the property, since his brother (Mr. R) uses the property whenever he
travels to Chennai.

Q 228. Which one is legally acceptable permissible source for funding overseas direct investment?

A) Proceeds of External Commercial Borrowings

B) Proceeds of Real estate business
C) Proceeds of Banking business
D) Proceeds of foreign currency funds raised through other than ADR / GDR issues

Q 229. ROC has reasonable cause to believe that XYZ Ltd, registered as ‘dormant company’
under his jurisdiction been functioning. State course of action by the Registrar against XYZ Ltd. –

A) Registrar may serve the notice stating that it is a dormant company and so cannot function, so all its
acts will be considered as void.
B) Registrar may initiate proceedings thereby making the company and its officers liable to be punished
for the functioning of the company under the status of dormant company.
C) Registrar may initiate enquiry and if found that XYZ Ltd. has actually been functioning, the Registrar
may remove name of such company from register of dormant companies & treat it as active company.
D) Registrar may initiate enquiry under section 206, if found to be functioning, for non compliance with
the Companies Act, 2013.

Q 230. ECB liability-equity ratio for ECB raised under the automatic route cannot exceed
……….(SELF DRAFTED)

A) 5:1
B) 10:1
C) 1:7
D) 7:1

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Q 231. Prohibited current account transactions find place in _ .

A) Schedule I of the FEM (Current Account Transactions) Rules, 2000.

B) Schedule II of the FEM (Current Account Transactions) Rules, 2000.
C) Schedule III of the FEM (Current Account Transactions) Rules, 2000.
D) All above

“5 Integrated Case Scenarios”

INTEGRATED CASE SCENARIO 1: -
LAGUS Transport Services Ltd. (LTSL) is operating in logistics & public transport domain. The
company has PAN-India presence. As per its Articles of Association, the company can appoint a
maximum of 15 directors and all of them shall be rotational directors. Presently, company has a
strength of 14 directors, of which 9 are executive directors & remaining 5 non-executive directors.
As on 31st March, 2018, its paid- up share capital was 8.42 Crore; turnover was 84 Crore & it had,
in aggregate, outstanding loans, debentures and deposits to tune of 42 Crore. In AGM held on 20th
August, 2018, Anil, Badal, Chanchal and Damodar were appointed as directors in place of Mohan,
Navin, Om and Prasad by passing a single resolution with simple majority. It is to be noted that
earlier, a motion authorising the appointment of Anil, Badal, Chanchal and Damodar by a single
resolution was passed in the meeting and not a single vote was cast against such motion.
As on 31st March, 2019, the turnover of the company increased to ₹ 120.52 crore but the aggregate
of outstanding loans, debentures and deposits reduced to ₹ 40 crore. The paid- up share capital
wasthe same as earlier. Due to the increased turnover there arose the requirement of appointing
two independent directors. Since the company was required to appoint two independent directors,
the total strength of the Board with such appointments would go up to 16 directors from the
present 14 whereas according to the Articles, the company can have a maximum of 15 directors.
Accordingly, the Articles were altered, and the total strength was increased to 20 directors.
After altering the Articles, the company proceeded to appoint four independent directors instead
of the mandatorily required two since it was felt that such step would strengthen the corporate
governance to the maximum extent. The independent directors were - Mrs. Eekam, who is
considered ‘influencer’ on supply chain management and has a lot of expertise in the logistics field;
Mrs. Prajna who is a marketing expert; Mrs. Ruchita, who is MBA (Finance and Accounting)
from IIM, Ahmedabad; and Mr. Amit, who is skilled in developing customized software.
Subsequent to the above developments, the time to hold AGM approached and it was held on 12th
August, 2019, at the registered office of the company at Mumbai.

[60]

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Q 232. In this case scenario, Anil, Badal, Chanchal and Damodar were appointed as directors by
passing a single resolution at the AGM. Is such appointment valid?

A) Appointment of Anil, Badal, Chanchal and Damodar by a single resolution is valid because
beforehand, a motion authorising their appointment by a single resolution was passed in the meeting
and not a single vote was cast against such motion.
B) Appointment of Anil, Badal, Chanchal and Damodar by a single resolution is not valid because
passing of resolution by simple majority indicates that it was not passed unanimously.
C) Appointment of Anil, Badal, Chanchal and Damodar by a single resolution with simple majority is
not valid because such resolution is required to be passed as a special resolution.
D) Appointment of Anil, Badal, Chanchal and Damodar by a single resolution is not valid because in no
case more than one director can be appointed by passing a single resolution..

Q 233. In the given case scenario, according to the Articles all the directors are rotational. Had this
been not the case, how many directors were required to retire at the AGM which was held on 20th
August, 2018?

A) Five directors
B) Four directors
C) Three directors
D) Two directors.

Q 234. In the given case scenario, if it is presumed that as on 31st March, 2019, the turnover of the
company is 87 Crore and the paid-up share capital is 12 Crore, would the company be still
mandatorily required to appoint two independent directors?

A) There is no need to appoint two independent directors since the aggregate of turnover and paid-up
share capital has not crossed the threshold of 100 Crore.
B) Instead of appointing two independent directors, the company is required to appoint only one
independent director since the aggregate of turnover and paid- up share capital is above 90 Crore but
less than 100 Crore.
C) Company is required to appoint min 2 independent directors since paid-up share cap is 12 Crore.
D) Company is required to appoint only 1 independent director since paid-up share capital is < 15 Crore.

Q 235. According to the case scenario, the company altered its Articles of Association so as to
increase the total strength of directors up to 20 from the present 15 directors. Which of the
following options is applicable in such a case of alteration?

A) Articles were altered by passing an ordinary resolution.

B) Articles were altered by passing an ordinary resolution followed by approval sought from the
jurisdictional Registrar of Companies.
C) Articles were altered by passing a Board Resolution with more than seventy- five percent majority.
D) Articles were altered by passing a special resolution.

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Q 236. As on 12th August, 2019, when the AGM of LTSL was held, the total strength of directors
reached to 18 due to the appointment of four independent directors. When all the directors are
rotational, how many directors shall get retired at this AGM?

A) Six directors
B) Five directors
C) Four directors
D) Two directors.

INTEGRATED CASE SCENARIO 2: -

Ali Baba Limited is a listed company incorporated under the provisions of Company Law having
its registered office at Andhra Pradesh. Mrs. Smart is a Managing Director of Ali Baba Limited
since its incorporation. She was first director and one of the promoters of the company. She has
vast experience of managing the company in very efficient manner.

Ali Baba Ltd. is a holding company of PM Limited with a FIRA Private Limited as a subsidiary to
PM Limited. Following are the details pertaining to the incorporation of the related entities and its
capital structure: -

S. N. Particulars Ali Baba Limited PM Limited FIRA

1. Date of Incorporation 17/09/1985 06/09/1988 28/09/1989
2. Place of Registered Office Andhra Pradesh Delhi Hyderabad
3. Authorized Share Capital 100,00,00,000/- 20,00,00,000/- 10,00,00,000/-
4. Paid Up Share Capital 99,00,00,000/- 10,00,00,000/- 10,00,00,000/-
Under the guidance of Mrs. Smart, Ali Baba Limited acquired shareholding in PM Limited and
thus resulting it into a subsidiary company of Ali Baba Limited. Now the Board of Directors of Ali
Baba Limited wishes to nominate Mrs. Smart for the position of Managing Director in PM Limited
and also to appoint her as Whole Time Director (WTO) in FIRA Private Limited, which is a
wholly owned subsidiary (WOS) of PM Limited.
Therefore, the Board of Directors of PM Limited passed a Board Resolution through resolution by
circulation to appoint Mrs. Smart as Managing Director of the company. Subsequently, the Board
of Directors of FIRA Private Limited passed the Board Resolution at Board Meeting, wherein all
directors present in the meeting approved the resolution for appointing her as Whole Time
Director of the company and then subsequent to unanimous Board approval, FIRA Private
Limited also conducted the general meeting for getting approval of shareholders and passed the
ordinary resolution to appoint her as Whole Time Director in the company.
Further, for appointment of Mrs. Smart, PM Limited and FIRA Private Limited had complied
with Schedule V of the Companies Act, 2013 as a result respective companies did not take any
approval from Central Government for her appointment as Managing Director and Whole Time
Director respectively.
Based on the above provided information and in the light of applicable provisions of the
Companies Act, 2013, read with Schedule V of the Act, you are asked to advice on the following: -

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Q 237. State on the validity of the appointment of Mrs. Smart as Managing Director in PM
Limited in terms of the provisions of the Companies Act, 2013?

A) Invalid, as no such appointment made or approved by resolution passed at board meeting by consent
of all directors present at meeting & supported by general meeting’s ordinary resolution u/s 196.
B) Valid as whole time KMP shall hold office in its subsidiary at the same time.
C) Valid with further approval of the Central Government.
D) Invalid because a person cannot hold more than one office as Managing Director.

Q 238. Whether Mrs. Smart appointment as Whole Time Director in FIRA Private Limited is valid
as per provisions of the Companies Act, 2013?

A) No, because being FIRA Private Limited is private company so rule 8 & 8A of Companies
(Appointment & Remuneration of Managerial Personnel) Rules, 2014, not applicable
B) Yes, as per section 2(71) it is deemed as public Company
C) Yes, on further approval of Central Government
D) No, because of restriction under section 203(3) on appointment in more than one company.

Q 239. What will be legal position as to the appointment of Mrs. Smart as Managing Director in
PM Limited, if Ali Baba Limited is a Government Company?

A) Invalid due to non-compliance of section 203

B) Valid in light of the provisions of section 203(4A)
C) Valid with approval of Central Government
D) Invalid because a person cannot hold office of Managing Director in more than one company.

Q 240. What is the status of FIRA Private Limited for the purpose of the applicability of
Companies Act, 2013, if Ali Baba Limited is a Government Company?

A) Private Company
B) Public Company
C) Government Company
D) Associate Company.

Q 241. Whether appointment of Mrs. Smart as Whole Time Director in FIRA Private Limited is
legally acceptable, if Ali Baba Limited is a Government Company?

A) No, because being FIRA Private Limited is private company so rule 8 & 8A of Companies
(Appointment & Remuneration of Managerial Personnel) Rules, 2014, not applicable
B) Yes, because section 203 is not applicable on Government Companies
C) Yes, with further approval Central Government
D) No, because of restriction under section 203(3)

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INTEGRATED CASE SCENARIO 3: -

M/s. Sheetal Chemicals Limited (SCL) is a listed public company dealing in petrochemicals which
are used in numerous household products like wax, detergents, dyes, carpeting, safety glasses, etc.
As per latest audited balance sheet as at 31st Mar, 19, company have following financial position: -
* Paid up share capital = Rs. 40 crore
* Authorized capital = Rs. 50 crore
* Turnover for FY 2018-2019 = Rs. 300 crore
Composition of Board: -
The company has thirteen directors on its Board namely, A1, B2, C3, D4, E5, F6, G7, H8, I9, J10,
K11, L12 and M13 of which A1, B2, C3, D4 and E5 are the independent directors. The Articles of
Association of the company restrict the maximum number of directors to fifteen. SCL remains
ever-conscious to corporate governance and ensures compliance to legal provisions in both letter
and spirit. L12 is the Managing Director of the company whereas M13 is the only woman director.
The company has constituted requisite committees as per the requirements of law. The Audit
Committee consists of seven directors as members i.e. A1, B2, C3, D4, E5, I9, J10 and K11.Earlier,
for the financial year ending 31st March, 2018, the company successfully convened and held
Annual General Meeting (AGM) on 25th September, 2018 at its registered office at Pune. On the
fateful day of AGM, while returning to Mumbai from Pune by road after her re-appointment at
AGM, a fatal accident claimed the life of M13 thus snatching an efficient and trustworthy director
from the hands of the company. Later on, a Board Meeting was held on 09-01-2019 and N14, a
finance professional and daughter of deceased woman director M13 was appointed as director to
fill the vacancy of woman director so created due to the death of M13. It may be noted that before
09-01-2019, a Board Meeting was held on 15-09-2018.
SCL is a growing company which wants to diversify its business into the sphere of agrochemicals
also and therefore, desires to bring on its Board O15 who is a chemical engineer with hands-on
experience of about twenty years post his qualification in the field of agrochemicals and other
petroleum products. Besides production, he is well versed in marketing of agrochemicals both in
India and abroad. It is hoped that he shall prove to be a valuable asset to the company.
Accordingly, a Board Meeting was held on 14th April, 2019 to appoint O15 as additional director.
As the total strength of directors was well within the limit prescribed by the Articles, there was no
need to alter the Articles.

Q 242. After the appointment of O15 as additional director on 14-04-2019, another Board Meeting
of SCL was held on 17-05-2019. From the given options, choose the correct one which indicates the
quorum for the current Board meeting?

A) Nine directors
B) Five directors
C) Four directors
D) Two directors.

Q 243. For the purpose of meeting of the Audit Committee of SCL, how many members should be
present at such meeting in order to constitute the quorum?

A) All the seven members

B) Only five members of which minimum two should be independent members

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C) Only three members of which minimum two should be independent members

D) Only two members of which minimum one should be independent member.

Q 244. From the case scenario, it is observed that after the death of M13, her daughter N14 was
appointed at a Board Meeting held on 09-01-2019 to fill the vacancy of woman director. Is the
appointment of N14 on 09- 01-2019 justified?

A) No. The appointment of N14 should have been made within three months from 25-09-2018.
B) No. The appointment of N14 should have been made within two months from 25-09-2018.
C) No. The appointment of N14 should have been made within one month from 25-09-2018.
D) Yes. The appointment of N14 made on 09-01-2019 is justified.

Q 245. In the above case scenario, L12 is the Managing Director of SCL. If it is assumed that there
is no managing or whole-time director, then in such a situation, how much remuneration the
company can pay to all the directors for the Financial Year 2019-20.

A) 11% of the net profits available for the Financial Year 2019-20
B) 5% of the net profits available for the Financial Year 2019-20
C) 3% of the net profits available for the Financial Year 2019-20
D) 1% of the net profits available for the Financial Year 2019-20.

INTEGRATED CASE SCENARIO 4: -

Hiwaves Private Ltd. for expansion of its business took the financial debt of Rs. 50 crore from the
GBC Bank Ltd. in 2017. Hiwaves Private Ltd. in its initial one year paid the instalments of the
amount of debt timely. However from mid of 2018, Hiwaves Private Ltd. started omission in the
payments of instalments. Despite of repeated reminders, Hiwaves Private Ltd. continued with
default in payments of instalments. GBC Bank Ltd. filed an application under Insolvency and
Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against
Hiwaves Private Ltd., alleging default in payments of debt, interest and other charges on 18th
November, 2018. The application was admitted in the NCLT on 1st December, 2018.
The Ex-directors and shareholders of Hiwaves Private Ltd. preferred an appeal against the said
admission of application under section 7 of the IBC. Appellant submitted that name of Hiwaves
Private Ltd. was struck off from the Register of Companies under Section 248 of the Companies
Act, 2013. Also, asserted that application under section 7 of IBC was preferred by GBC Bank Ltd.,
is barred by limitation and against a non-existent company (i.e. Hiwaves Private Ltd.). So, they
alleged that no such application is maintainable. However, the appeal was set aside.
During the CIRP, Resolution Professional (RP), “Mr. Amar” was appointed to manage the estate
of the Hiwaves Private Ltd. During the pendency of the CIRP, the Enforcement Directorate (ED)
provisionally attached the assets belonging to the Hiwaves Private Ltd. Mr. Amar (RP) intimated
the ED about initiation of the CIRP and imposition of moratorium on the property and assets of
the Hiwaves Private Ltd. as the resolution professional was required to take charge and custody of
the same. ED submitted that moratorium declared by the Adjudicating Authority would not be
applicable to the criminal case initiated under the Prevention of Money Laundering Act, 2002.

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Q 246. In given case, Hiwaves Private Ltd. was struck off from Register of Companies under the
Companies Act, 2013. State whether GBC Bank Ltd. can file an application u/s 7 of the Code?

A) No. Application can’t be filed as Hiwaves Pvt Ltd. no more in existence as its struck off from ROC
B) No. Application cannot be filed under the Code but under the Companies Act be filed within 2 years
from the date of notice notified in Official Gazette on struck off from Register of Companies.
C) Yes. Application can be filed under both laws by GBC Bank Ltd, under 2 different jurisdictions.
D) Yes. Application can be filed on an appeal of GBC bank Ltd. (being a creditor) before Tribunal under
the Companies Act for taking Hiwaves Private Ltd. into register of companies, and then may file an
application of initiation of CIRP under the capacity financial creditor, under the Code.

Q 247. As given in the case, GBC Bank Ltd. files an application for initiation of CIRP on 18th
November, 2018 which was admitted on 1st December, 2018. Suppose, if later Hiwaves Private Ltd.
pays off the outstanding debt amount and request the GBC Bank Ltd. to withdraw the application.
Specify which amongst the following is the correct statement: -

A) No withdrawal can be done, as the application has been admitted.

B) Yes, withdrawal is possible by approval of 66% of voting shares of the COC.
C) No withdrawal applies here as application of CIRP is not maintainable as H Pvt Ltd. is struck off.
D) Yes, withdrawal is possible by approval of 90% of voting shares of the COC.

Q 248. Within how many days application for initiation of CIRP can be admitted by NCLT, as it
was filed on 18th November, 2018 by GBC Bank Ltd?

A) Within 7 days from receipt of application

B) Within 10 days from receipt of application
C) Within 14 days from receipt of application
D) Within 21 days from receipt of application.

Q 249. Suppose, NCLT rejects application of GBC Bank Ltd. on account of incomplete application
submitted before it. Within how many days, the applicant can rectify the defect in the application?

A) Within 7 days of receipt of such notice from NCLT

B) Within 10 days of receipt of such notice from NCLT
C) Within 14 days of receipt of such notice from NCLT
D) Within 30 days of receipt of such notice from NCLT

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INTEGRATED CASE SCENARIO 5: -

Global Trade and Securities (India) Limited (GTSIL) is a listed company having been listed at
BSE and NSE. It was incorporated around four and a half years back in June, 2015 and has its
registered office at Connaught Place, New Delhi. The authorised and paid-up share capital of the
company is Rs. 25.00 crore.

GTSIL is duly registered with the Securities and Exchange Board of India (SEBI) for providing
merchant banking services. The company offers a varied range of services including issue
management, handling of buy-back of shares, debt and equity syndication, mergers and
acquisitions, listing and delisting, etc. GTSIL is a well-established and reputed name among the
regulatory authorities, Government Agencies, law firms, share-brokers, mutual funds, banks, etc.

The company is being managed by nine directors out of which three are independent directors. Of
the other six directors two are non-executive. The four executive directors i.e.Skand, Srishti, Rina
and Rohan are 2 energetic, young and dynamic professionals with vast experience in the field of
merchant banking.

In the current Financial Year 2019-20, a chance scrutiny of accounts revealed that during the last
financial year, by oversight, Rohan,who heads the new issue division of the company, had drawn
remuneration in excess of the limit provided by relevant provisions of law.

The shareholding base of the company is quite wide and therefore, the number of small
shareholders having stake in the company is substantial. It so happened that some of them wished
to appoint Mukund, a seasoned finance professional, as small shareholders’ director on the Board
of the company. After due process, Mukund was appointed by the company as director to
represent small shareholders.

During the financial year2018-19, the profits of the company rose by around Rs. 7.00 crore in
comparison to the previous year and therefore, a rise in the dividend per share was expected to be
approved in the AGM. Accordingly, a dividend of Rs. 6 per share was declared as against Rs. 4 per
share in the preceding year.

It is a proven fact that PESTEL analysis1(i.e. analysis of political, economic, social, technological,
environmental and legal factors affecting organisations)has always been a critical aspect for the
success of any organisation.

Keeping this crucial fact in view, the directors of the company desiring to improve political
understanding, after following the due procedure of law in this respect, made one-time political
contribution of certain amount in the current Financial Year to Public Vikassheel Dal which is one
of the prominent political parties of the country duly registered under Section 29A of the
Representation of the People Act, 1951.

Q 250. From case scenario it is evident that company made political contributions of certain
amount to Public Vikassheel Dal, a prominent political party of country. As company is in
existence for < 5 years, how much amount it might have contributed to political party in question.?

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A) Any amount as approved by the directors.

B) Any amount within the limit of 5% of the average net profits of the last 3 years.
C) Any amount within the limit of 7.5% of the average net profits of the last 3 years.
D) Political contribution made by the company is invalid as it is yet to complete 5 years of its existence.

Q 251. The above case scenario states that Mukund was appointed as small shareholders’ director
on the Board of the company. To be a director of the small shareholders, what is the nominal value
of shares which such director is required to own: -

A) Such director is required to own shares of the nominal value of Rs. 20,000 in the company prior to his
appointment as small shareholders’ director.
B) Such director is required to own shares of the nominal value of at least Rs. 10,000 in the company
prior to his appointment as small shareholders’ director.
C) Such director is required to own shares of the nominal value of at least Rs. 5,000 prior to his
appointment as small shareholders’ director.
D) Such director is not required to own shares of any nominal value in the company prior to his
appointment as small shareholders’ director.

Q 252. In this case scenario, the name of the company includes the word ‘India’. In case a company
is desirous of including words ‘British India’ in its name, which of following options is applicable: -

A) For including ‘British India’ in its name, such company must be incorporated with minimum
Authorized Capital of Rs. 50,00,000.
B) For including ‘British India’ in its name, such company must be incorporated with minimum
Authorized Capital of Rs. 75,00,000.
C) For including ‘British India’ in its name, such company must be incorporated with minimum
Authorized Capital of Rs. 100,00,000.
D) None of the above.

Q 253. The above case scenario reveals that Rohan, one of the directors, had drawn remuneration
in excess of the limit prescribed by the relevant provisions. As regards recovery of the excess
remuneration drawn by him, which of the following options is applicable?

A) The company shall not waive recovery of excess remuneration paid unless approved by a special
resolution within one year from the date the sum becomes refundable.
B) The company shall not waive recovery of excess remuneration paid unless approved by a special
resolution within two years from the date the sum becomes refundable.
C) Company shall not waive recovery of excess remuneration paid unless approved by Central Govt.
D) The company shall not waive recovery of excess remuneration paid unless approved by a special
resolution within three years from the date the sum becomes refundable.

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“SOLUTIONS”
SN Reasons
Approval of FS shall be done by BOD prior to calling AGM. There is no such time limit for approval
1 C of FS by Board but clearly it shall be done before AGM. Accordingly, board meeting may be
conducted in same day to approve the financial statements before conducting AGM.
As per section 176 no act done by person as a director shall be deemed to be invalid notwithstanding
his appointment was invalid due to any defect or disqualification. However, acts done by director after
2 C fact of defect coming into notice of company shall not be valid. Since in this question defect in
appointment of auditor came into notice of company on December 2016 hence acts done prior to
that date shall only be valid.
2 Years Refer Section 149 Rule 6
3 D
As per section 202 only MD or WTD or manager shall be eligible for compensation for loss of office.
However, no compensation shall be provided if above persons voluntarily resigns. Further if loss of
office is due to reconstruction for amalgamation and he is being appointed as MD or manager or any
4 B other officer of reconstructed or amalgamated company, he shall also be not entitled for
compensation. Here, Mr. and resigned and Mr. O is a director other than managing director or whole-
time director. So, only Mr. M is eligible for compensation
As per section 161(2) if original director is independent director then alternate director shall also be
5 B independent director.
Section 149(6) a person who either himself or any of its relative is or has been an employee or
proprietor or a partner in any of three financial year immediately preceding FY in which is proposed
to be appointed of – a firm of auditor of company or its holding company, subsidiary or associate
company shall not be eligible to be appointed as independent director. Also 149(6) states that any
6 D person who has any pic unary relationship other than generation as such director or having
transaction not exceeding 10% of total income with company or its holding company or its subsidiary
company or its Associate company or their promoters or directors at any time during immediately
preceding 2 financial years or current financial year.
As per section 150, appointment of independent director shall be approved by company in General
7 B Meeting. There is no such requirement to pass Board resolution.
As per section 154 Central govt. shall in 1 month from receipt of application under section 153 allot
DIN to applicant in such manner as may be prescribed. Special Note – Institute plays between 1
8 B month and 30 days. You need to learn exactly where 1 month is mentioned and where 30 days. This
was repeated in MCQ of foreign company chapter as well
As per section 155, no individual who has already been allotted DIN under section 154, shall apply or
9 B obtain or process another DIN.
As per rule 4 of companies (meeting of board and its powers) rules 2014, approval of matters relating
10 C to amalgamation and Merger, Demerger, acquisition and takeover shall not be dealt with in a meeting
through video conferencing or other audio-visual means except when quorum is present in person.
As per part I of Schedule V person who is resident of India shall only be eligible for appointment of
MD, WTD and manager. Explanation I.—For purpose of this Schedule, resident in India includes a
11 D person who has been staying in India for a continuous period of not < 12 months immediately
preceding date of his appointment as a managerial person and who has come to stay in India.
As per section 156, every existing director shall within one month of receipt of DIN from central
12 A government intimate his din to company. 1 month from 6 may = 6th June.
As per sec 197, total managerial remuneration payable by a public company, to its directors, including
managing director and whole-time director, and its manager in respect of any financial year shall not
13 C exceed eleven per cent. Note –section 197 not applicable to private company, still considering no
options left this should be answer.

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As per section 149 subsection 4, every listed public company shall have at least one third of total
14 C number of directors as independent director. Hence 1/3 * 13 = 4.33 i.e. 5 directors.
Sec 5(7), Financial credit means any person to whom a financial debt is owed and includes person to
15 C whom such debt has been legally assigned or transferred to. So, by assigning debt to X trust, it
becomes financial creditor. Hence, X trust in capacity of financial creditor can file up valid petition
As per Section 174 Quorum Shall be, at least 1/3 of its total strength or two directors, whichever is
16 B higher. In this question, totals number of directors are 10, hence at least four directors shall form
Quorum. But only Mr. E, G and H are available for meeting. Hence meeting cannot be held
As per section 175, resolution by circulation shall be deemed to be passed by board or committee
17 B when such resolution circulated in draft together with necessary paper to all directors or member of
committee approved by 2/3 of majority of every director entitled to vote on resolution.
As per Section 177 audit committee shall comprise of minimum three directors with majority of
18 D directors being independent director. Majority of directors, including chairperson, shall have ability to
read and understand financial statements. Hence option D is appropriate.
As per Section 177 audit committee shall comprise of minimum three directors with majority of
directors being independent director. Majority of directors, including chairperson, shall have ability to
19 A read and understand financial statements. Hence option D is appropriate. Here, only Mr. A in audit
committee has ability to understand financial statement Whereas audit committee comprises of four
members, hence, option a is appropriate.
As per section 175, Where not less than 1/3 of directors require that any resolution under circulation
20 C must be decided at meeting, chairperson shall put resolution to be decided at a meeting of board.
Here out of 10 directors, 4 directors want to discuss matter further in meeting so “C”.
2000, 2 Lakhs Refer Section 165
21 B
As per section 156, every existing director shall within one month of receipt of DIN from central
22 B government intimate his din to company. Hence, 6th June.
RV shall not undertake valuation of any assets in which he has a direct or indirect interest or becomes
so interested at any time during a period of three years prior to his appointment as valuer or three
23 C years after valuation of assets was conducted by him. Hence if he becomes interested in 2018, he will
not be able to undertake valuation of any property of company till 2021.
As per sec 186(5), No investment shall be made or loan or guarantee or security given by company
unless resolution sanctioning it is passed at a meeting of Board with consent of all directors present at
24 D meeting and prior approval of public financial institution concerned where any term loan is subsisting,
is obtained.
As per rule 3 of companies (meeting of board and its powers) rules 2014, any director intending to
participate through video conferencing in board meeting may indicate such participation at beginning
25 D of calendar year, and such declaration shall be valid for one year. Here, director declared his
participation through electronic mode in April 2017. Therefore, board meeting that is to be conducted
in August 2018, intimation of April 2017 is expired.
As per rule 3 of Companies (Appointment and qualification of directors) Rules2014
The following class of companies shall appoint at least 1 Woman director-
(I) Every listed company
26 D (II) Every other public company having –
A) Paid–up share capital of one hundred crore rupees or more OR
B) Turnover of three hundred crore rupees or more. Hence, all companies can be selected.
Sec 180(1)(d) not applicable to private company. Hence Board of Company itself has power to fix
27 B time limit to repay debt due from director and no SR required in GM.
Sec 230 – If 90% value of creditors by way of an Affidavit affirm compromise or arrangement then
28 C tribunal may dispense of calling of meeting.
As per sec 277, Company liquidator or provisional liquidator shall within three weeks from date of
29 B winding up order apply to tribunal for formation of winding up committee.

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Section 162- Appointment of two or more person as Directors of company by a single resolution is
prohibited unless a resolution has first been agreed at meeting without any vote being cast against it.
Hence, appointment shall be void. Section 176 - As per section 176 no act done by person as a
30 B director shall be deemed to be invalid notwithstanding his appointment was invalid due to any defect
or disqualification. However, acts done by director after fact of defect coming into notice of company
shall not be valid.
As per foreign exchange management (realization, repatriation and surrender of foreign exchange)
regulations, 2015 an individual who has acquired foreign exchange for purpose of purchase and
31 D foreign exchange remains unused, and then he shall take reasonable steps to realize and repatriate
such foreign exchange within 180 days.
32 B As per sec 3(7), corporate person shall not include any financial service provider.
As per sec 5(12) “insolvency commencement date” means date of admission of an application for
33 C initiating corporate insolvency resolution process by Adjudicating Authority u/s 7, 9 or 10.
There is restriction on resolution applicant u/s 29 to keep confidentiality RP provides to resolution
34 B applicant access to all relevant information. However, there is no restriction or prohibition on power
of IRP to access all information from any party.
As per sec 24, Notice of meeting shall be given by resolution professional to operational creditors or
35 B their representatives if amount of their aggregate debt is > to 10% of total debts.
As per rule 3 of company’s (meetings of board and its powers rules) 2014 - The draft minutes of
36 B meetings shall be circulated among all directors within 15 days of meeting, either in writing or in
electronic mode, as may be decided by board.
37 D 10 Lakhs
As per Section 56 of IBC. Any extension of fast track corporate insolvency resolution process shall
38 C not be granted more than once.
As per Section 152(1), where AOA has not specified first directors of company, then Individual
39 B subscribers to MOA shall be deemed to be first directors of company.
As per Rule 3 of companies (appointment & qualification of directors) 2014, in case of intermittent
40 D vacancy of Woman Director it shall be filled in 3 months from date of vacancy or date of next board
meeting, whichever is later.
As per sec 149(3), every company shall have at least 1 director who stays in India for a period of more
41 C than 182 days during FY. Hence period spent in India during FY 2018-19 shall be counted.
As per rule 4 of Companies (appointment and qualification of directors) rules, 2014
Following class or classes of companies shall have at least 2 directors as independent directors –
(I) Public Companies having paid up share capital of ten crore rupees or more OR
(II) Public Companies having turnover of one hundred crore rupees or more OR
(III) Public Companies which having Total outstanding loans, debentures & deposits > 50 Cr rupees.
42 C Provided that in case a company covered under this rule is required to appoint a higher number of
independent directors due to composition of its audit committee, such higher number of independent
directors shall be applicable to it. In section 177 – Audit Committee, composition of audit committee
requires majority of members to be independent directors.
Hence in this ques, Total 7 members are there in audit committee, therefore majority i.e. 4 directors
need to be independent directors in company.
Section 151+ Rule 7: -A listed company may on notice from lower of 1000 small shareholders or
43 B 1/10th of total number of small shareholders, have a small shareholders director elected by small
shareholders. So, lower of 1000 or 5000 i.e. 1000 small shareholder’s notice is required.
As per section 152(6): -
44 A (A) Unless articles provide for retirement of all directors at every annual general meeting, not less than
two-thirds of total number of directors of a public company shall—

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(I) be persons whose period of office is determine by retirement of directors by rotation

(II) save as otherwise expressly provided in this Act, be appointed by company in general meeting.
(B) remaining directors in case of any such company shall, in default of, and subject to any regulations
in articles of company, also be appointed by company in general meeting.
C) At first annual general meeting of a public company held next after date of general meeting at
which first directors are appointed in accordance with clauses (a) and (b) and at every subsequent
annual general meeting, one-third of such of directors for time being as are liable to retire by rotation,
or if their number is neither three nor a multiple of three, then, number nearest to one-third, shall
retire from office. Explanation. Here, “total number of directors” shall not include independent
directors, whether appointed under this Act or any other law, on Board of a company.
Hence, Total no. of directors =8-5=3 (note – SSD is always required to be an independent director).
Rotational directors = 5*2/3= 2 Retiring director = 2*1/3 = 1
As per section 161(1), Additional director shall hold office up to date of next AGM or up to last date
45 B when AGM was ought to have been held. Since last date for a GM to be held is six months from end
of financial year therefore additional director shall vacate his office on 30thseptember.
Sec 161(2), Claim by Mr. Q is not valid as authority to appoint alternate director has been vested in
46 B Board of directors only & not a single director and that too subject to empowerment by articles.
As per Section 149subsection 4, Every listed public company shall appoint at least one third of its
47 D total number of directors as independent director. 1/3rd of 13 = 5
49 C As per section 173, Maximum gap between two board meetings shall not exceed 120 days.
As per Section 174, Quorum of company shall be at least one third of its total strength or two
49 B directors, whichever is higher. 1/3*7=2.33=3
As per Section 179. Board can delegate clause d, e & f of section 179(3) to committee of directors i.e.
50 B To either borrow monies OR to invest funds of companies or to grant loans or give, guarantee, or
provide security in respect of loans.
As per sec 181 of Co Act,2013 board of directors may contribute to bona fide charitable and other
funds. Prior permission of members in general meeting is required if charitable contribution exceeds
51 D 5% of avg net profits during immediately preceding 3 FYs. Hence contribution can be made without
any approval despite of losses if it does not exceed 5% provided it is to a bona fide charitable fund.
As per sec 196, a person who has attained age of 70 years may be appointed as managing director,
whole time director of manager if: -
Such appointment is made by passing special resolution and explanatory statement annexed to notice
52 D shall indicate justification for appointing such person. If special resolution is not passed, appointment
can be made if central government is satisfied on an application made by board, that such
appointment is most beneficial to company. Also, provisions relating to max tenure of 5 years [sec
196(2)] are not applicable to a government co hence appointment can be more than 5 years.
As per Sec 30 of IBC,2016 a resolution applicant may submit to resolution professional, a resolution
53 C plan prepared on basis of information memorandum.
As per IBC,2016 first meeting of committee of creditors shall be held within 7 days of constitution of
57 C committee of creditors.
55 B USD 3000 per visit can be carried in cash (as foreign currency notes/coins) for travel abroad.
As per sec 2(54) of Companies Act, 2013 Managing director is a director who by virtue of articles or
agreement or resolution passed at general meeting or by board of directors is entrusted with
56 B substantial powers of management. Further substantial powers do not include drawing and endorsing
any cheque or negotiable instrument or signing any certificate of share. Hence being MD of a
company Mr. V can sign financial statements of company.
As per sec 196 of Companies Act, 2013 no company shall appoint or reappoint any person as MD,
57 C WTD or manager for a term exceeding 5 years at a time.
₹ 1,00,000 (Refer Rule 6A of FCRA)
58 C

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As per sec 173 read with Rule 4 of Companies (meeting of Board and its powers) Rules, 2014,
59 B approval of Board’s report cannot be decided in board meeting through video conference. Rule 4 is
omitted wef 30.06.2021 so now all the matters can be done through VC.
As per sec 232, an application may be made to tribunal for sanctioning of compromise and
60 D arrangement and tribunal if satisfied may by order sanction scheme and make provision for different
matters which includes all matters specified in question.
As per sec 196, a person who has attained age of 70 years may be appointed as managing director,
whole time director of manager if: - Such appointment is made by passing special resolution &
61 C explanatory statement annexed to notice shall indicate justification for appointing such person. If
special resolution is not passed, appointment can be made if central government is satisfied on an
application made by board, that such appointment is most beneficial to company.
As per sec 203 read with rule 8 of Companies (Appointment and remuneration of managerial
personnel) Rules, 2014, Every listed company and every other public company having a paid-up share
62 C capital of Rs. 10 crore or more shall have following combination of whole time KMP.
I) MD or CEO or Manager and in their absence a WTD
II) CS III) CFO
As per sec 196, no reappointment of MD, WTD or manager shall be made earlier than 1 year before
63 A expiry of his term, i.e, re-appointment shall be made in 4th year. Hence, 24th June, 2019.
As per sec 165 no person shall hold office as director in more than 10 public companies. Hence max
64 A number of public companies in which a person can be appointed as a director not be more than 10.
As per sec 168, resignation made u/s 168(1) shall take effect from date on which notice is received by
65 D company or date, if any, specified by director in notice, whichever is later.
Bank will not become a related party solely on account of conversion of debt into equity. It can
take representation in CoC. Refer Section 21(2) IBC 2016
66 D

As per sec 247 of Companies Act, 2013 registered valuer shall not undertake valuation of any assets in
67 C which he has direct or indirect interest or becomes so interested at any time during a period of 3 years
prior to his appointment or 3 years after valuation of asset was conducted by him.
As per sec 168, resignation made u/s 168(1) shall take effect from date on which notice is received by
68 D company or date, if any, specified by director in notice, whichever is later
As per IBC, 2016 first meeting of committee of creditors shall be held within 7 days of constitution of
69 C committee of creditors.
Under IBC, resolution plan shall be approved by committee of creditors by a vote of not less than
70 B 66% of voting share of financial creditors after considering its feasibility and viability.
Small companies or holding company & its wholly owned subsidiary company are eligible for availing
71 C benefit u/s 233. However, eligible company may instead of availing benefit u/s 233 use provisions of
sec 232 for approval of any scheme for merger or amalgamation. Hence fast track merger is optional.

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IBC provides powers to IRP to access all information from various parties such as
I) BOD, promoters, members and partners of corporate debtor, any person associated with
72 B management of business and operations of corporate debtor
II) Auditors and other professional advisors of corporate debtor
III) The financial institutions maintaining accounts of corporate debtor.
Registrar shall initiate process of striking off name of company if company remains as dormant
73 A company for a period of 5 consecutive years. Hence 30th June, 2023.
As per section 182 of Companies Act, 2013 any company which has been in existence for less than 3
FYs is prohibited from making political contribution. As per Clause (42) of sec 2 of Companies
act,2013, ‘financial year’ means period ending on 31st March of every year and where a company is
74 A incorporated on or after 1st day of January of a year period ending on 31st day of March of following
year. company is incorporated on 3rd Dec, 2016 hence 31st march 2017 is first year. Hence it cannot
contribute till 31st March 2019. It can contribute only on or after 1st April 2019.
As per sec 244 of Companies Act, 2013 members eligible for applying to Tribunal for relief in cases of
oppression, etc. are: Company having share capital, LOWEST of following: -
75 C I) 100 members OR II) 1/10th of total number of members OR
III) One or more members holding not less than 1/10th of issued share capital
Hence single member can apply being 1/10th of total number of members.
As per sec 455 of Co. Act, 2013 a company can make application to ROC to obtain status of dormant
company if it is an inactive company. Inactive company means a company which has not filed
76 B financial statements and annual returns during last 2 FYs. Hence N can make application if it does not
file financial statements for FY 17-18 & 18-19.
As per sec 15G of SEBI Act, 1992 a person shall be liable to prescribed penalty if he communicates
77 D any unpublished price sensitive information to any person, with or without his request for such
information except in ordinary course of business or under any law.
78 D As per IBC, 2016 CIRP shall commence from date of admission of application by NCLT.
As per sec 152 of Companies Act, 2013 where articles of company are silent with respect to 1st
79 C Directors, all subscribers to memorandum who are individuals shall be deemed to be first directors
As per sec 209 of Co Act, 2013 where registrar or inspector has reasonable grounds to believe that
80 B books and papers of company are likely to be destroyed, mutilated, altered or falsified he may enter
and search place where books are kept & can seize only after obtaining an order from special court.
As per sec 233, where central govt is of opinion that scheme is not in public interest or in interest of
81 B creditors, it may file an application to Tribunal.
As per sec 277, winding up order shall be deemed to be notice of discharge except when business of
82 A company is continued.
As per sec 247 of Co Act, 2013 registered valuer shall not undertake valuation of any assets in which
83 A he has direct or indirect interest or becomes so interested at any time during a period of 3 yrs. prior to
his appointment or 3 yrs. after valuation of asset was conducted by him. So, cooling off period =3 yr.
Any person aggrieved by order of NCLAT may approach to Supreme Court within 60 days of order
84 C only on question of law.
As per IBC, 2016 adjudicating authority may allow withdrawal of application admitted u/s 7, 9, or 10
85 B on an application made by applicant with approval of 90% voting share of COC. Hence approval of
66% voting share is not sufficient.
As per IBC, operational creditor is a person to whom operational debt is owed. Operational debt
86 B means a claim in respect of provision of goods or services including employment. Hence person who
provided goods or services and payment is due from corporate debtor is operational creditor.
As per IBC, Operational debt means a claim in respect of provision of goods or services including
employment. Operations can be defined as work of managing inner workings of business so that it
87 C runs efficiently. Provision of goods or services or employment is a type of operation. Hence any
liability which comes from transaction on such operation is operational debt.

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As per FEMA, PRI is a person who is resident in India for more than 182 days during preceding FY.
Peter: - Peter was not resident in preceding year i.e., 17-18 for a period of 182 days and hence he is
not PRI for FY 18-19.
88 A Peter’s Wife: - She is residing in India in FY 17-18 only for 69 days and hence she is not PRI
Lisa: - Lisa is living in India for more than 182 days in year 17-18. Also, as per definition of PRI any
person who has come to or stays in India for any purpose which would indicate his intention to stay
in India for an uncertain period is treated as PRI.
On return from a foreign trip, travelers are required to surrender unspent foreign exchange in form of
89 D currency notes within 90 days and travelers’ cheque within 180 days of return. However, they are free
to retain foreign exchange up to USD 2000 in form of foreign currency.
48 hours Refer Rule 16 FCRA Reporting by banks of receipt of foreign contribution
90 A
As per sec 164(2) of Companies act, 2013 a person who is or has been director of a company shall be
disqualified from being reappointed as a director in that company or appointed in any other company
91 C for a period of 5 years, if company of which he is a director has failed to- repay deposits accepted by it
or pay interest and such failure continues for 1 year or more.
Sec 153 and 154 read with rule 10 of Companies (Appointment & qualification of Directors) Rules,
2014. If CG on examination finds that application for allotment of DIN made by applicant is
92 C incomplete it shall give intimation of such incompleteness by email to applicant directing to rectify
incompleteness by resubmitting application within 15 days of such email. In present case D received
email on 3rd January and hence she should resubmit application latest by 18th January 2019.
As per sec 151 of Companies Act, 2013 small shareholders may propose appointment of small
shareholder’s director by giving a notice in writing. notice shall be given by at least-
93 C I) 1000 small shareholders OR II) 1/10th of total number of small shareholders,
Whichever is LOWER. Hence min 450 small shareholders must group together.
As per sec 151, small shareholder means a shareholder holding shares of ‘Nominal value’
of not more than Rs. 20000. It is pertinent to note that nominal value is relevant and not paid up
value of share. Hence only Rachana is having shares of nominal value Rs. 20000. Others are holding
94 B shares having nominal value more than Rs. 20000. Hence, they cannot be treated as small
shareholders. Also, as per sec 151 of Companies Act, 2013 small shareholders may propose
appointment of small shareholder’s director by giving a notice in writing.
As per sec 177 of Co Act, 2013 establishment of vigil mechanism is mandatory for: -
a) Listed companies
95 D b) companies which have accepted public deposits
c) Companies which have borrowed money from banks & public financial institutions > Rs. 50 Cr.
As per sec 203 a whole time KMP cannot hold office in more than one company except subsidiary of
96 D company at same time. Hence Mr. Raman can hold directorship only in Alternate Ltd.
It is duty of registered valuer to make an impartial, true & fair valuation of any assets which are
required to be valued. He shall exercise due diligence while performing his functions as a valuer. In
97 C this case it has been found that loss was arising due to incorrect statement was made in report. Hence
valuer shall be liable for making incorrect statement in his report.
As per sec 167 of companies act, 2013 office of director shall become vacant in following situations: -
I)Where he absents himself from all board meetings held during period of 12 months.
98 A II)Where he acts in contravention of section 184 relating to entering into contracts in which he is
directly or indirectly interested.
Sec 33(3) of IBC states that where resolution plan approved by adjudicating authority is contravened
99 C by corporate debtor, any person whose interests are prejudicially affected by such contravention may
make an application for liquidating company.
In case of voluntary liquidation of corporate person as per section 59 of IBC Code, 2016
100 D declaration for voluntary liquidation shall be from majority of directors of company.
In event of merger or amalgamation as per section 233 of Co. Act 13, transferee company shall not as
101 D a result of merger or amalgamation, hold any shares in its own name or in name of any trust or on
behalf of any of its subsidiary/ associate company & any such shares shall be cancelled/ extinguished.

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As per section 248 of companies act, 2013 registrar is empowered to send a notice to company and all
its directors of his intention to remove name of company from register of companies and require
102 B company and its directors to send their representations along with relevant documents within a period
of 30 days from date of notice.
As per sec 277 of Co Act, within 3 weeks of date of passing of winding up order by Tribunal
103 B company liquidator will make an application to tribunal for constitution of winding up committee.
As per sec 7(5) of IBC, Adjudicating authority may by order reject application if it is satisfied that a
104 C default has not occurred. Since in given case NCLT shall reject application considering that no default
has occurred against Mr. Satya, and his stand as a financial creditor is not proved in petition.
As per IBC Code, 2016. Old provision section 12: - CIRP shall be completed within 180 days from
date of admission of application. Adjudicating authority may extend period beyond 180 days but not
exceeding 90 days. Such extension shall not be granted more than once. Amendment: - CIRP shall be
105 A mandatorily completed within 330 days from insolvency commencement date including extension
days and time taken in legal proceedings. However, extra 60 days given is to complete litigation
process. Extension can be granted by NCLT only once.
As per Section 2(v) (i) of FEMA, PRI is a person who is resident in India for more than 182 days
during preceding financial year. Mr. Ram resided in India during 2017-18 for less than 182 days; hence
106 B he cannot be treated as PRI in year 2018-19. Further he stayed in India for more than 182 days during
FY 2018-19, hence he can be treated as PRI in year 2019-20.
As per sec 149 read with rule 4 & 5, if board meeting is called at a shorter notice, so as to transact
some urgent business, then presence of at least 1 independent director is mandatory. In absence of
107 D any independent director, a decision shall be circulated to all directors and approved by at least 1
independent director.
As per sec 203 read with rule 8 of Companies (Appointment and remuneration of managerial
personnel) Rules, 2014, Every listed company and every other public company having a paid-up share
108 B capital of Rs. 10 crore or more shall have following combination of whole time KMP.
I) MD or CEO or Manager and in their absence a WTD II) CS III) CFO
Books and papers of a company amalgamated with or acquired by another company u/s 391 to 396
109 C shall not be disposed off without prior permission of CG.
As per rule 5 read with Sch III of FEMA (Current Account Transaction) Rules, 2000, individuals can
draw foreign exchange up to USD 2,50,000 for meeting exp of medical treatment. However, if
110 D expenses of kidney transplant exceed 250,000 such drawl may also be made without any approval of
RBI provided such amount is required/estimated by medical institute offering medical treatment.
As per foreign exchange management (realization, repatriation and surrender of foreign exchange)
regulations, 2015 an individual who has acquired foreign exchange for purpose of purchase and
111 A foreign exchange remains unused, and then he shall take reasonable steps to realize and repatriate
such foreign exchange within 180 days.
112 C As per sec 173(1) every co shall hold its first board meeting within 30 days of its incorporation.
113 B Where an intermediary fails to enter into an agreement with his client, he shall be liable for penalty as
specified u/s 15B of SEBI, 1992
114 C 17 Lakhs Refer section 197 Schedule V
115 C 5 Lakhs,1 Lakh Refer Section 178 Penalty

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As per sec 173(2) read with rule 3 of Co (Meeting of Board & its Powers) Rules, 2014 any director
116 D who intends to participate in meeting through electronic mode may intimate about such participation
at beginning of calendar year. Such intimation shall be valid for 1 year.
117 As per 2nd proviso to sec 149(1): -
I) Every listed company II) Every public co having paid up share capital of 100 Cr or more
D III) Every public co having turnover 300 Cr or more is required to appoint at least 1 Woman director
Hence both ABC & XYZ
As per Section 3 of Co Act, 2013 there shall be minimum 7 persons for formation of public company
118 C
and as per sec 149(1)(a), public co shall have min 3 directors.
119 Nominee is a person appointed by member of OPC who shall in event of subscriber’s death or his
incapacity to contract becomes member/shareholder of OPC. To get appointed he/she must be
C Indian citizen and resident in India but should not be minor. In present case since Ruchika has not
resided in India for more than 182 days during year 2017 she is not an Indian resident. Hence, she
cannot be appointed as nominee.
120 As per sec 180(1)(d) of Co Act, 2013 power to remit or give time for repayment of any debt due by
director can be exercised by Board only with consent of company by way of special resolution.
B However sec 180 is not applicable to private company hence it can be decided by Board itself and
there is no requirement of special resolution.
121 This question is based on Section 73 of Companies Act. It is technically not a part of CA Final
Syllabus. For your knowledge, maximum deposits companies can normally accept from its members
A is 35 % of aggregate of paid up share capital, free reserves and securities premium. Accordingly, total
deposits company can take is 95 lakhs (65+10+20) * 35 %=33.25 lakhs.
As per Co Act, 2013 significant influence is created over a company if at least 20% of total voting
122 D power is held. So, for creating ‘significant influence’ RUCHIR MARCONS Ltd. must control at least
twenty per cent of total voting power of RUCHIKA Marketing Ltd.
123 B OPC can have only 1 person as member & one as its nominee, whose name to be mentioned in MOA
This question is based on Trade-Marks Act, 1999. It is technically not a part of CA Final Syllabus.
124 D For your knowledge, as per Trade-Marks Act, 1999, time limit for making application to CG against
anomaly is 3 years from registration of company. Hence 30th may, 2021.
Pursuant to sec 230(2) and rule 4, creditors responsibility statement shall be in Form No. CAA1.
125 B
As per sec 115 of Companies Act, 2013 Members holding not less than one percent of total voting
126 A power or holding shares on which an aggregate sum of not less than five lakh rupees has been paid up
on date of notice
As per sec 101 of Co Act if co has to convene its AGM by shorter notice it must have consent from
127 C not less than 95% of members entitled to vote at such meeting
As per 2nd proviso to 149(1) of Co. Act, 2013 read with Rule 3 of Co (Appointment & Qualification
of Directors) Rules, 2014 following classes of companies shall have at least 1 Woman director: -
128 D I) Every listed Company &
II) Public co having paid up share capital of 100 Cr or more &
III) Public co having turnover of 300 Cr or more

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As per sec 149(4) of Co. Act, 2013 read with Rule 4 of Companies (Appointment & Qualification of
Directors) Rules, 2014 any intermittent vacancy of independent director shall be filled up by board at
129 C earliest but not later than immediately next board meeting or 3 months from date of such vacancy
whichever is later.

130 D
As per sec 151 of Companies Act, 2013 a shareholder holding shares of a nominal value not more
than Rs. 20000 is a small shareholder.
A As per sec 152(5) of Co. Act, 2013 read with Rule 8 of Companies (Appointment & Qualification of
131 Directors) Rules, 2014 a person to be appointed as director shall file his written consent in form DIR-
2 to company on or before his appointment as a director.

132 B
As per sec 152(6) of Co. Act, 2013 not less than 2/3rd of total number of directors shall be rotational
directors if articles of company do not provide for retirement of all directors at every AGM.
133 C As per sec 149(10) of Co. Act, 2013 an independent director shall hold office for a maximum term of
5 consecutive years. Further as per sec 149(11), no independent director shall hold office for more
than 2 consecutive terms.
134 B As per sec 157 of Co. Act, 2013 every company is required to furnish DIN of all its directors to
registrar within 15 days of receipt of intimation regarding DIN from directors.
135 As per sec 160 of Companies Act, 2013 proposed director other than retiring director may give notice
of his own candidature to company. A sum of Rs. 1 lakh shall be deposited along with such notice.
C amount deposited with company shall be refunded, if person proposed as a director gets elected as a
director or gets more than 25% of total valid votes cast.
136 B As per sec 161 of Companies Act, 2013 additional director shall hold office up to date of next AGM
or last date on which AGM should have been held whichever is earlier.
137 C As per sec 165 of Co Act, 2013 a person is permitted to hold office as a director (including alternate
directorship) in max 20 companies of which maximum no of public companies shall not exceed 10.
138 C As per sec 203 of Co act, 2013 read with rule 8A of Companies (Appointment and remuneration of
managerial personnel) Rules, 2014 a company whether public or private shall have a whole time
secretary if paid up share capital of company is 5 crore or more and it is not covered under Rule 8.
139 B As per sec 203(3) of Companies Act, 2013 a whole time KMP shall not hold office in more than one
company except in its subsidiary company at same time.
140 A As per sec 196(3) of Companies Act, 2013 no person shall be appointed as MD, WTD or manager if
he is below age of 21 years. Since N is above age of 21 years he can be appointed as MD.
141 A As per sec 197(5) of Co act, 2013 read with Rule 4 of Co (Appointment & remuneration of
managerial personnel) Rules, 2014 max sitting fees that can be paid to director shall not be > 100000.
142 D As per sec 203(1) of Co act, 2013 read with rule 8 of Companies (Appointment and remuneration of
managerial personnel) Rules, 2014 following classes of company shall have whole time KMP: -
I) Every listed company
II) Every other public company having a paid up share capital > 10 Cr.
143 A As per proviso to sec 203(3) of Companies Act, 2013 a KMP may be a director of any company with
permission of board.
144 D As per sec 197(1) of Co Act, 2013 total managerial remuneration payable by public company to its
directors in any financial year shall not exceed 11% of net profits of company for that financial year.
Sec 199 of Co Act, 2013 is attracted where a company is required to restate its financial statements
due to fraud or non-compliance with any requirement under this act and rules made thereunder.
The company shall recover from any past or present MD, WTD, manager or CEO by whatever name
145 B & who during period for which financial statements are required to be restated received any
remuneration. Any amount paid to such persons as remuneration in excess of such remuneration as
would have been payable to him as per restatement of financial statements shall be recovered.
146 A Rule 4 of Companies (Appointment and remuneration of managerial personnel) Rules, 2014 amount
of sitting fees payable to independent directors and women directors shall not be less than sitting fee
payable to other directors.
147 C As per sec 196(2) of Companies Act, 2013 MD, WTD or manager shall not be appointed for a term
exceeding 5 years at a time.

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148 A As per sec 173(5) of Companies Act, 2013 in case of One Person Company, small company and
dormant company, it would be sufficient compliance of sec 173 if at least one board meeting is held in
each half of a calendar year and gap between 2 board meetings is not less than 90 days.
149 B As per sec 175 of Companies Act, 2013 if not less than 1/3rd of total number of directors of
company require that any resolution proposed to be passed by circulation must be decided at a board
meeting then chairperson shall put resolution to be decided at a board meeting.
150 A As per sec 173(3) of Companies Act, 2013 notice shall be given at least 7 days before board meeting.
It shall be sent to all directors at their addresses registered with company.
151 C As per sec 182 of Companies Act, 2013 a company not being a government company can make
political contribution only after 3 years from date of its incorporation.
152 C As per sec 178(1) of Companies Act, 2013 constitution of nomination and remuneration committee is
mandatory for a public company having turnover of Rs. 100 crore or more.
153 B As per sec 174(3) of Co Act, 2013 where at any time number of interested directors exceed or is equal
to 2/3rd of total strength of BOD quorum shall be number of remaining directors (dis-interested
directors) or 2 directors whichever is higher.
154 C As per sec 188 of Companies Act, 2013 if a member is a related party, he shall note vote on ordinary
resolution. However, in a case of a company is which 90% or more members, in numbers, are
relatives of promoters or are related parties, every member shall have a right to vote on ordinary
resolution, even though he may be a related party.
155 B As per sec 186(1) of Companies Act, 2013 a company shall not make investment through more than
two layers of investment companies.
156 A As per sec 179(3) of Co Act, 2013 there are certain powers of board which are exercisable by passing
a resolution at board meeting only, one of which is power to authorize buy-back of securities u/s 68.

157 A As per sec 186(5) of Companies Act, 2013 where company intends to make any investment of its
funds approval of board shall be obtained by means of resolution passed at meeting of board with
consent of all directors present at meeting.
158 C As per sec 173(2) read with rule 3 of Companies (Meeting of board and its powers) Rules, 2014 draft
minutes shall be circulated among all directors within 15 days of meeting either in writing or in
electronic mode as may be decided by board.
159 B As per sec 177(4) of Companies Act, 2013 audit committee may make omnibus approval for related
party transactions proposed to be entered into by company.
160 D As per 4th proviso to sec 188 of Companies Act, 2013 section 188 shall not apply to transactions,
entered in by company in ordinary course of business and which are on arm’s length basis. Hence no
approvals are required for such transactions.
161 C As per sec 177 read with rule 6A of Companies (Meeting of board and its powers) Rules, 2014
omnibus approval shall be valid for a period not exceeding one financial year and shall require fresh
approval after expiry of such financial year.
As per sec 191 read with rule 17 of Co (Meeting of board & its powers) Rules, 2014 in case of transfer
of whole of undertaking by company no payment of compensation for loss of office shall be made if
162 B company has not paid dividend on preference shares or not redeemed preference shares on due date.
As per Sec 206(2) of Co Act, 2013, Registrar may call for any info or explanation or other docs related
to company from company or any officers of company which he thinks fit. Proviso to 206(2) provides
that, where such info or explanation relates to past period, officers who had been in employment of
163 D company for such period, if so called upon by registrar by notice served on him in writing shall also
furnish such info or explanation to best of their knowledge.
So, Mr. S, ex-manager can be called on for such info/explanation which was related to their service
period.
164 B As per Sec 209 of Co Act, 2013, Registrar may enter & search place where such books or papers are
kept and seize them only after obtaining order from Special Court.

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As per 230(9) of Co Act, 2013, Tribunal may dispense with calling of a meeting of creditor or class of
creditors where such creditors or class of creditors, having at least 90% value, agree and confirm, by
165 C way of affidavit, to scheme of compromise or arrangement.
As per 230, 232 & 233 & Co (Compromises, Arrangements & Amalgamations) Rules, 2016; Scheme
of Amalgamation is a Complete Code for absorbing objects of Transferor Company, Increase in
Authorized Share Capital of Transferee Company, Reduction of Share Capital required if any &
166 D dissolution of Transferor Company without winding up. Hence, Petition for approval of proposed
Scheme of Amalgamation between PQR Limited & LMN Limited can seek approval for all 3 options
namely Change in Main Object clause of MOA, Reduction of share capital and Dissolution of
Transferor Co without winding up as effect of amalgamation.
As per Sec 233 (1) of Companies Act, 2013 a scheme of merger or amalgamation may be entered in 2
or more small companies or holding company & its wholly-owned subsidiary company or other class
of companies. Fast track merger in 233 are optional & not compulsory to company. If company wants
167 C apply for merger as per 232, it can do so. Hence, here CS of XYZ Eternal limited has erred in law and
his contention is not valid as per law. Company shall have option to choose in normal process of
merger and fast track merger.
As per sec 244 of Co Act, 2013 below members have right to apply to Tribunal if company having
share capital: -
(a) Not < 100 members of company or not < 1/10th of total number of member (whichever less) OR
168 C (b) Any member or members holding not less than one-tenth of issued share capital of company
provided applicant(s) have paid all calls and other sums due on shares.
In given case, since there are ten shareholders. As per condition (a) above, 10% of 10 i.e. 1 satisfies
condition. Therefore, a single member can present a petition to Tribunal, regardless of fact that he
holds less than one-tenth of company’s share capital.
169 B As per sec 241(2) of Companies Act, 2013, if CG is of opinion that affairs of company conducted in
manner prejudicial to public interest, it may itself apply to Tribunal for order under this Chapter XVI
of Companies Act, 2013
170 B As per sec 277(4) of Companies Act, 2013 within 3 weeks from Date of passing of winding up order,
Company Liquidator shall make application to Tribunal for constitution of a winding up committee to
assist and monitor progress of liquidation proceedings by Liquidator.
171 A As per sec 277(3) of Co Act, 2013 winding up order deemed notice of discharge to officers,
employee/ workmen of company except when business continued.
172 C 500 crores Refer Applicability of IBC ,2016 on NBFC

173 D As per sec 15G of SEBI Act, 1992 insider trading includes where a person communicates unpublished
price sensitive information to any other person whether he requests for such information or not
except in ordinary course of business or as required under any law. Hence P liable u/s 15G of act.

174 B SEBI (LODR) Regulations, two-thirds of members of audit committee shall be independent directors.

SEBI (LODR) Regulations, a listed entity shall submit statement showing holding of securities and
175 B shareholding pattern separately for each class of securities: -
(a) 1 day prior to listing of its securities on stock exchange(s)
(b) On a quarterly basis, in 21 days from end of each quarter. In, 10 days of any capital restructuring
of listed entity resulting in a change exceeding 2 % per cent of total paid-up share capital.

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176 A As per sec 15T & 15Z of SEBI Act, In case of filing appeal with SAT: Within 45 days from date of
order of copy made by SEBI or adjudicating officer and in case of filing appeal with Supreme Court: -
Within 60 days from date of communication of decision or order of SAT.
177 C As per sec 8 of SEBI Act no act or proceeding shall be invalid merely due to vacancy or defect in
constitution.
As per sec 15G of SEBI Act, 1992 insider trading includes where a person communicates unpublished
178 C price sensitive information to any other person and where he counsels or procures for any other
person to deal in security of any body corporate on basis of unpublished price sensitive information.
Hence it is insider trading & penalty is applicable u/s 15G.
179 A As per Reg 29 of SEBI (LODR) 2015 A ltd has to intimate to stock exchange up to 3rd July, 2019.
180 D 2 working days Refer Regulation 4 Trading when in possession of unpublished price sensitive
information (UPSI)

181 D DIR 5

182 C As per sec 247(2) of Companies Act, 2013 VALUER appointed not undertake valuation of any assets
in which he has direct or indirect interest or becomes so interested at any time during 3 years prior to
his appointment as VALUER or 3 years after valuation of assets was conducted by him.
183 A Proviso to Rule 8(1) of Companies (Miscellaneous) Rules, 2014 which states that Registrar shall
initiate process of striking off name of company if such company remains as a dormant company for
a period of consecutive five years.
As per sec 455 of Co. Act, 2013 a company can make application to ROC to obtain status of dormant
184 B company if it is an inactive company. Inactive company means a company which has not filed
financial statements and annual returns during last 2 FYs. Hence Nanny can make application if it
does not file financial statements for FY 17-18 & 18-19.
185 D As per sec 435 of Companies Act, 2013 CG can establish such number of special courts as it
considers necessary for speedy trail of offences.
186 C As per sec 438 of Co Act, 2013 Court of session, Metropolitan Magistrate & Judicial magistrate of 1st
class can be deemed to be special court.
187 B As per sec 446A of Co Act, 2013 size of co & nature of business are taken into consideration while
deciding quantum of fine/ punishment.
188 C As per sec 439 of Co Act, 2013 no court shall take cognizance of any offence unless complaint
relating to issue & transfer of securities is made in writing by person authorized by SEBI. Hence
employee is not competent person for filing complaint.
189 C As per sec 423 of Co Act, 2013 a person aggrieved by order of Appellate Tribunal may approach to
Supreme Court within 60 days of order.
190 A He does not need any prior approval, because during year April 2016-March 2017 his all forex
transactions were US $ 210000 & individual does not require any prior approval for remittances made
up to US $ 250000 in a year (Sch. III of FEMA regulation).
191 D Person who has fallen sick after proceeding abroad may also be released forex by Authorized Dealer
(without seeking prior approval of RBI) for medical treatment outside India > limit USD 2,50,000 on
basis of estimation given by medical institute offering treatment.
Mr. Ram cannot be considered 'Person resident in India' during FY 2018-2019 notwithstanding
192 B purpose or duration of his stay in India in 2018-2019. Individual to be present in India for more than
182 days in preceding FY. Mr. Ram does not satisfy this condition for FY 2018-2019. But shall be
considered as 'Person resident in India' during financial year 2019-2020.
193 D 50,000 (Refer Section 247 )

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194 C 2 Years (Refer Section 455 of the Companies Act 2013)

195 D Foreign source includes Foreign Govt., international agency (but not UN or its agencies, World Bank,
IMF etc.), foreign co, multinational corporation, co where > 50% capital held by foreigner or foreign
co, foreign trust, foreign citizen etc. [2(1)(j) of FCRA, 2010.]
Many companies in India have foreign shareholding > 50% due to liberalization in FDI policy. These
would be ‘foreign source’ as per 2(1)(j)(vi) of FCRA. Receipt of donations/ contributions directly or
196 B indirectly by persons and organizations from these companies are presently violation of FCRA.
197 C 14 of FCRA, cooling period = 3 years for registration of person whose certificate cancelled by CG
198 B Financial service providers excluded by explanation Sec 1 of IBC.
199 C As per IBC, 180 days’ timeline of CIRP commences from admission of application by
NCLT.As per amendment, CIRP shall be mandatorily completed within 330 days from
insolvency commencement date including extension days and time taken in legal
proceedings.
200 C Sec 56 of IBC, 2016, extension of fast-track corporate insolvency resolution process
not be granted more than once.
201 A As per sec 21(5) of IBC, operational creditor can assign or legally transfer operational debt to financial
creditor however transferee shall be considered as operational creditor in respect of such transfer.
202 D As per sec 23 of IBC, Resolution Professional is responsible.
203 B Sec 17 of IBC, officers & managers of corporate debtor report to IRP & provide access to such docs
and records of corporate debtor as may be required by interim resolution professional.
204 C As per sec 7(5) of IBC, Adjudicating authority may by order reject application if it is satisfied that a
default has not occurred. Since in given case NCLT shall reject application considering that no default
has occurred against Mr. Satya, and his stand as a financial creditor is not proved in petition.
205 B Operational Creditor means a person to whom an Operational debt is owed. It refers to anyone
provided goods or services and payment for same is due from corporate debtor.
As per sec 173(2) read with rule 3 of Co (Meeting of Board & its Powers) Rules, 2014 any director
206 B who intends to participate in meeting through electronic mode may intimate about such participation
at beginning of calendar year. Such intimation shall be valid for 1 year. However director may
participate in person even if he has given his intention to participate in meeting through video
conferencing provided he intimates to company sufficiently in advance.
207 B As per sec 164 of Co Act, 2013 director is disqualified if he has not paid calls on shares of company
held by him & 6 months have elapsed from last day fixed for payment of call. ground of
disqualification shall apply even where shares are held by person jointly with any other person.

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As per Sec 206(2) of Co Act, 2013, Registrar may call for any info or explanation or other docs related
to company from company or any officers of company which he thinks fit. Proviso to 206(2) provides
208 B that, where such info or explanation relates to past period, officers who had been in employment of
company for such period, if so called upon by registrar by notice served on him in writing shall also
furnish such info or explanation to best of their knowledge.
209 C As per sec 15G of SEBI Act, 1992 insider trading includes where a person communicates unpublished
price sensitive information to any other person and where he counsels or procures for any other
person to deal in security of any body corporate on basis of unpublished price sensitive information.
210 C Sec 33(3) of IBC states that where resolution plan approved by adjudicating authority is contravened
by corporate debtor, any person whose interests are prejudicially affected by such contravention may
make an application for liquidating company.
As per sec 328, a transaction is deemed to be fraudulent preference if it relates to transfer of property.
211 A It took place within 6 months preceding date of winding up. It was a voluntary act. In such case
tribunal may make such order as it thinks fit and declare such transaction as invalid and restore
position. Official liquidator thus can recover sale of assets as per sec 328.
As per Sec 206(2) of Co Act, 2013, Registrar may call for any info or explanation or other docs related
to company from company or any officers of company which he thinks fit.
Proviso to 206(2) provides that, where such info or explanation relates to past period, officers who
212 C had been in employment of company for such period, if so called upon by registrar by notice served
on him in writing shall also furnish such info or explanation to best of their knowledge. Hence K can
be called upon by Roc by written notice served upon him without any time period limit.
213 D As per sec 248 of Co Act, 2013 for removal of name of company from register of companies,
application shall be filed by co with consent of members holding 75% paid up share capital.
214 A Under Chapter XXII of Companies Act, 2013 co shall file return to ROC in India within 30 days of
appointment of Mr. Y
215 D As per sec 247, where registered valuer does not comply with provisions of act and does not discharge
his duties with diligence he shall be liable to both A & B
216 C As per IBC, 2016 NCLT shall appoint interim resolution professional within 14 days from insolvency
commencement date.
217 A As per IBC, 2016 unless otherwise provided all decisions of CoC shall be taken by a vote not less than
51% of voting share of financial creditors.
218 D 1 crore (Refer Section 55 of IBC 2016)

As per 2nd proviso to sec 149(1): -

I) Every listed company II) Every public co having paid up share capital of Rs. 100 Cr or more
219 B III) Every public co having turnover > 300 Cr is required to appoint at least 1 Woman director
Since turnover is more than 300 cr company is required to appoint woman director.
As per FEMA current account transaction rules, if commission exceeds per transaction to agents
abroad for sale of residential flats or commercial plots in India exceeding USD 25000 or 5% of inward
remittance whichever is more, prior approval of RBI is required.
220 B
Each agent booked 3 flats. Price of 3 flats = 15 lakh * 3 flats = 45 lakhs
Out of which 2/3rd amount can be remitted which comes to 30 Lac.
Hence USD 25000 or 5% of inward remittance (5% of 30 Lakhs) i.e., USD 1.5 lakhs whichever is
more can be given as commission. Hence 1.5 lakhs.
221 A ₹ 5 Lakhs (Refer Section 247)
222 C date of admission of an application (Refer Section 5(12) under IBC 2016

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223 C As per sec 230 of Co Act, 2013, meeting of creditors can be dispensed by NCLT if 90% of creditors
in value agree & confirm to same by way of affidavit.
224 B As per sec 173(2) read with rule 3 of Co (Meeting of Board & its Powers) Rules, 2014 any director
who intends to participate in meeting through electronic mode may intimate about such participation
at beginning of calendar year.
225 B As per sec 151 small shareholders shall give notice of proposal to appoint small shareholder director
at least 14 days before meeting. Hence 15th January, 2019.
As per IBC, 2016 sec 21 on committee of creditors, committee of creditors to consist of all financial
226 B creditors of corporate debtor. If corporate debtor does not have any financial creditor, committee
should consist of 18 largest operational creditors by value, 1 representative of workmen & 1
representative of employees.
227 C As per FEMA, a person resident outside India can continue to hold property if it is inherited from
person who was resident in India.
228 A As per FEMA, proceeds of ECB is legally acceptable permissible source of funding oversees direct
investment.
229 C As per sec 455, Registrar may initiate enquiry & if found that XYZ Ltd. has been functioning, registrar
may remove name of such company from register of dormant companies & treat it as active company
230 D 7:1 (Refer ECB Framework under ECB)

231 A As per FEMA, prohibited current account transactions are covered under Schedule I.
As per sec 162 two or more persons may be appointed as directors by single resolution, if resolution
232 A that such appointment is to be made has first been agreed to by meeting without any vote being cast
against it. Later appointment can be made by ordinary resolution. Hence appointment of Anil, Badal,
Chanchal & damodar by single resolution is valid.
As per sec 152(6), if articles do not provide for all directors to be rotational directors at least 2/3rd of
233 C total number of directors shall be rotational. Out of which 1/3rd shall retire at every AGM.
While counting total number of directors, independent directors shall not be taken into consideration.
Hence 14 shall be total no. of directors. Hence 14*2/3*1/3 = 3 directors shall retire.
234 C As per sec 149 read with rule 4 of Co ( Appointment & Qualification of Directors) Rules, 2014 public
co having paid up share capital of 10 cr or more or turnover 100 cr or more or aggregate of o/s loans,
debentures & deposits exceeding 50 cr is required to appoint at least 2 independent directors.
235 D As per sec 149(1), a company shall have max 15 directors. However company may increase number
beyond 15 by passing special resolution. As company’s articles provided for max no. of directors to be
15 company is required to pass special resolution to alter its articles.
236 B As per sec 152(6), if articles do not provide for all directors to be rotational directors at least
2/3rd of total number of directors shall be rotational. Out of which 1/3rd shall retire at every AGM.
While counting total number of directors, independent directors shall not be taken into consideration.
Hence 14 shall be total no. of directors. Hence 14*1/3 = 4.6666 since nearest to 4.666 is 5, 5 directors
shall retire.
237 A As per sec 196 of Co Act, 2013 appointment of MD, WTD, Manager shall be first approved by board
of directors in meeting and approved at a general meeting held immediately after board meeting. Since
so such approval is obtained appointment is not valid.
238 B FIRA Pvt Ltd is a subsidiary of PM ltd. PM ltd is a public co. As per sec 2(71) a company which is a
subsidiary of a public company shall be deemed to be public company. Hence FIRA Pvt Ltd is a
public co. provisions relating to approvals required u/s 196 for appointment of WTD are also
complied with. Also as per sec 203, a whole time KMP shall not hold office in more than one
company except in its subsidiary company at same time. Mrs. Smart is MD in PM ltd, hence she can
hold office as WTD in FIRA since FIRA is subsidiary of PM Ltd.

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239 B Provisions of sec 203 are not applicable to MD, CEO or manager & in their absence a WTD of Govt
Company hence appointment will be valid.
240 C PM Ltd is a subsidiary of Ali Baba Ltd & FIRA is a WOS of PM ltd. Hence if Ali baba is a
government company, PM Ltd & FIRA will also be considered as Govt co. Since as per definition of
government co, a subsidiary of any government co is also considered as government co.
241 B Provisions of sec 203 are not applicable to MD, CEO or manager & in their absence a WTD of Govt
Company hence appointment will be valid.
242 B As per sec 174, quorum shall be higher of 1/3rd of total strength of directors or 2 directors. There are
total 14 directors in company. ( 13 + 1 additional) Hence 14*1/3 = 4.666 which is nearest to 5.
243 C Quorum shall be higher of 1/3rd of total strength of directors or 2 directors, but there should be
minimum 2 independent directors present. Hence 7 directors * 1/3 = 2.3333 which is nearest to 3.
Hence option C.
244 D As per Rule 3 of companies (appointment and qualification of directors) 2014, in case of intermittent
vacancy of Woman Director it shall be filled within Three months from date of vacancy or date of
next board meeting, whichever is later. M13 created vacancy on 25th Sept, 2018. 3 months after this
date is 24th Dec and board meeting was held on 9th Jan, 2019. Hence board meeting is later. Thus
appointment is valid.
245 C As per 2nd proviso to sec 197(1), remuneration payable to directors other than MD or WTD shall not
exceed 3% of net profits if company has not employed any MD, WTD and manager.
246 D Yes. Application can be filed on an appeal of GBC bank Ltd. (being a creditor) before Tribunal under
Companies Act for taking Hiwaves Private Ltd. into register of companies, and then may file an
application of initiation of CIRP under capacity financial creditor, under Code
247 D As per IBC, application for initiation of CIRP once admitted can be withdrawn only after obtaining
approval of 90% of voting shares of COC.
248 C As per IBC, application for initiation of CIRP shall be admitted within 14 days from receipt of
application by NCLT.
249 A As per IBC, if NCLT rejects application it shall communicate reasons of rejection to applicant and
applicant can rectify defects in application within 7 days of receipt of such notice from NCLT.
250 A As per sec 182, there are no restrictions on making political contribution provided company is not a
government co & it is in existence for more than 3 FYs. Political contribution shall be made only after
obtaining approval by passing board resolution.
251 D As per sec 151, a person who himself is not small shareholder may be appointed as small shareholder
director. Hence he is not required to own shares of any nominal value.
252 D There are no any restrictions or conditions regarding authorized capital for including particular name
in name of company.
253 B As per sec 197(10), company shall not waive recovery of any excess remuneration drawn or received
by director unless approved by company by passing special resolution within 2 years from date sum
becomes refundable.

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“26 Amendment based MCQs for NOVEMBER 2020”

“QUESTIONS”
Q 254. If Nidhi company is incorporated before the enforcement of Nidhi (Amendments)
Rules,2019, application must be given to the CG within _ from the date of incorporation or
within 6 months of enforcement of Rules whichever is earlier in form NDH-4.?

A) 9 months
B) 1 year
C) 1.5 years
D) 2 years

Q 255. As per Reg 17, any person who is serving as Whole-time director / managing director in any
listed entity shall serve as an independent director in not more than _ _ listed entities?

A) Three
B) Seven
C) Eight
D) None of the above

Q 256. If it is concluded at the hearing of the case u/s 241 (3), that the person is not a fit or proper
person such a person shall not hold the office of a director or any other office connected with the
conduct and management of the affairs of any company for a period of _ from the date of
the said decision.

A) 2 years
B) 3 years
C) 5 years
D) 6 years

Q 257. Negative list for which the ECB proceeds cannot be utilized includes which of the following:

A) Real estate activities

B) Investment in capital market
C) Equity Investment
D) All of the above

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Q 258. Extension of time for settlement of import dues up to a period of six months at a time,
maximum up to the period of _.

A) Three years
B) One year
C) Five years
D) None of the above

Q 259. Every individual who holds DIN as on 31st March of the Financial Year is supposed to file
e-form DIR-KYC on or before _ .

A) 30th June
B) 30th September
C) 31st October
D) None of the above

Q 260. A director can update his personal mobile number or e-mail address using .

A) Web-form DIR-3 KYC

B) E-form DIR-3 KYC
C) Both (a) & (b)
D) None of the above

Q 261. As per sec 212 (8) the power is confined to _ to arrest persons if accused for the
offences specified in the section.

A) Director only
B) Additional Director only
C) Assistant Director only
D) Any officer not below the rank of Assistant Director

Q 262. Where the "appointed date" is chosen as a specific calendar date, it may precede the _ __
of the application for scheme of merger/ amalgamation in NCLT.

A) Date of filing
B) Acquisition date
C) Date of transfer
D) None of the above

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Q 263. ROC is now entitled to file a petition to Tribunal for winding up on ground specified in
which clause?

A) 271 (a)
B) 271 (e)
C) 271 (a) & (e)
D) None of the above

Q 264. In case a company does not comply with the requirements of Nidhi (Amendment) Rules, it
shall not be allowed to file _ .

A) Form No. SH-7

B) Form PAS-3
C) a&b
D) None of the above

Q 265. _ means a foreign entity formed, registered or incorporated in accordance with

the laws and regulations of the host country in which the Indian Party makes a direct investment.

A) Wholly Own Subsidiary

B) Portfolio Investment
C) Joint Venture
D) All of the above

Q 266. Financial Commitment means the amount of direct investment by way of contribution to
equity, loan and 100 percent of amount of guarantees and _ per cent of the
performance guarantees issued by an Indian Party to or on behalf of its overseas Joint Venture
Company or Wholly Owned Subsidiary.

A) 30
B) 45
C) 50
D) 75

Q 267. _ are the prohibited sectors for overseas direct investment.

A) Real Estate Sector

B) Banking
C) a and b
D) None of the above

Q 268. The following SOP has to be followed by designated AD Category-I banks in case of
untraceable entities who are found to be in contravention of reporting provisions for ECB by
failing to submit prescribed return(s) under the ECB framework, either physically or
electronically, for past _ quarters or more.

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A) Four
B) Six
C) Seven
D) Eight

Q 269. Foreign contribution means any donation, delivery or transfer made by a foreign source of
any article excluding any article given as gift or personal use & value of gift does not exceed _.

A) 25000
B) 50000
C) 75000
D) 100000

Q 270. A person who is entitled to receive foreign hospitality in a foreign country shall after
receiving the such hospitality the person is required to intimate within from the date of
receipt of such hospitality to the central Government about source and the manner in which, he
received such hospitality.

A) One month
B) Sixty days
C) Ninety days
D) Three months

Q 271. The corporate insolvency resolution process shall mandatorily be completed within a period
of from the insolvency commencement date, including any extension of the
period of corporate insolvency resolution process granted under this section and the time taken in
legal proceedings in relation to such resolution process of the corporate debtor.

A) Three hundred days

B) Three hundred and thirty days
C) Three hundred and sixty-five days
D) One hundred and eighty days

Q 272. Which is not salient feature of New ECB framework Notified by RBI in Jan 2019?

A) Merging of Track 1 and II as “Foreign Currency denominated ECB” and merging of Track III and
Rupee Denominated Bonds framework as “Rupee Denominated ECB”.
B) List of Eligible borrowers has been pruned.
C) The lender should be resident of FATF or IOSCO compliant country.
D) All of the above are features.

Q 273. As per New ECB framework notified by RBI in January 2019, Minimum Average Maturity
Period {MAMP} for all ECB’s in general will be: -

A) 2 years
B) 3 years

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C) 5 years
D) None of the above

Q 274. As per New ECB Framework notified by RBI in January 2019, framework for raising loans
through ECB comprises of which of the option?

A) FCY denominated ECB only

B) INR denominated ECB only
C) Both of the above
D) None of the above

Q 275. As per New ECB framework notified by RBI in January 2019, which one of the following
entities shall be eligible to raise ECB’s?

A) Port Trusts
B) Units in SEZ
C) All entities eligible to receive FDI?
D) All the above

Q 276. As per the RBI policy, which of the following is/are correct about routes for raising ECB’s?

A) Under the ECB framework, ECB can be raised either under the automatic route or approval route.
B) Under the automatic route, the prospective borrowers are required to send their requests to RBI
through there Authorized Dealer Banks.
C) Both of the above
D) None of the above

Q 277. As per New ECB framework notified by RBI in January 2019, which of the following is
incorrect about ECB facility for start-ups?

A) An entity should be recognized as a Startup by the CG on the date of raising ECB

B) The borrowing must be denominated in Indian Rupees only.
C) Borrowing can be for any expenditure in connection with the business of the borrower
D) None is incorrect

Q 278. Aadhar Authentication by Banks of the clients and the beneficial owner is: -

A) Mandatory. It is mandatory for the client to authenticate their identity with Bank via Aadhar
Authentication.
B) Voluntary. The clients have the option to authenticate there identity via other means.
C) Completely at option of the Bank.
D) None of the above.

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“SOLUTIONS”
SN Reasons
254 B Refer Amendments - Nidhi Company

255 A Refer newly added points in composition of BOD (Regulation 17)

256 C Refer Amendments- Section 243- Consequence of termination or modification of certain agreements.

257 D Refer Amendments May 20 FEMA

258 A Refer FEMA, extension of time for settlement of import payments.

259 B Amendments for May 20 - Rule 12A

260 B Refer Rule 12A of Companies (Appointment and Qualification of Directors) Rules, 2014.

261 D Refer amendments in Section 212 (8)

262 A Refer MCA Clarification - Compromises, Arrangements and Amalgamations.

263 B Refer Section 272- Petition for winding up

264 C Refer Amendments in Miscellaneous Provisions.

265 C Refer definition of Joint Venture under ODI, FEMA.

266 C Refer definition of Financial Commitment under ODI, FEMA.

Real Estate sector & Banking are prohibited sectors for overseas investment. {Real estate business
267 C means buying and selling of real estate or trading in transferable development rights but does not
include development of township, construction of residential/commercial premises, roads & bridges.
268 D Refer SOP for untraceable entities, FEMA

269 D Refer Rule 6A FCRA

270 A Refer Rule 7 Sub Rule (4), FCRA

Refer time limit for completion of corporate insolvency resolution process completion of corporate
271 B insolvency resolution process.
272 D -

273 B -

274 C -

275 D -

276 A -

277 C Because ECB can be raised in foreign currency as well

278 B -

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 CA FINAL – LAW SPOM SET A Nov 2024
“MCQs for MAY 2021”
(in addition & continuation to ICAI 278 MCQs)

“QUESTIONS”
MAY 2021 RTP
Case Scenario 1
Balfor Ltd., is an unlisted company, having total 70 members, with a paid-up capital of ₹ 42,00,000,
having turnover of ₹ 200 crore, as per the audited financial statements for the year ended on 31st
March, 2020.
5 members holding in total 4% stake in the company, met in person to discuss about the oppression
and mismanagement going on in Balfor Ltd. and to do something about it. One of the members,
Mr. Ravi, suggested that we five members should file a class action application to the Tribunal to
get a resolution in this matter, to which another member, Mr. Jay, told that he is in contact with 3
other members of the company, holding in total 3% stake, who are also finding the activities going
on in the company to be unjust. So, five plus three other members i.e. 8 members in total, will be
able to file an application to the Tribunal under section 244 of the Companies Act, 2013.
The application of complaint for oppression and mismanagement was filed to the Tribunal
on 4th June, 2020, with the consent of aforesaid 8 members of the company. The said application
provided the details of an agreement made by Balfor Ltd. with Mr. Dev, a relative of director of
Balfor Ltd., Mr. Raj, with respect to continuous supply of raw materials to Balfor Ltd., for which
Mr. Raj, had received certain commission from Mr. Dev, in cash, for offering the contract to him.
Also, another director, Mr. Jayesh, had improperly transferred a property of Balfor Ltd. on 6 th
March, 2020, to Mr. Prakash.

The Tribunal on receipt of such application, made an order, directing investigation into the
affairs of Balfor Ltd. Also, the agreement made with Mr. Dev was ordered to be terminated after
giving notice to Mr. Dev and obtaining his consent. However, no compensation was ordered to be
paid to Mr. Dev for such cancellation of agreement. The contract with respect to property
transferred by Mr. Jayesh was also ordered to be set aside, as it would have been deemed to be a
fraudulent preference, in case such transaction was made by an individual in his insolvency.

Simultaneously, the Central Government ordered for the investigation into the affairs of Balfor
Ltd., on receipt of the order from the Tribunal and the task of such investigation was assigned to
the Serious Fraud Investigation Office. The Director of Serious Fraud Investigation Office, on
getting such order from the Central Government, designated 3 inspectors for such investigation
and soon, the investigation got started by the designated persons.
One of the Investigating officers, Mr. Vaibhav, issued summons, to 2 employees, of Balfor
Ltd., Mr. Karan and Mr. Arjun, respectively, as well as, to Mr. Daya, an employee of Kafor Ltd.,
an associate company of Balfor Ltd., after taking the requisite approvals.
The aforesaid persons attended at the place at which they were summoned by Mr. Vaibhav and
were examined on oath, one after the other. During the said examination, Mr. Vaibhav, took down
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 CA FINAL – LAW SPOM SET A Nov 2024
notes in writing and he read over the notes taken by him, to all the persons examined, after the end
of examination. After hearing the said notes, Mr. Karan and Mr. Arjun, signed the document on
which such notes were written but Mr. Daya, refused to sign such document without any reasonable
cause for the same, on the same day, but then he thought there would be no issue in signing and so
he signed the same after 20 days.
Mr. Vaibhav, forwarded the notes taken by him to the Assistant Director of Serious Fraud
Investigation Office, Mr. Ramanuj, and on the basis of such notes, he derived that Mr. Arjun has
committed an offence under section 447 of the Companies Act, 2013 which Mr. Ramanuj
reconfirmed with Mr. Vaibhav, via email.
Mr. Ramanuj, accordingly, passed an order for arrest of Mr. Arjun, after recording in writing the
reasons for such arrest and he immediately forwarded the copy of order of such arrest to the
concerned authority along with the document containing notes taken by Mr. Vaibhav at the time of
examination of Mr. Arjun, which indicated that he has committed an offence under section 447 of
the Companies Act, 2013.
Balfor Ltd., on coming to know of such arrest of Mr. Arjun, wanted to give termination to him and
also wanted to demote Mr. Karan to position of junior assistant from his position of senior assistant
in the company, during the pendency of investigation and for that purpose it made an application to
the Tribunal for the same on 10th October, 2020.
In response to the said application from Balfor Ltd., the Tribunal passed an order on 26 th
October, 2020 allowing the termination to be given to Mr. Arjun but it objected to the decision of
the company for reduction in rank of Mr. Karan from his current position, against which Balfor
Ltd. filed an application with the appellate tribunal on 15 th November, 2020.

Multiple Choice Questions:

Q 279 State in the light of the given facts , whether, the five members holding in total 4% stake in
Balfor Ltd., or the eight members, holding in total 7% stake in Balfor Ltd., were eligible for filing
application for class action or/ and u/s 244, respectively, of the Companies Act, 2013?

A. For filing application for class action, 5 members were eligible and also for filing application u/s 244 of the
Companies Act, 2013, 8 members were eligible.
B. For filing application for class action, 5 members were not eligible and also for filing application u/s 244 of the
Companies Act, 2013, 8 members were not eligible .
C. For filing application for class action, 5 members were eligible but for filing application u/s 244 of the
Companies Act, 2013, 8 members were not eligible.
D. For filing application for class action, 5 members were not eligible but for filing application u/s 244 of the
Companies Act, 2013, 8 members were eligible .

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Q 280 Whether the decision of Tribunal can be considered as valid with respect to termination of
agreement made by Balfor Ltd. with Mr. Dev as well as setting aside the contract of transfer of
property, respectively?

A. The decision of tribunal for termination of agreement made by Balfor Ltd. with Mr. Dev can be considered as
valid. Also, the decision of setting aside the contract of transfer of property, can be considered as valid as such
transfer was made within 6 months before the date of making application to the tribunal.
B. The decision of tribunal for termination of agreement made by Balfor Ltd. with Mr. Dev cannot be considered
as valid as no compensation was ordered to be paid to Mr. Dev. Also, the decision of setting aside the contract
of transfer of property, cannot be considered as valid as such transfer was not made within 90 days before the
date of making application to the tribunal.
C. The decision of tribunal for termination of agreement made by Balfor Ltd. with Mr. Dev can be considered as
valid. Also, the decision of setting aside the contract of transfer of property, can be considered as valid as such
transfer was made within 3 months before the date of making application to the tribunal.
D. The decision of tribunal for termination of agreement made by Balfor Ltd. with Mr. Dev cannot be considered
as valid as no compensation was ordered to be paid to Mr. Dev. However, the decision of setting aside the
contract of transfer of property, can be considered as valid as such transfer was made within 3 months before
the date of making application to the tribunal.

Q 281 Prior approval of which authority would have been sufficient for Mr. Vaibhav for
examining Mr. Daya, on oath, and how much maximum amount of fine could be levied on Mr.
Daya for refusing to sign the document containing the notes taken down by Mr. Vaibhav?

A. Prior approval of Director of Serious Fraud Investigation Office would have been sufficient for Mr.
Vaibhav and maximum amount of fine that could be levied on Mr. Daya is ₹ 1,00,000.
B. Prior approval of Central Government would have been sufficient for Mr. Vaibhav and maximum amount
of fine that could be levied on Mr. Daya is ₹ 40,000.
C. Prior approval of Director of Serious Fraud Investigation Office would have been sufficient for Mr.
Vaibhav and maximum amount of fine that could be levied on Mr. Daya is ₹ 1,40,000.
D. Prior approval of Central Government would have been sufficient for Mr. Vaibhav and no fine that could
be levied on Mr. Daya as he has signed the said document within 30 days of being examined on oath.

Q 282 Whether Mr. Ramanuj was having the authority to exercise power to make an order of
arrest of Mr. Arjun on the basis of notes of examination received from Mr. Vaibhav and to which
authority, Mr. Ramanuj would have forwarded the copy of arrest order along with the document
containing notes?

A. No, as such notes can’t be considered as a material or evidence in his possession to be used against Mr. Arjun
and Mr. Ramanuj would have forwarded the copy of arrest order along with the document containing notes to
the Serious Fraud Investigation Office.
B. Yes, as such notes constitute valid evidence to be used against Mr. Arjun and Mr. Ramanuj would have
forwarded the copy of arrest order along with the document containing notes to the Central Government.
C. No, as such notes can’t be considered as a material or evidence in Mr. Ramanuj’s possession to be used against
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 CA FINAL – LAW SPOM SET A Nov 2024
Mr. Arjun and Mr. Ramanuj would have forwarded the copy of arrest order along with the document
containing notes to NCLT.
D. Yes, as such notes constitute valid evidence to be used against Mr. Arjun and Mr. Ramanuj would have
forwarded the copy of arrest order along with the document containing notes to the Serious Fraud Investigation
Office.

Q 283 What was the last date available with Tribunal to give response to the application made by
Balfor Ltd. with respect to its employees as well as with Balfor Ltd. to file appeal with the appellate
tribunal?

A. 10th November, 2020 and 26th November, 2020, respectively.

B. 9th November, 2020 and 25th November, 2020, respectively.
C. 10th November, 2020 and 25th December, 2020, respectively.
D. 9th November, 2020 and 26th November, 2020, respectively.

Case Scenario 2
Shri Hari Textiles Limited was incorporated in the year 2010. Its Registered Office is situated in
Connaught Place, New Delhi. It filed its audited annual financial statements for the financial year
2019-20 well within time with the jurisdictional Registrar of Companies. The Registrar inspected
the statements and after reviewing them, felt the need to seek clarifications on certain matters.
Accordingly, a written notice was sent by the Registrar to the company and its officials directing
them to comply with the notice within thirty days of its receipt. However, the company and its
officials failed to reply within the time specified in the notice.

The Registrar initiated the inquiry and proceeded further for inspecting all the documents of the
company. While conducting the inquiry, the Registrar on prudent grounds believed that some of
the documents and other vital information in relation to the company would be destroyed or altered
by the official of the company. With a view to safeguard the documents, the Registrar obtained an
order from the Special Court and thereafter, seized all such material.

While inspecting some of the documents the Registrar came to know that the Board of Directors
had passed a resolution in a Board Meeting held on 10-04-2019 and thereby, increased the
remuneration payable to the directors including two whole-time directors and Managing Director
to 12℅ of the net profits of the company which was a sharp increase of 5% from the preceding
financial year.

Prior to the inquiry, two directors of the company, namely, Mr. X and Mr. D got retired. The
Registrar found from the inspection of the documents that they were involved in certain dealings
which included selling of the assets of the company. On the basis of such information gathered from
the inspected documents, the Registrar sought some clarifications from both of them regarding the
dubious transactions. However, both Mr. X and Mr. D refused to appear before him showing their
non-availability in the town and also represented through a common representative that they were
no more a part of the Board of Directors of Shri Hari Textiles Limited.

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After the completion of inspection and inquiry, the Registrar submitted a written report to the
Central Government in respect of his findings against the company. The reports mentioned that
there were major discrepancies in the assets and liabilities as well as profit and loss statements filed
by the company.
On receipt of report from the Registrar, the Central Government considered it necessary to
investigate the affairs of the company by the Serious Fraud Investigation Office (SFIO).
Accordingly, by an order SFIO was directed to conduct the investigation of Shri Hari Textiles
Limited and submit its report within the stipulated time. As instructed by the Central Government,
SFIO authorised some of its inspectors to investigate the affairs of the company. The team deputed
by the SFIO included experts in the field of cost accounting, financial accounting, taxation, law and
forensic auditing.
While inspecting the company, the team of SFIO came to know that the Income-tax authorities had
already initiated investigation against Shri Hari Textiles Limited.

Multiple Choice Questions:

Q 284 Shri Hari Textiles Limited and its officials failed to submit any reply to the written notice
issued by the Registrar within the time specified in the notice. How much fine can be imposed for
such failure?

A. The Company and every defaulting officer shall be punishable with a fine up to ₹ 1,00,000 and in case of
continuing failure, with an additional fine up to ₹ 500 for every day after the first during which the failure
continues.
B. The Company and every defaulting officer shall be punishable with a fine up to ₹ 1,50,000 and in case of
continuing failure, with an additional fine up to ₹ 1,000 for every day after the first during which the failure
continues.
C. The Company and every defaulting officer shall be punishable with a fine up to ₹ 1,00,000 and in case of
continuing failure, with an additional fine up to ₹ 5,000 for every day after the first during which the failure
continues.
D. The Company and every defaulting officer shall be punishable with a fine up to ₹ 2,00,000 and in case of
continuing failure, with an additional fine up to ₹ 5,000 for every day after the first during which the failure
continues.

Q 285 From the case scenario, it is observed that the Registrar seized certain important documents
in the course of inquiry. After inspection what procedure is to followed pertaining to such
documents?

A. The Registrar is required to submit such documents in the Special Court which permitted seizure.
B. The Registrar is required to forward all such documents along with the inquiry report to the Central
Government.
C. The Registrar is required to return such documents back to the company after making, if considered necessary,
the copies of them.
D. The Registrar is required to retain such documents until further instruction is received from the Special Court.

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Q 286 What is the requisite requirement for increasing the remuneration of directors including
whole-time directors and Managing Director to 12% so that it shall be in accordance with the
relevant provisions of the Companies, Act, 2013?

A. Board Resolution increasing the remuneration to 12% needs to be authorised at the General Meeting and
thereafter, duly sanctioned by the ROC.
B. Board Resolution increasing the remuneration to 12% needs to be authorised at the General Meeting and
thereafter, duly sanctioned by the Tribunal.
C. Board Resolution increasing the remuneration to 12% needs to be authorised at the General Meeting subject to
Schedule V.
D. Board Resolution increasing the remuneration to 12% needs to be authorised at the General Meeting and
thereafter, duly sanctioned by the Central Government through Regional Director.

Q 287 The case scenario states that the Registrar of Companies had called ex-directors of the
company for examining them during the inquiry. Is the Registrar empowered to call the ex-
directors:

A. The Registrar cannot call ex-directors of the company, without the order of the court.
B. The Registrar may, by issuing a written notice, call the ex-directors for seeking the requisite information.
C. In case the Registrar is appointed by the Central Government to conduct investigation, then only he can call
ex-directors of the company.
D. Except the Tribunal, no other authority is empowered to call ex-directors of a company for any examination.

Q 288 According to the case scenario, while inspecting the company, the team of SFIO came to
know that the Income-tax authorities had already initiated investigation against the company.
From the given options, choose the correct one that indicates as to how in amidst of such a
situation, SFIO will be continuing with the investigation.

A. SFIO has to put its investigation on hold so long as the company is being investigated by Income-tax
authorities.
B. SFIO will proceed with its investigation on the basis of report submitted by Income- tax authorities.
C. SFIO will proceed with its investigation while Income-tax authorities shall keep on hold its investigation.
D. SFIO will simultaneously continue its investigation along with the Income-tax authorities.
.
Independent MCQs

Q 289 The borrowing per Startup will be limited to USD ………. million or equivalent per financial
year either in INR or any convertible foreign currency or a combination of both.

A. 5
B. 2

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C. 3
D. 10

Q 290 Who shall determine the amount of claim due to a creditor under the Insolvency and
Bankruptcy Code during the Corporate Insolvency Resolution Process (CIRP)?

A. Committee of creditors
B. Resolution professional
C. Adjudicating Authority
D. Corporate debtor

Q 291 Can an Adjudicating Authority order the liquidation of a corporate debtor even after
approving the resolution plan:

A. Yes, if the resolution plan is contravened.

B. The Adjudicating Authority may order the liquidation of a corporate debtor even after approving the resolution
plan on receiving an application from a third party who is unaffected by such liquidation
C. Yes, the Adjudicating Authority may order for the liquidation of a corporate debtor if the committee of creditor
does not approve the resolution plan after its approval by the Adjudicating Authority
D. No, the Adjudicating Authority cannot order the liquidation of a corporate debtor after approving the
resolution plan.

Q 292 What is the periodicity of submission of report by company liquidator with respect to the
progress of winding up of the company to the Tribunal:
A. Monthly
B. Bi-monthly
C. Quarterly
D. Half yearly.

Q 293 Mr. X, a resident of India planned a tour of 15 days to visit Paris and to meet his niece living
there. While returning to India, Mr. X was carrying with him INR 30,000. Her niece told him that
limit is marked on bringing Indian currency notes at the time of return to India. Identify the
correct limit :

A. INR 2000
B. INR 5000
C. INR 10,000
D. INR 25,000

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MARCH 2021 MTP

Case Scenario 1
Mr. Sameer, holding 15% shares of Towe Ltd., an unlisted company, since 30th September 2019, is
unpaid to the extent of Rs. 10 lakh, filed a petition with Tribunal on 5th April, 2020, for winding up of
Towe Ltd. and a copy of the same was filed with Registrar of Companies (ROC).
The Registrar of Companies (ROC) submitted his views to the National Company Law Tribunal
(NCLT) on 18th May, 2020. The ROC mentioned in his views that it was just and equitable that Towe
Ltd. should be wound up, on analyzing the information available with him with respect to the affairs
of Towe Ltd.
The Tribunal appointed provisional liquidator, Mr. Raj, on 20th May, 2020, without giving, notice of
the same as well as without affording opportunity for making representations, to the company. Mr.
Raj is registered as an insolvency professional under the Insolvency and Bankruptcy Code, 2016 and he
filed the declaration with respect to his independence to the Tribunal on 25th May, 2020.
Tribunal passed its order for winding up of Towe Ltd. on 16th June, 2020 and the provisional
liquidator, Mr. Raj was appointed as the Company Liquidator. The Tribunal directed Mr. Sameer
to deposit an amount of Rs. 1 lakh as security for costs as a precondition to issue directions to Towe
Ltd.
The intimation thereof, of passing such order was sent to Mr. Raj as well as to the Registrar of
Companies, by the Tribunal. The ROC on receipt of such order from Tribunal made an endorsement to
that effect in his records relating to Towe Ltd. and also made a notification in the Official Gazette
that such order of winding up has been made by the Tribunal.
Mr. Raj calculated that the outstanding liabilities and debts of Towe Ltd. which amounted to Rs. 70
lakh and the expenses of winding up were estimated at Rs. 3 lakh.
Towe Ltd. has at present 8 members which are holding shares unpaid to the extent of Rs. 40 lakh, in
total.
Following were the past members of the company:-
1. Mr. Kishan ceased to be member on 23rd March, 2019, from whom Towe Ltd. had unpaid calls
on shares amounting to Rs. 8 lakh. At the time when, Mr. Kishan ceased to be a member, the
outstanding liabilities of the company were only Rs. 5 lakh.

2. Mr. Dhawan ceased to be member on 28th May, 2019, from whom Towe Ltd. had unpaid calls on
shares amounting to Rs. 16 lakh. At the time when, Mr. Dhawan ceased to be a member, the
outstanding liabilities of the company were only Rs. 13 lakh.

3. Mr. Tanmay who ceased to be member on 17th June, 2019, was having unpaid calls on shares of
Towe Ltd. amounting to Rs. 15 lakh. At the time when, Mr. Tanmay ceased to be a member, the
outstanding liabilities of the company were only Rs. 10 lakh.

Towe Ltd. created a floating charge, as agreed, on the stock of the company on 23rd August, 2019, to
secure a current account with Munim Bank which was in debit by Rs. 12 lakh from 1st May, 2019 and
thereafter the bank also advanced Rs. 15 lakh on 1st September, 2019, for meeting the operating
expenses of the company.
Munim Bank charged Rs. 1,18,500 as interest for financial year ended on 31st March, 2020, by debiting
the said current account of Towe Ltd. on the total amount of Rs. 27 lakh (Rs.12 lakh + Rs. 15 lakh). Towe
Ltd. Compiled
remained solvent during the financial year 2019-20.
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 CA FINAL – LAW SPOM SET A Nov 2024
Multiple Choice Questions:

Q 294 Whether Mr. Sameer was eligible to file petition for winding up against Towe Ltd.?

A. No, as he is not holding fully paid up shares of Towe Ltd.

B. No, as he is not holding shares for 12 months or more prior to presenting such petition for winding up.
C. Yes, as he is a holding not less than 10% of the shares of Towe Ltd.
D. Yes, as he is holding shares for 6 months or more prior to presenting such petition for winding up.

Q 295 What was the last date available with ROC to submit his views to NCLT on the petition filed
by Mr. Sameer and with the NCLT to pass order for winding up, respectively?

A. 5th June, 2020 and 5th July, 2020 respectively.

B. 4th June, 2020 and 4th July, 2020 respectively.
C. 5th May, 2020 and 5th July, 2020 respectively.
D. 5th May, 2020 and 4th July, 2020 respectively.

Q 296 Whether the act of Tribunal can be considered valid for not giving notice of appointment of
provisional liquidator, Mr. Raj as well as opportunity for making representations, to Towe Ltd.?

A. Partially invalid, as giving notice of appointment of provisional liquidator, Mr. Raj, is mandatorily for the
tribunal. However, whether to afford opportunity to Towe Ltd. for making representations is upon the sole
discretion of the tribunal.
B. Valid, if in the opinion of the tribunal, there were some special reasons, whether recorded in writing or not, for
not giving notice as well as opportunity for making representations, if any, to Towe Ltd.
C. Valid, if in the opinion of the tribunal, there were some special reasons, recorded in writing, for not giving
notice as well as opportunity for making representations, if any, to Towe Ltd.
D. Not valid, as giving notice of appointment of provisional liquidator, Mr. Raj as well as opportunity for making
representations, to Towe Ltd., is mandatorily required to be given by the tribunal.

Q 297 How much amount, Mr. Kishan, Mr. Dhawan and Mr. Tanmay, would be liable to pay as a
contributory, if in case tribunal calls past members to satisfy the contributions?

A. Mr. Kishan shall not be liable to pay any amount, Mr. Dhawan and Mr. Tanmay shall be liable to pay Rs. 16
lakh and Rs. 10 lakh, respectively.
B. Mr. Kishan, Mr. Dhawan and Mr. Tanmay shall be liable to pay Rs.5 lakhs, Rs. 13 lakh and Rs. 10 lakh,
respectively.
C. Mr. Kishan shall not be liable to pay any amount, Mr. Dhawan and Mr. Tanmay shall be liable to pay Rs. 13
lakh and Rs. 10 lakh, respectively.
D. Mr. Kishan and Mr. Dhawan shall not be liable to pay any amount and Mr. Tanmay shal l be liable to pay Rs.
10 lakh.

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Q 298 How much amount of floating charge created on the stocks of Towe Ltd. shall be valid and
how much of interest shall be allowed if no other rate is notified by the Central Government, other
than the rate of interest prescribed in the Act?

A. Rs. 27 lakh and Rs. 1,18,500, respectively.

B. Rs. 15 lakh and Rs. 98,750, respectively.
C. Rs. 27 lakh and Rs. 98,750, respectively.
D. Rs. 12 lakh and Rs. 1,18,500, respectively.

Independent MCQs
Q 299 Which of the following in incorrect with respect to export declaration exemption?

A. trade samples of goods and publicity material supplied free of payment

B. personal effects of travelers, whether accompanied or unaccompanied
C. goods imported free of cost on re-export basis;
D. by way of gift of goods accompanied by a declaration by the exporter that they are not more than ten lakh
rupees in value

Q 300 Where a company or an officer of a company or any other person having already been
subjected to penalty for default under any provisions of this Act, again commits such default within
a period of ………..years from the date of order imposing such penalty passed by the adjudicating
officer or the Regional Director, as the case may be, it or he shall be liable for the second or
subsequent defaults for an amount equal to ……… the amount of penalty provided for such default
under the relevant provisions of this Act.

A. 3, twice
B. 5, thrice
C. 3, thrice
D. 4, twice

Q 301 Commission, per transaction, to agents abroad for sale of residential flats or commercial
plots in India exceeding USD ………….. or five percent of the inward remittance whichever is more
requires approval of RBI.

A. 30000
B. 25000
C. 50000
D. 10000

Q 302 How much % approval required in Pre-pack insolvency to pass any resolution by CoC?

A. 75%
B. 66%
C. 51%
D. 90%

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Case Scenario 3 (ONLY IN OLD MTP)

Hibiscus Powergear
(b) National LimitedBank
Commercial (HPL), an unlisted
agreed company,
to reduce interestisrate
“One Stop
from Shop”
11% p.a. for all the
to 8% p.a.custom
on Cash built
Credit
electrical switchboards,
till next one year. It alsobattery chargers
in-principle andtobus
agreed ducts.Rs.
provide It manufactures comprehensive
3 Crores as non-fund rangefor
based limits of a period
products from small industrial distribution boards to the large state-of-the-art intelligent motor and
of two years.
power control centers. The Registered Office of the company is located in Belthangadi and two
(c) Directors were to waive off all the outstanding interest payable to them upto 31.3.2019 and also had
manufacturing plants are situated at Dabaspet Industrial Area near Bengaluru.
no objection if interest rate on their loans was reduced to 6% p.a.
(d) Suppliers and other creditors consented to waiving off their debts to the extent of all the amounts
HPL has been
outstanding forincurring
a period huge losses
beyond for the
2 years last31.03.2019.
as on three years.
InThere were
essence, accumulated
HPL losses
was required to the
to pay extent
only for
of
theRs. 192Crores
last years toasthe
on suppliers
31.03.2019. The
and Board
other of Directors had been evaluating all the possible options to
creditors.
bring the company back on the track. One of the options considered was Corporate Debt Restructuring
(e) Patents and goodwill were to be written off to the extent of Rs. 0.50 Crores. Value of obsolete items
(CDR) with the creditors, through Compromise.
in the inventory was quantified to Rs. 0.80 Crores and was to be written off.
(f) Bad debts identified to the extent of Rs. 0.75 Crores were to be written off.
Following data was extracted from the latest Audited Financial Statements of HPL as on 31.03.2019:
(g) Remaining Freehold property worth Rs. 15 Crores was revalued at Rs. 23 crores.
S. Particulars Amount
After the above exercise, an application for the Compromise was filed by HPL with the jurisdictional
No.
National Company Law Tribunal (in short ‘Tribunal’) and made the necessary disclosures (Rs. in Crores)
by filing an
Affidavit. The disclosures contained all the material facts in respect of HPL, a copy of the Scheme of
1. Secured Creditors
Corporate Debt Structuring as consented to by the creditors, methodology on the basis of which creditors
been8%identified,
had (a) Debentures (Securedresponsibility
creditors’ by creating Charge on Freehold
statement in the Property)
prescribed form, 20.00
safeguards for the
protection of otherInterest
(b) Accrued securedonand
8%unsecured
Debenturescreditors, Auditor’s Report, Valuation Report, etc.
After(c)hearing
Cash the Application,
Credit (availedthe Tribunal
from gave necessary Commercial
National directions in Bank
respect of conducting of the
1.60
meeting of the creditors, fixed the date and place of the
against hypothecation of stocks and book debts) meeting, gave directions for the appointment of
15.00
the Chairperson and scrutinizer, fixed the quorum, stated the procedure to be followed at the meeting
including
2. methodology
Unsecured of voting which could be either in person or by proxy or by postal ballot or by
Creditors
voting through electronic means, the time within which the Chairperson was required to report the result
1.
of the meeting Loans from
to the Directors
Tribunal, etc.@ 8% p.a. 30.00
To ensure2. transparency
Trade Payables that may facilitate all the stakeholders to take proper 18.00 decisions, extensive
disclosures
3. wereOthermade by HPL along with the Notice for the Meeting and then the company,
creditors 0.40 as per the
directions of the Tribunal, sent Notices to all the creditors and to all those who were entitled to receive it.
Total Outstanding
Further, it was also Debt
sentpayable
to all by
theHPL
relevant Regulators seeking their representations. 85.00In addition, the
Notice was advertised
Consequently, a Scheme ofin Corporate
English in Debt
Times of India andwas
Restructuring in the local Kannada
consented by 78% ofNewspaper
the securedUdayavani
creditors in
Kannada
and all otherlanguage. The company
stake holders. also published
Brief outlines the Notice
of the Scheme on itsbelow:
are given website.
It is worth
(a) noting that United
8% Debenture-holders Belts
were to Private Limited
take over (UBPL),
the Freehold supplying
Property some
at the of thevaluation
current components to 12
of Rs. HPL,
Crores (book value Rs. 8 Crores) in part payment of their dues and to provide additional Rs.10 Crores on
had raised objections to the proposed Scheme of Compromise after receiving the Notice. As
31.03.2019,
@ HPL was
9% p.a. secured byrequired
a floatingtocharge
pay Rs.on0.80
the Crores
assets oftoHPL.
UBPL for theaccrued
Interest supply of
onvarious components.
Debentures was to be
paid immediately.
The Meeting was duly convened and the majority representing 78% of the value of creditors agreed to
the Scheme of Compromise. The Tribunal provided for the protection of minority creditors and by an
Order sanctioned the Scheme of Compromise relating to Corporate Debt Structuring (CDR), after
considering the Certificate issued by the Auditor of HPL. The order of the Tribunal was filed with the
Registrar by HPL within the specified period of the receipt of the order.
However, in the due course of time, HPL faced many practical hurdles in the implementation of the
Scheme of Compromise sanctioned by the Tribunal.

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Multiple Choice Questions:

Q 303 The case scenario states that an Application for Compromise was filed by HPL with the
jurisdictional National Company Law Tribunal (NCLT) along with all the necessary documents
including Auditor’s Report. From the following options, choose the one which the auditor must
include in the Auditor’s Report when the Application for Compromise relates to the Scheme of
Corporate Debt Restructuring (CDR):

A. That all the Fixed Assets of HPL have been properly revalued by the Registered Valuer for the purpose of
Compromise and the Valuation Report being submitted to the Tribunal is true and correct;
B. That the total value of creditors shown in the financial statements of HPL as on 31.03.2019 is true and correct
and there are no material discrepancies.
C. That the fund requirements of HPL after the corporate debt restructuring as approved shall conform to the
liquidity test, based upon the estimates provided to the auditor by the Board of HPL.
D. That all the contents of the Application and other documents submitted to the Tribunal are true and correct to
the best of his knowledge and belief and reflect a true and fair position of HPL as on the date of submission of
Application to the Tribunal.

Q 304 According to the case scenario, with a view to ensure transparency that might facilitate all
the stakeholders to take proper decisions, extensive disclosures were made by HPL along with the
Notice for the Meeting and the notices were sent to all the creditors and all those who were entitled
to receive it. As regards the adoption of the Compromise, the Notice needs to provide that the
persons to whom the notice is sent may vote in the meeting either themselves or through proxies or
by postal ballot:

A. Within 21 days from the date of receipt of such Notice.

B. Within one month from the date of receipt of such Notice.
C. Within 14 days from the date of receipt of such Notice.
D. Within 7 days from the date of receipt of such Notice.

Q 305 It is stated in the case scenario that United Belts Private Limited (UBPL), supplying some of
the components to HPL, had raised objections to the proposed Scheme of Compromise. For raising
any objection to the Scheme of Compromise, the value of UBPL as trade creditor in the books of
HPL must be:

A. Not less than 5% of the total outstanding debt as per the audited financial statements as on 31.03.2019 of HPL.
B. Not less than 10% of the total outstanding debt as per the audited financial statements as on 31.03.2019 of
HPL.
C. Not less than Rs. 1 Crore as per the audited financial statements as on 31.03.2019 of HPL.
D. Not less than 25% of the total outstanding debt as per the audited financial statements as on 31.03.2019 of
HPL.

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Q 306 The Notice was also sent to all the relevant Regulators seeking their representations which
was to be made within the specified period from the date of receipt of such notice. From the
following options, choose the one which specifies the correct time period for making
representations:

A. Representation needs to be made within 10 days from the date of receipt of notice.
B. Representation needs to be made within 15 days from the date of receipt of notice.
C. Representation needs to be made within 30 days from the date of receipt of notice.
D. Representation needs to be made within 45 days from the date of receipt of notice.

Q 307 According to the case scenario, the Tribunal while providing for the protection of minority
creditors, sanctioned by an order the Scheme of Compromise relating to Corporate Debt
Structuring (CDR), after considering the Certificate issued by the Auditor of HPL. The Auditor’s
Certificate at the Sanctioning stage shall be to the effect that:

A. HPL has duly followed all the procedure required for the Compromise as required under the Companies Act
2013 and the relevant Rules thereunder.
B. All the documents submitted by HPL to the Tribunal for the purpose of Compromise are true and correct and
the Auditors have duly verified them.
C. The accounting treatment, if any, proposed in the Scheme of Compromise by HPL is in conformity with the
prescribed accounting standards.
D. The Auditors have reasonable grounds to believe that HPL will continue its business as a going concern after
the implementation of Compromise.

Independent MCQs

Q 308 In order to make Robotics Toys Private Limited as its subsidiary, Golden Rays Robots
Limited raised its investment in Robotics Toys from 40% to 60% of its paid-up capital. From the
options given below, choose the one which correctly indicates as to when the Robotics Toys shall be
considered the undertaking of Golden Rays Robots Limited.

A. In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 10% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics
Toys must have contributed in generation of 10% of the total income of Golden Rays during the previous
Financial Year.
B. In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 20% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics
Toys must have contributed in generation of 20% of the total income of Golden Rays during the previous
Financial Year.
C. In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 25% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics
Toys must have contributed in generation of 25% of the total income of Golden Rays during the previous
Financial Year.
D. In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 30% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics
Toys must have contributed in generation of 30% of the total income of Golden Rays during the previous
Financial Year.

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Q 309 Mr. A is an authorized dealer holding a valid Authorization issued by the Reserve Bank of
India under section 10 of the FEMA, 1999. During the course of his business, he violated one of the
conditions subject to which the Authorization was granted to him. The Adjudicating Authority
imposed a penalty of Rs. 1,50,000 under section 13 (being 3 times the amount involved in the
violation, i.e. Rs. 50,000). Mr. A accepted the default. State the time limit before which Mr. A
should pay the penalty, assuming he does not prefer an appeal to the Appellate Authority:

A. Within 30 days from the date of the Order imposing the penalty.
B. Within 45 days from the date of the Order imposing the penalty.
C. Within 60 days from the date of the Order imposing the penalty.
D. Within 90 days from the date of the Order imposing the penalty

Q 310 A Limited, an Indian company holds a commercial plot in Chennai, India. It intends to sell
the same. M/s Super Seller is a real estate broker with Head Office in the USA. M/s Super Seller is
appointed to find buyers for the land. A company Glory Inc., based out of USA is identified as a
buyer. Glory Inc., is controlled from India and is hence a Person Resident in India under FEMA
provisions. Glory Inc., agrees to buy the land for USD 6,00,000 (assume 1 USD = Rs.70). M/s Super
Seller is to be paid commission at the rate of 7% of the sale proceeds. The commission is to paid to
the H.O of M/s Super Seller in USA. Decide, in light of the relevant provisions of FEMA, 1999,
which of the following is correct (Ignoring TDS implications arising under the Income Tax Act,
1961):

A. Prior permission is not required for remittance of commission upto USD 25,000. For balance commission of
USD 17,000, permission of RBI is to be sought by A Limited.
B. Prior permission is not required for remittance of commission upto USD 30,000. For balance commission of
USD 12,000, permission of RBI is to be sought by A Limited.
C. Prior permission is not at all required for remittance of the entire commission.
D. Prior permission is required to be taken from The Reserve Bank of India for the entire amount of commission.

Q 311 Best Nidhi Limited has been incorporated on 01/04/2020 as a Nidhi Company under section
406 of the Companies Act, 2013 with 250 members. Its main object is to accept deposits from
members and lend loans to members for the mutual benefit of the members. It also provides locker
facilities to members. For FY 2020-2021, the income of the company (before deducting any expense)
was Rs. 40,00,000. Expenses incurred during the year amounted to Rs.10,00,000. Calculate the
maximum amount of rental income that could have been earned during the FY 2020-2021 by the
company.

A. Rs. 10,00,000
B. Rs. 7,50,000
C. Rs. 8,00,000
D. Rs. 6,00,000

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Q 312 Mr. Romil was appointed as an IRP during the Corporate Insolvency Resolution Process on
3rd of March, 2019. He can make a Public announcement -

A. latest by 6th March 2019

B. latest by 7th March 2019
C. latest by 10th March 2019
D. latest by 14th March 2019

Q 313 Z Ltd, a Starup is permitted to raise ECB under the automatic route with the minimum
average maturity period of :

A. 1 years
B. 3 years
C. 5 years
D. 10 years

Q 314 Shivdeep submitted his claim as an operational creditor to the liquidator of Chiranjeevi Food
Products Limited, a company under liquidation. If Shivdeep wants to alter his claim, state the time
period within which he can do so after its submission.

A. Five days
B. Ten days
C. Fourteen days
D. Fifteen Days

Q 315 Ruby Petals Limited, a small company, files an application with the NCLT stating that the fast track
corporate insolvency resolution process against it cannot be completed within the prescribed period of 90
days. On being satisfied, NCLT orders to extend the period of such process by 30 days. However, Ruby
Petals Limited again initiates an application for further extension of time period of insolvency process by
another 10 days. Which of the following option is applicable to such a situation:

A. NCLT can extend the period by another 10 days because total extension does not exceed 45 days.
B. NCLT is empowered to grant another extension of 10 days if Ruby Petals deposits Rs. 50,000 as penalty.
C. NCLT is empowered to grant another extension of 10 days if Ruby Petals deposits Rs. 100,000 as penalty.
D. NCLT cannot extend the period by another 10 days because such extension shall not be granted more than
once.

Q 316 A valuer in a company will be appointed by the ----------- or in its absence, by the -------------of
that company.
A. Board of directors, Shareholders
B. Board of Directors, Audit committee
C. Shareholders, Audit committee
D. Audit Committee, Board of Directors

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Q 317 Suppose SEBI has constituted its board as per requirements of section 4 of SEBI Act, 1992
with 3 whole time members under Section 4(1)(d) of the SEBI Act, 1992, but one of them resigned
and to refill his post, it took 1 month. Examine acts done in between the vacancy period, as per
SEBI Act , 1992.

A. All acts become void ab-initio as per section 8 of the SEBI Act, 1992.
B. Only financial acts are void ab initio as per section 8 of the SEBI Act, 1992.
C. All acts are valid as per section 8 of the SEBI Act, 1992.
D. All acts should be rectified after composition of proper board as per section 8 of the SEBI Act, 1992.

APRIL 2021 MTP

Case Scenario 1
Heights Private Ltd. for expansion of its business took the financial debt of amount Rs.50 crore
from the HBC Bank Ltd. Heights Private Ltd. in its initial one year paid the instalments of the
amount of debt timely. However later, started omission in the payments of instalments. Despite of
repeated reminders, Heights Private Ltd. continued with default in payments of instalments.
HBC Bank Ltd. filed an application under Insolvency and Bankruptcy Code, 2016 for
initiating Corporate Insolvency Resolution Process (CIRP) against Heights Private Ltd., alleging
default in payments of debt, interest and other charges on 18th November, 2020.

The application was admitted in the NCLT on 1st December, 2020.

The Ex-directors and shareholders of Heights Private Ltd. preferred an appeal against the said
admission of application under section 7 of the IBC. Appellant submitted that name of Heights
Private Ltd. was struck off from the Register of Companies under Section 248 of the Companies
Act, 2013. Also, asserted that application filed under section 7 of IBC by HBC Bank Ltd., is barred
by limitation and against a non-existent company (i.e. Heights Private Ltd.). So, they alleged that no
such application is maintainable. However, the appeal was set aside.

During the CIRP, Resolution Professional (RP), “Mr. Amar” was appointed to manage the estate of
the Heights Private Ltd. Mr. Amar invited Resolution applicant Mr. Jeet to submit him a resolution
plan for approval of the CoC. Later, Mr. Amar discovered Mr. Jeet is in the management of the
Height Private Ltd. So, he raised an objection stating of ineligibility of Mr. Jeet as resolution
applicant. However, Mr. Jeet submitted a resolution plan with an affidavit stating he is eligible
under section 29A of the Code to the resolution professional.
Mr. Amar presented such resolution plan to the CoC for its approval with requisite voting share of
the financial creditors.
While during the pendency of the CIRP, the Enforcement Directorate (ED) provisionally attached
the assets and property belonging to the Heights Private Ltd. considering that the assets and
property was derived by the company from the proceeds of crime. Mr. Amar (RP) intimated the
ED about initiation of the CIRP and imposition of moratorium on the property and assets of the
Heights Private Ltd. as the resolution professional was required to take charge and custody of the
same. ED submitted that moratorium declared by the Adjudicating Authority would not be

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applicable to the criminal case initiated under the Prevention of Money Laundering Act, 2002.

Multiple Choice Questions:

Q 318 In the given case, Heights Private Ltd. was struck off from Register of Companies under the
Companies Act, 2013. State whether HBC Bank Ltd. can file an application under section 7 of the
Code-

A. No. Application cannot be filed as the Heights Private Ltd. is no more in the existence as it is struck off from
Register of Companies.
B. No. Application cannot be filed under the Code but under the Companies Act be filed within 2 years from the
date of notice notified in Official Gazette on struck off from Register of Companies
C. Yes. Application can be filed under both the laws by the HBC Bank Ltd, being under the two different
jurisdictions.
D. Yes. Application can be filed on an appeal of HBC bank Ltd. (being a creditor) before Tribunal under the
Companies Act for taking Heights Private Ltd. into register of companies, and then may file an application of
initiation of CIRP under the capacity financial creditor, under the Code.

Q 319 As given in the case, HBC Bank Ltd. files an application for initiation of CIRP on 18th
November, 2020 which was admitted on 1st December, 2020. Suppose, if later Heights Private Ltd.
pays off the outstanding debt amount and request the HBC Bank Ltd. to withdraw the application.
Specify which amongst the following is the correct statement:

A. No withdrawal can be done, as the application has been admitted.

B. Yes, withdrawal is possible by approval of 66% of voting shares of the CoC.
C. No withdrawal is applicable here as application of CIRP is not maintainable as Hiwaves Private Ltd. is struck
off.
D. Yes, withdrawal is possible by approval of 90% of voting shares of the CoC.

Q 320 Within how many days application for initiation of CIRP can be admitted by NCLT, as it
was filed on 18th November, 2020 by GBC Bank Ltd.?

A. 25th November 2020

B. 28th November 2020
C. 2nd December 2020
D. 9th December 2020

Q 321 Suppose, NCLT rejects application of HBC Bank Ltd. on account of incomplete application
submitted before it. Within how many days, the applicant can rectify the defect in the application?

A. Within 7 days of receipt of such notice from NCLT

B. Within 10 days of receipt of such notice from NCLT
C. Within 14 days of receipt of such notice from NCLT
D. Within 30 days of receipt of such notice from NCLT

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Q 322 Comment on nature of ineligibility of Mr. Jeet as Resolution applicant under section 29 A of
the Code-

A. Mr. Jeet is not eligible as resolution applicant though he submitted an affidavit.

B. Mr. Jeet is eligible as Resolution applicant as he submitted resolution plan supported by affidavit
C. Mr. Jeet is a connected person, so not eligible as Resolution applicant
D. Mr. Jeet is a related party so not eligible.

Case Scenario 2
The Registrar of Companies (ROC) by a written notice had required for certain information from
Retq Ltd., under section 206 of the Companies Act, 2013.
The ROC, through perusal of such information received in response to notice issued to Retq Ltd.,
observed that the complaints of the investors were not being redressed for a long time, from the
statements filed by Grievance Redressal Department of Retq Ltd., established in compliance of
regulation 13 of the SEBI (LODR) Regulations, 2015, for the quarter ended March, 2020 and June,
2020, which showed that the number of complaints pending at the beginning of the quarter and
received during the quarter, were much more than that disposed off during the said quarters as
shown below:-
Particulars Quarter ended Quarter ended
March, 2020 June, 2020
Complaints pending at the beginning quarter 120 130
Complaints received during the quarter 50 60
Complaints disposed of during the quarter 40 30
Complaints remaining unresolved at the end of the quarter 130 160

Also, the ROC, noticed from the reports called from the Audit Committee, that many
complaints were filed with the Audit Committee by the employees under the Vigil Mechanism of
the company, the details of establistment of vigil mechanism was disclosed in Retq Ltd.’s website
and board report as well. However, the ROC also noticed that, one employee, Mr. Tapan, was
reprimanded by the chairman of Audit Committee for complaints filed repeatedly without any
purpose or were of no value.
The ROC, thus on the basis of information available with him, passed an order for carrying out
inquiry by exercising its power under section 206 of the Companies Act, 2013, after informing the
company the grounds of allegation against it.
After the inquiry was conducted, the ROC submitted its report to the Central Government which
included a recommendation for further investigation into the affairs of Retq Ltd. but the reasons
for the same were not mentioned.
Meanwhile, an Extra-ordinary General Meeting was conducted for passing a resolution for the
purpose of conducting investigation by a statutory authority into the affairs of Retq Ltd. by the
Central Government which could not materialize due to the reason that the votes were not
adequate in favour of such resolution.

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However, 8 members holding 20% shares in Retq Ltd., out of total 120 members, made an
application to the tribunal as there were good reason for seeking an order of investigation into the
affairs of the company. Such application was supported by evidence to show that an investigation
into the affairs of Retq Ltd. was necessary. The tribunal passed an order for conducting such
investigation, as it was satisfied that it was necessary.
The Central Government, thereafter, passed an order for investigation into the affairs of Retq Ltd.
and appointed 2 persons, Mr. Vipul and Mr. Mehul, as the inspectors. The said inspectors duly init
iated the task of investigation as per the procedure prescribed under section 217 of the Companies
Act, 2013, read with rule 6 of the Companies (Inspection, Investigation and Inquiry) Rules, 2014.

Multiple Choice Questions:

Q 323 Whether the details of establishment of Vigil Mechanism needs to be disclosed mandatorily
on the website of Retq Ltd. and also whether reprimanding, Mr. Tapan, just for filing repeated
complaints by the chairman of Audit Committee can be considered as a valid act?

A. Yes, provided the company has a website. The act of reprimanding, Mr. Tapan, can be considered as valid as
the complaints filed by him were frivolous in nature.
B. No, as disclosing such details in the board report suffices the requirements. The act of reprimanding, Mr.
Tapan, cannot be considered as valid as the chairman of audit committee does not have any authority to do so.
C. Yes, even if the company does not have website, then it needs to create one and then disclose such details. The
act of reprimanding, Mr. Tapan, can be considered as valid as the complaints filed by him were frivolous in
nature.
D. Yes, provided the company has a website. The act of reprimanding, Mr. Tapan, only on the grounds that the
complaints filed by him were frivolous in nature, cannot be considered as valid.

Q 324 Whether non-mentioning of reasons in his report recommending investigation by ROC, can
be considered valid and what type of resolution was required to be passed by Retq Ltd. so that
investigation could have been initiated into the affairs of Retq Ltd. by the Central Government?

A. No, as reasons are required to be given in order to support the recommendations for investigation made by
him. Special resolution was required to be passed by Retq Ltd.
B. Yes, as giving reasons is optional as making recommendations for investigation itself depends upon the
discretion of ROC. Resolution with members holding not less than 90% of the shares, was required to be
passed by Retq Ltd.
C. No, as reasons are required to be given in order to support the recommendations for investigation made by
him. Resolution with majority of members representing 3/4 th in value of the shares was required to be passed
by Retq Ltd.
D. Yes, as giving reasons is optional as making recommendations for investigation itself depends upon the
discretion of ROC. Ordinary resolution was required to be passed by Retq Ltd.

Q 325 Whether the application to tribunal was filed by adequate number of members for purpose
of conducting investigation into the affairs of Retq Ltd. and whether the Central Government holds

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discretion for ordering investigation in case of order passed by Tribunal for the same or report
received from the registrar recommending investigation?

A. No, the application was not filed by adequate number of members. Central Government shall mandatorily
order for investigation in case of order passed by Tribunal and it holds discreti on for ordering investigation in
case of report received from the registrar.
B. Yes, the application was filed by adequate number of members. Also, the Central Government holds discretion
for ordering investigation in case of order passed by Tribunal or report received from the registrar.
C. No, the application was not filed by adequate number of members. Central Government shall mandatorily
order for investigation in case of order passed by Tribunal or in case of report received from the registrar.
D. Yes, the application was filed by adequate number of members. Central Government shall mandatorily order
for investigation in case of order passed by Tribunal and it holds discretion for ordering investigation in case of
report received from the registrar.

Q 326 Whether opportunity of being heard is required to be given by ROC before issuing notice for
information and also by the Tribunal, before passing order for investigation, to Retq Ltd.,
respectively?

A. Yes, opportunity of being heard is required to be given in case of ROC but not required to be given in case of
tribunal.
B. Yes, opportunity of being heard is required to be given in case of both ROC as well as tribunal, respectively.
C. No, opportunity of being heard is not required to be given in case of both ROC in case of both ROC as well as
tribunal, respectively.
D. No, opportunity of being heard is not required to be given in case of ROC but in case of tribunal, it is required
to be given.

Case Scenario 3
Troy Ltd. is an unlisted public company, deriving its income mainly from trading in iron bars. It
also derives some income from investments in immovable properties. It is the only subsidiary
company of Wrim Ltd., a listed public company, which holds 55% equity in Troy Ltd. The shares
of Wrim Ltd. are listed on the Bombay Stock Exchange as well as on the National Stock Exchange.
Net income of Troy Ltd. was Rs. 66 crore whereas the standalone income of Wrim Ltd. was Rs. 154
crore, as shown in the audited financial statements of both the companies for the financial year
ended on 31 st March, 2020. However, the net worth of Troy Ltd. was only 15% of the total net
worth of both the companies as per the consolidated financial statements. Also, the contribution of
Troy Ltd. in the consolidated turnover of both the companies was only 18%.
The Audit Committee of Wrim Ltd. has all the 7 directors of the company, as its members. The said
Committee held a meeting on 25th April, 2020, for the purpose of reviewing the financial
statements of Troy Ltd. which had been limited reviewed by the statutory auditors of Wrim Ltd. as
required by Accounting Standard No. 21. Also, an omnibus approval was granted, in the said
meeting, for some transactions to be entered by Wrim Ltd. with the related parties.

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The meeting was scheduled 2nd time in the year and it was chaired by Mr. Suresh, an Independent
Director of the company, who is also serving as an Independent Director on the Board of Troy Ltd.
In the meeting, apart from Mr. Suresh, Mr. Dharmendra, another Independent Director and Mr.
Vimal, an Executive Director with Chartered Accountancy qualification, were present.
On recommendation of Mr. Vaibhav, the Managing Director of Wrim Ltd., his brother, Mr.
Jaimin, has been appointed as the regular non-executive chairperson of the company, as Mr.
Jainim possess the requisite qualifications for the said post, as also opined by the chairperson of the
Nomination and Remuneration Committee of the company, Mr. Dharmedra. Mrs. Meena, is a
qualified Chartered Engineer who has been appointed as the Woman Director, in the Board Of
Directors of Wrim Ltd.
The Board Of Directors of Wrim Ltd., in one of its meetings, made a proposal to dispose of 6%
equity holding in Troy Ltd., as the company received attractive offer for such shares from a foreign
company based in Netherland, also engaged in the business of iron bars trading. Also, the board
made a proposal to sell 22% assets of Troy Ltd. under a scheme of arrangement approved by
NCLT as most of the business of Troy Ltd. was going to be automated in the upcoming years and
due to which, use of some of the assets, as requiring intervention of workers, may become obsolete.
In the same meeting, the Board discussed on the quarterly financial statements of the company
which had been limited reviewed by the statutory auditors of the company. The minutes of the
previous Board Meeting of its subsidiary company, Troy Ltd., were also discussed, as it was placed
in the Board Meeting of Wrim Ltd.
Wrim Ltd. made the following compliances for the June’ 2020 quarter, as required by
SEBI(LODR) Regulations, 2015 :-
(1) It submitted its unaudited quarterly financial statements to the recognised stock exchange on
31 st July, 2020.
(2) It submitted its quarterly compliance report on corporate governance on 10th July, 2020.
(3) It submitted a statement showing holding of securities and shareholding pattern separately
for each class of securities on 21st July, 2020. There was no capital restructuring done in the
company during the said quarter, resulting in change exceeding 2% of the total paid up share
capital.

Multiple Choice Questions:

Q 327 Whether Troy Ltd. can be considered as a material subsidiary of Wrim Ltd. and whether it
will violate the law, if no more independent director of Wrim Ltd. is appointed on the board of
Troy Ltd., as Mr. Suresh, an independent director, is already appointed there?

A. Yes, it can considered as a material subsidiary of Wrim Ltd. and as Mr. Suresh is on the board of Troy Ltd.,
statutory requirements are satisfied and it will not violate the law if no more independent director of Wrim Ltd.
is appointed on the board of Troy Ltd.
B. No, it cannot considered as a material subsidiary of Wrim Ltd. and apart from Mr. Suresh, one more
independent director of Wrim Ltd. needs to be appointed as independent director on the board of Troy Ltd., to
satisfy the statutory requirements, otherwise it will violate the law.
C. No, it cannot considered as a material subsidiary of Wrim Ltd. and as Mr. Suresh is on the board of Troy Ltd.,
statutory requirements are satisfied and it will not violate the law if no more independent director of Wrim Ltd.
is appointed on the board of Troy Ltd.

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D. Yes, it can considered as a material subsidiary of Wrim Ltd. and apart from Mr. Suresh, one more independent
director of Wrim Ltd. needs to be appointed as independent director on the board of Troy Ltd., to satisfy the
statutory requirements, otherwise it will violate the law.

Q 328 How many directors and independent directors, apart from Mr. Suresh should have
attended the meeting of audit committee to constitute a valid quorum present for the meeting and
what in particular, the Audit Committee should have reviewed during the meeting at the time of
reviewing the financial statements of Troy Ltd.?

A. 1 director and one more independent director, apart from Mr. Suresh, should have attended the meeting of
audit committee to constitute a valid quorum present for the meeting and the audit committee should have
reviewed in particular, the loans advanced by and taken by Troy Ltd.
B. 3 directors and one more independent director, apart from Mr. Suresh, should have attended the meeting of
audit committee to constitute a valid quorum present for the meeting and the audit committee should have
reviewed in particular, the investments made by Troy Ltd.
C. 1 director and one more independent director, apart from Mr. Suresh, should have attended the meeting of
audit committee to constitute a valid quorum present for the meeting and the audit committee should have
reviewed in particular, the main income source of Troy Ltd. i.e. sales and operations of iron bars trading
business.
D. 2 directors and one more independent director, apart from Mr. Suresh, should have attended the meeting of
audit committee to constitute a valid quorum present for the meeting and the audit committee should have
reviewed in particular, the investments made by Troy Ltd.

Q 329 What shall be the last date of submission of quarterly financial statements to the stock
exchange for Wrim Ltd., in case Wrim Ltd. was not able to submit the same on 31st July, 2020, and
whether it can be submitted in unaudited form also?

A. 15th August, 2020 and no, it needs to be submitted in audited form.

B. 31st August, 2020 and yes, it can be submitted in unaudited form.
C. 31st July, 2020 and no, it needs to be submitted in audited form.
D. 15th August, 2020 and yes, it can be submitted in unaudited form.

Q 330 How many more independent directors and woman directors should be atleast there on the
board of Wrim Ltd., apart from Mr. Suresh and Mrs. Meena, respectively?

A. 3 more independent directors are required and no more woman director is required to be appointed, as Mrs.
Meena is already there.
B. 3 more independent directors are required and 1 more woman director is required to be appointed, apart from
Mrs. Meena.
C. 2 more independent directors are required and no more woman director is required to be appointed, as Mrs.
Meena is already there.
D. No more independent woman director is required to be appointed due to presence of 1 independent director
and 1 woman director, in the board, already.

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Q 331 Whether special resolution shall be required to be passed by the company in the general
meeting, to dispose of 6% equity holding in Troy Ltd., and also to sell 22% assets of Troy Ltd.
under a scheme of arrangement approved by NCLT?

A. Yes, special resolution in the general meeting needs to be passed for disposing of 6% equity holding in Troy
Ltd. However, for selling 22% assets of Troy Ltd., special resolution shall not be required.
B. Yes, special resolution in the general meeting needs to be passed for disposing of 6% equity holding in Troy
Ltd. as well as for selling 22% assets of Troy Ltd.
C. There is no requirement of passing special resolution in the general meeting, only board resolution for the
same is sufficient.
D. No, ordinary resolution in the general meeting is sufficient for disposing of 6% equity holding in Troy Ltd.
However, for selling 22% assets of Troy Ltd., board resolution for the same is sufficient.

Independent MCQs

Q 332 The members of H Limited apply to the National Company Law Tribunal under section 241
of the Companies Act, 2013 on grounds of oppression and mismanagement by the Board of
Directors. The NCLT passed an order removing the Managing Director of the Company, Mr. M.
One year later, Mr. M is now a changed man and the Board of Directors want Mr. M back, as
Manager of the company. The Board of Directors seek your expert opinion as to what they should
do to get Mr. M appointed as the Manager of the Company. State your opinion, in light of the
relevant provisions of the Companies Act, 2013.

A. Mr. M cannot be appointed as the Manager of the company for a period of 5 years from the date of order of the
NCLT and the only solution available in this regard to the Board is to wait for 4 more years.
B. Mr. M can be appointed as Manager if the special approval of the Central Government is obtained.
C. Mr. M can be appointed by way of making an application to the NCLT.
D. None of the above.

Q 333 X Ltd., a foreign company along with the financial statement of FY 2020-2021 of its Indian
business operations have to file statement of related party transactions, repatriation of profits and
statement of transfer of funds with the Registrar latest by:

A. April 30,2021
B. June 30,2021
C. September 30, 2021
D. December 31, 2021

Q 334 The Tribunal while passing an order of winding up of a company, for advising the company
liquidator and to report to the Tribunal on winding up matters may direct for constitution of –

A. Audit committee
B. Advisory committee
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C. Standing committee
D. Liquidation committee

Q 335 State which statement is correct as regards the preservation of books and papers of
amalgamated company:

A. It can be disposed any time after 1 year with permission of Board of Directors of Transferee Company.
B. It can be disposed with permission of Central Government after 5 years
C. Not be disposed of without prior permission of the Central Government
D. It cannot be disposed.

Q 336 State whether, Mr. R, the director of Roma Ltd. who is already been subjected to a penalty
for default under the Companies Act, 2013, repeats such default, shall be liable for subsequent
defaults –

A. No
B. Yes, if default is committed with in period of 1 year from the date of commission of first default.
C. Yes, if default is committed with in period of 1 year from the date of order passed by NCLT
D. Yes, if default is committed with in period of 3 years from the date of order imposing such penalty passed by
the Adjudicating officer.

Q 337 Minimum Average Maturity Period prescribed for ECB raised for working capital purposes
or general corporate purposes under the ECB framework is:

A. 1 year
B. 5 year
C. 7 year
D. 10 year

Q 338 X Ltd. Submitted an application on 31st August, 2020 for renewal of certificate to Central
Government for acceptance of foreign contribution under FCRA, 2010, shall be renewed latest by:

A. 30th September 2020

B. 29th November 2020
C. 28th February 2021
D. 31st July 2021

Q 339 A meeting of committee of creditors shall quorate if members of the CoC

representing……………. are present either in person or by video/audio means:

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A. at least thirty three percent of the voting rights
B. at least Fifty one percent of the voting rights
C. at least sixty six percent of the voting rights
D. at least ninety percent of the voting rights

Q 340 Any director or any other employee of a company, who had entered into or authorized the
contract or arrangement in violation of the provisions of section 188 shall,—
(i) in case of listed company , be liable to a penalty of ₹ ………….
(ii) in case of any other company, be liable to a penalty of ₹ ……………… (SELF DRAFTED)

A. 10 Lakhs, 5 Lakhs
B. 20 Lakhs, 10 Lakhs
C. 10 Lakhs, 15 Lakhs
D. 25 Lakhs, 5 Lakhs

Q 341 Limit of yearly remuneration payable shall not exceed (in rupees) in Case of other director, if
effective capital is ₹ 200 crores. (SELF DRAFTED)

A. 12 Lakhs
B. 20 Lakhs
C. 24 Lakhs
D. 10 Lakhs

SPACE FOR NOTES

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“SOLUTIONS”
SN Reasons
279 Refer Section 244 & 245 - For filing application for class action, 5 members were eligible and also
A
for filing application u/s 244 of the Companies Act, 2013, 8 members were eligible.
280 Refer Section 242- The decision of tribunal for termination of agreement made by Balfor Ltd. with
Mr. Dev can be considered as valid. Also, the decision of setting aside the contract of transfer of
C
property, can be considered as valid as such transfer was made within 3 months before the date of
making application to the tribunal.
281 Prior approval of Director of Serious Fraud Investigation Office would have been sufficient for Mr.
C Vaibhav and maximum amount of fine that could be levied on Mr. Daya is ₹ 1,40,000.(Authors’ note
Penalty should be as per Section 447 ,although answer will differ)
282 Refer Section 212 -Yes, as such notes constitute valid evidence to be used against Mr. Arjun and Mr.
D Ramanuj would have forwarded the copy of arrest order along with the document containing notes
to the Serious Fraud Investigation Office.
283 B Refer Section 218- 9th November 2020 and 25th November, 2020, respectively.
284 Refer 206 (7) - The Company and every defaulting officer shall be punishable with a fine up to ₹
A 1,00,000 and in case of continuing failure, with an additional fine up to ₹ 500 for every day after the
first during which the failure continues.
285 Section 209 -The Registrar is required to return such documents back to the company after making,
C
if considered necessary, the copies of them.
286 Section 197 - Board Resolution increasing the remuneration to 12% needs to be authorised at the
C
General Meeting subject to Schedule V.
287 Section 218 The Registrar may, by issuing a written notice, call the ex-directors for seeking the
B
requisite information.
288 Section 212 - SFIO will proceed with its investigation while Income-tax authorities shall keep on
C
hold its investigation.
289 C 3 million (Refer ECB for start-up)
290 B Resolution professional (Duties of a RP)
291 A Yes, if the resolution plan is contravened.
292 Quarterly submission of report by company liquidator with respect to the progress of winding up of
C
the company to the Tribunal (Refer Section 288)
293 INR 25,000
D
294 Refer Section 272 Yes, as he is holding shares for 6 months or more prior to presenting such petition
D for winding up.

295 Refer Section 272 (60 days), Section 273 (90 days) 4th June, 2020 and 4th July, 2020 respectively
B
296 Refer Section 273 Valid, if in the opinion of the tribunal, there were some special reasons, recorded
in writing, for not giving notice as well as opportunity for making representations, if any, to Towe
Ltd.
C

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SN Reasons
297 Refer Section 285- Mr. Kishan shall not be liable to pay any amount, Mr. Dhawan and Mr.
C
Tanmay shall be liable to pay Rs. 13 lakh and Rs. 10 lakh, respectively.
298 Rs. 27 lakh and Rs. 98,750, respectively.(Refer Section 332 – 12,00,000 x 5% x 11/12 = 55,000 and
C
15,00,000 x 5% x 7/12 = 43,750 Adding both 55000+43750 = 98750
299 by way of gift of goods accompanied by a declaration by the exporter that they are not more than ten
D lakh rupees in value (Refer Exemptions under Export regulation under FEMA as value is five lakhs
not ten lakhs)
300 A 3,twice (Refer Section 454A)
301 B 25000 (Refer Schedule III current account FEMA)
302 B 66%
303 (Refer Section 230(2) -That the fund requirements of HPL after the corporate debt restructuring as
approved shall conform to the liquidity test, based upon the estimates provided to the auditor by the
C
Board of HPL.

304 B (Refer Section 230(4) Within one month from the date of receipt of such Notice.
305 (Refer Section 230 (4) Not less than 5% of the total outstanding debt as per the audited financial
A
statements as on 31.03.2019 of HPL.
306 Refer Section 230(5)- Representation needs to be made within 30 days from the date of receipt of
C
notice.
307 Refer Section 230 (7) The accounting treatment, if any, proposed in the Scheme of Compromise by
C HPL is in conformity with the prescribed accounting standards.

308 In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest
more than 20% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or
B
the Robotics Toys must have contributed in generation of 20% of the total income of Golden Rays
during the previous Financial Year.
309 D Within 90 days from the date of the Order imposing the penalty.(Section 14 FEMA)
310 Prior permission is not required for remittance of commission upto USD 30,000. For balance
commission of USD 12,000, permission of RBI is to be sought by A Limited. (Refer Schedule III
B
Current Account Transaction)

311 C Rs. 8,00,000 (Rule 4 of Nidhi ) Not exceeding 20 % of gross income i.e. 20% of 40 Lakhs
312 latest by 6th March 2019 (Refer Section 15 IBC i.e. immediately means not later than three days from
A the date of his appointment)

313 B 3 years (Refer ECB guidelines)

314 C Fourteen days
315 NCLT cannot extend the period by another 10 days because such extension shall not be granted
D
more than once. (Refer Section 12 IBC)
316 D Audit Committee, Board of Directors
317 All acts are valid as per section 8 of the SEBI Act, 1992.

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SN Reasons
318 Refer Section 252 Yes. Application can be filed on an appeal of HBC bank Ltd. (being a creditor) before
D Tribunal under the Companies Act for taking Heights Private Ltd. into register of companies, and then may
file an application of initiation of CIRP under the capacity financial creditor, under the Code.
319 D Refer Section 12A of IBC Yes, withdrawal is possible by approval of 90% of voting shares of the CoC.
320 C 2nd December 2020 (within 14 days) Section 10 of IBC
321 A Within 7 days of receipt of such notice from NCLT -Section 10 of IBC
322 C Refer Section 29A - Mr. Jeet is a connected person, so not eligible as Resolution applicant
323 Refer Section 177 Yes, provided the company has a website. The act of reprimanding, Mr. Tapan,
A
can be considered as valid as the complaints filed by him were frivolous in nature.
324 No, as reasons are required to be given in order to support the recommendations for investigation
A
made by him. Special resolution was required to be passed by Retq Ltd.
325 Yes, the application was filed by adequate number of members. Central Government shall
D mandatorily order for investigation in case of order passed by Tribunal and it holds discretion for
ordering investigation in case of report received from the registrar.
326 No, opportunity of being heard is not required to be given in case of ROC but in case of tribunal, it
D
is required to be given.
327 Yes, it can considered as a material subsidiary of Wrim Ltd. and as Mr. Suresh is on the board of
A Troy Ltd., statutory requirements are satisfied and it will not violate the law if no more independent
director of Wrim Ltd. is appointed on the board of Troy Ltd.
328 2 directors and one more independent director, apart from Mr. Suresh, should have attended the
meeting of audit committee to constitute a valid quorum present for the meeting and the audit
D
committee should have reviewed in particular, the investments made by Troy Ltd. Refer regulation
18 LODR
329 D Refer Regulation 27(2) LODR- 15th August, 2020 and yes, it can be submitted in unaudited form
330 3 more independent directors are required and no more woman director is required to be appointed,
A
as Mrs. Meena is already there. (Regulation 17 LODR)
331 Yes, special resolution in the general meeting needs to be passed for disposing of 6% equity holding
A in Troy Ltd. However, for selling 22% assets of Troy Ltd., special resolution shall not be required-
Refer Regulation 24 LODR
332 D None of the above.
333 C September 30, 2021 (within 6 months from the closure of FY)
334 B Advisory committee (Refer Section 287 of companies Act 2013)
335 Not be disposed of without prior permission of the Central Government (Section 239 of Co.Act
C
2013)
336 Yes, if default is committed with in period of 3 years from the date of order imposing such penalty
D
passed by the Adjudicating officer.(Refer Section 454A of Co.Act 2013)
337 D 10 year (Refer ECB guidelines)
338 B 29th November 2020(Refer Section 16 FCRA)
339 A at least thirty three percent of the voting rights (Quorum of CoC)
340 D 25 Lakhs,5 Lakhs (Refer Section 188 )
341 C Refer Schedule V Remuneration

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“MCQs for NOV 2021”

“QUESTIONS”
NOV 2021 RTP

Case Scenario 1

Sukesh Web Developers Ltd. (for short SWD) is a public company, incorporated in December,
2018. Sukesh is the Managing Director of the company. The company is engaged in the business of
developing Websites, Mobile App, providing of On-line Platform for conducting Business Meetings,
Class Room Teachings and providing of pre-filled educational Tablets as per syllabus prescribed by
the respective Central / State Boards, of Classes 6th to 12th.
At the time of incorporation, the company was formed by 7 members, who were actually classmates
when they all were doing B.Tech (Electronics) from IIT, Mumbai. Initially they contributed the
capital from their own resources and the paid up capital at the time of incorporation was ₹ 50
crore. Among the 7 members, 3 members occupied the position of director in the company. In
addition to this, 2 other persons were also appointed as Independent Directors. One is a Professor
(Finance) in IIM, Ahmedabad and another is an Advocate on Record at Supreme Court.
The popularity and user friendly features of On-Line Products, increased the demand, and the
turnover of the company dramatically increased from ₹ 100 crore in March 2019 to ₹ 350 crore by
the end of March 2020.
The Company Secretary in full time employment of the company, apprised the Board that,
company should now appoint at least one woman director on the Board. The Board agreed and the
name of Sudha (the wife of Sukesh) was proposed and approved in the General Meeting of the
company. Sudha was appointed as woman director in the Board of the Company with effect from
10th April, 2020.
Now, the Board of SWD consists of the following persons:

S. No. Name Designation Group

1. Sukesh Managing Director Promoter
2. Rahul Director Promoter
3. Parmeshwar Director Promoter
4. Kamal Independent Director Professor (Finance)
5. Damodar Independent Director Advocate on Record at Supreme Court
6. Sudha Woman Director Wife of MD

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During this pandemic situation, Rahul, one of the member and director in the company
passed away due to Corona in March 2021. Rahul was the key person in procuring new
business relations and was having good connections with various schools, in which the
company’s pre - loaded educational Tablets were being supplied. It was a great set-back to
the company.
However, the company went on doing business inspite of the fact that the minimum
requirement of members in SWD reduced from 7 to 6. The Company Secretary apprised to
the Board that Arundhati (the wife of deceased Rahul) has applied for transmission of
shares in her name, which were held in the name of Rahul. The Board accepted the
transmission request, and the Board Secretariat of the company entered the name of
Arundhati as member of the company. Now again the minimum requirement of seven
members of this public company fulfilled.
During the Financial Year 2020-21 the five meetings of the Board of Directors were held, but
Sudha, being a woman director, never ever attended any meeting of the Board of Directors
due to her shy nature and always sought leave of absence of the Board. The Company
Secretary apprised in the Board Meeting held in April 2021, about the vacation of the post
of woman director on account of continuous absence of Sudha in the Board Meetings held
during the FY 2020-21 and requested the Board to again propose for the appointment of
new woman director and also other director (in replacement of the demise of Rahul, Ex-
Director). The Board accepted the recommendation of the Company Secretary and was
advised to move ahead to complete the legal formalities.

Based on the above scenario, answer the following questions in the light of the Companies
Act, 2013:

Q 342 State the legal position w.r.t. appointment of woman director in the Board by the SWD:

A) It is not required to appoint any woman director, since the company is not a listed entity.
B) It is not required to appoint woman director, since the paid-up capital of the company is only ₹ 50 crore, which
is below the threshold limit of ₹ 100 crore.
C) It is required to appoint at least one woman director, since the turnover of the company has crossed ₹ 300
crore, which is actually ₹ 350 crore as on 31st March, 2020.
D) If both the conditions i.e. paid-up capital of ₹ 100 crore or more; and turnover of ₹ 300 crore or more, are
fulfilled, then SWD is required to have at least one woman director.

Q 343 The company is not a listed entity, even then it has appointed two Independent Directors.
Why?

A) By appointing independent director(s), the company is benefitted of their expertise and wisdom.
B) The company was required to appoint independent directors since its paid-up capital is ₹ 50 crore, (at the time
of incorporation) which is above the threshold limit of ₹ 10 crore.
C) Appointing of Advocate on Records at Supreme Court as Independent director is beneficial to address the legal
issues.
D) The company was used to get the financial advice, hence it appointed a Financial Professional as an
Independent Director.

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Q 344 In the above case, Sudha (the wife of Sukesh, Managing Director) was appointed to fill up the
vacancy of woman director. Whether appointment of relative of Managing Director to fill up the
vacancy of woman director is permissible?

A) Sudha is the wife of MD, and hence cannot be considered to be appointed as woman director. So her
appointment is not valid.
B) There is no prohibition/ restriction in the Companies Act, 2013 to appoint any woman to fill up the vacancy of
woman director even she is a relative of any of the director.
C) Woman director should be chosen only from the Databank maintained by the Indian Institute of Company
Affairs (IICA), New Delhi.
D) Sudha should immediately break the relationship with her husband, who is MD in the company, if she want to
continue as woman director, in order to maintain the independent status.

Q 345 Sudha being a woman director did not attended any meeting during FY 2020 -21. However
she always sought leave of absence of the Board. Sudha argued that when leave of absence have
been sought, she may continue to be on Board by holding the Office of Woman Director. What is
your opinion?

A) No, a woman director is given a special treatment under the Law, so the post of woman director shall not be
treated as vacant.
B) Since in the given she has sought leave of absence of the Board, so the office of woman director shall not be
treated as vacant.
C) The office of a director shall become vacant in case he absents himself from all the meetings of the Board of
Directors held during a period of 12 months with or without seeking leave of absence of the Board.
D) In option (c) above, words used are ‘he’ and ‘himself’, which are used for a male person, so the intention of the
law makers are very clear and the office of woman director cannot be treated as vacant. If the intention of the
law maker would have been to include a woman director, the words in the above sentence [Option C] should
have been used as ‘she’ and ‘herself’.

Case Scenario 2

Vivaan Contractors Limited, a public company incorporated under the Companies Act, 2013 is
engaged in engineering and construction business. Over the past 2 years, the company has been
struggling to pay dues to its various stakeholders such as lenders of working capital, suppliers of
material, subcontractors, etc. The amount lend by the lenders for working capital is secured by first
charge over current assets including receivables and stock and fixed assets are provided as
collaterals. Mr. Ravi, CFO being an authorized person to make an application, files for Corporate
Insolvency Resolution Process (CIRP) to the Adjudicating Authority at Mumbai on 29th March
2020. The Adjudicating Authority admitted the application and passed an order for initiating CIRP
under section 10 of the Insolvency and Bankruptcy Code (IBC) and accordingly declared
moratorium under section 14 of the Code. The order passed by the Adjudicating Authority did not
provide for the appointment of Interim Resolution Professional (IRP) and thus, Mr. Rahul was

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appointed as IRP by a separate order dated 30th April 2020. The said order copy was however
received to Mr. Ravi on 3rd May 2020 and on the very same day Mr. Rahul was informed
regarding his appointment. Subsequently, Mr. Rahul made a public announcement and took over
the control of the assets of the Corporate Debtor.

Q 346 As per the given facts in the case scenario, in which category the lenders for working capital
would fall for the constitution of Committee of Creditors?

A) Financial Creditors
B) Secured Creditors
C) Either (a) or (b)
D) Both (a) and (b)

Q 347 What amongst the following is necessary for filing an application for CIRP by the authorized
representative of Vivaan Contractors Limited?

A) Resolution passed by all the directors approving the filing of application.

B) Special resolution passed by shareholders of Corporate Debtor approving the filing of application.
C) Resolution passed by all the directors followed by approval through special resolution of shareholders of the
Corporate Debtor.
D) Ordinary resolution passed by shareholders of Corporate Debtor approving the filing of application.

Q 348 Which date shall be considered as the insolvency commencement date for the purpose of
computing the time period for Corporate Insolvency Resolution Process?

A) 29th March 2020

B) 30th April 2020
C) 3rd May 2020
D) 6th May 2020

Q 349 Which date shall be the last date of the completion of the Corporate Insolvency Resolution
Process including any extension granted under section 12 of the Code.

A) 21st February 2021

B) 25th March 2021
C) 24th September 2020
D) 28th March 2020

Q 350 Under the case scenario, by which date Mr. Rahul, Interim Resolution Professional should
have the made the public announcement under section 15 of the Code.

A) 3rd May 2020

B) 30th April 2020
C) 6th May 2020
D) 5th May 2020

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Independent MCQs

Q 351 Pankaj Nidhi Limited, incorporated under section 406 of the Companies Act, 2013. Pankaj
Nidhi Limited wants to enter into an agreement for acquiring another company by purchase of its
securities. Now the management of the Pankaj Nidhi Limited is in dilemma with respect to the
requirement of entering into such an agreement. Pankaj Nidhi Limited approached you to provide
with the best course of action considering the provisions of the Companies Act, 2013.

A) As per the Nidhi Rules, 2014, Nidhi company can enter into an agreement for acquiring other company by
purchase of its securities provided the Nidhi company has passed a special resolution in its general meeting or
have obtained the previous approval of the Regional Director having jurisdiction over such Nidhi.
B) As per the Nidhi Rules, 2022, Nidhi company can enter into an agreement for acquire or purchase securities of
any other company or control the composition of the Board of Directors of any other company in any manner
whatsoever or enter into any arrangement for the change of its management
C) As per the Nidhi Rules, 2014, Nidhi company can enter into an agreement for acquiring other company by
purchase of its securities provided the Nidhi company has passed a special resolution in its general meeting
and have obtained the previous approval of the Registrar of Companies (Roc) having jurisdiction over such
Nidhi.
D) As per the Nidhi Rules, 2014, Nidhi company can enter into an agreement for acquiring other company by
purchase of its securities provided the Nidhi company has passed a special resolution in its general meeting or
have obtained the previous approval of the Registrar of Companies (Roc) having jurisdiction over such Nidhi.

Q 352 Adheera Limited, a company incorporated under the Companies Act, 2013, has not entered
into significant accounting transaction during the last one financial year. Accordingly, the
management of the company was thinking to obtain the status of the dormant company under
section 455 of the Companies Act, 2013. The Registrar on the filings made during the last financial
year found some irregularities and ordered inspection of the books of accounts under section 207 of
the Companies Act, 2013. Now the management of the Company consults you, to advise on the
application to be made to Registrar for obtaining the status of the dormant company considering
the provisions of the Companies Act, 2013.
(1) The company shall be able to obtain the status of the dormant company after passing special
resolution to this effect in the general meeting of the company.
(2) The company shall not be able to obtain the status of the dormant company as company shall
be inactive i.e. not carrying significant accounting transactions during the last 2 financial years.
(3) The company shall be able to obtain the status of the dormant company after issuing notice
to all the shareholders of the company for this purpose and obtaining consent of at least 3/4th
shareholders in value.
(4) The company shall not be able to obtain the status of the dormant company as inspection u/s
207 of the Act is going on against the Company.

A) Only (3)
B) Either (2) or (4)
C) Either (1) or (3)
D) Both (2) and (4)

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Q 353 Kiara Limited holds 77% of the shares of Sunny Limited. Kiara Limited makes an
application for merger of Holding and Subsidiary Company under section 233 – Fast Track Merger
of the Companies Act, 2013. The legal counsel of Kiara Limited states that company cannot apply
for merger under section 233 of the said Act. He further stated that company shall have to apply for
merger as per section 232 of the Act i.e. Merger and Amalgamation of Companies. State the correct
statement in terms of the validity of the difference in the opinion of the legal counsel.

A) Opinion of the legal counsel of Kiara Limited is valid as the provisions given for fast track merger in section
233 can be made between only small companies.
B) Opinion of the legal counsel of Kiara Limited is invalid as merger shall be possible only as per section 233
between Holding and Subsidiary Company.
C) Opinion of the legal counsel of Kiara Limited is valid as the provisions given for fast track merger in section
233 can be made between Holding and wholly owned subsidiary.
D) Opinion of the legal counsel of Kiara Limited is invalid as merger of Holding and Subsidiary company is
possible under both section 232 and section 233.

Q 354 A meeting of committee of creditors shall quorate if members of the CoC representing --------
---are present either in person or by video/audio means:

A) at least thirty three percent of the voting rights

B) at least Fifty one percent of the voting rights
C) at least sixty six percent of the voting rights
D) at least seventy five percent of the voting rights

Q 355 Vandana Operations Limited has reported a net profit of ₹ 2 crores for the half year ended
30th September 2020. During the previous financial year 2019 -2020, the company has paid up
share capital of ₹ 40 crore and outstanding loan from bank amounting to ₹ 80 crores on the date of
last audited financial statement. Whether the company is required to appoint internal auditor for
the current financial year ending on 31st March 2021?

A) Yes, the company is required to appoint internal auditor for FY ending on March 2021 as the net profit of the
company is more than ₹ 1 crore.
B) Yes, the company is required to appoint internal auditor for FY ending on March 2021 as the outstanding loan
during the previous year ending on March 2020 of twenty five crore rupees.
C) Yes, the company is required to appoint internal auditor for FY ending on March 2021 as the paid up share
capital of the company is more than 10 crore.
D) No, the company is not required to appoint internal auditor for FY ended March 2021 as the paid up share
capital of the company is less than ₹ 50 crore during the preceding financial year.

Q 356 The Committee of Creditors (CoC) of Ashoka Cement Limited under the Corporate
Insolvency Resolution Process (CIRP) have passed a resolution allowing the Resolution Professional
(RP) of Company for initiating the process of liquidation before NCLT under section 33 of the
Insolvency and Bankruptcy (Amendment) Code, 2019. Accordingly, the RP was appointed as

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liquidator of the Ashoka Cement Limited. While forming the liquidation estate, the liquidator was
in dilemma regarding the inclusion and exclusion of the assets forming part of the liquidation
estate. You as a Qualified Chartered Accountant are required to advise the liquidator regarding the
issues faced by him with respect to the exclusion to be made in the liquidation estate of Ashoka
Cement Limited as per the provisions of the Code.
1. Assets in security collateral held by financial service providers.
2. Any asset of the corporate debtor in respect of which a secured creditor has relinquished
security interest.
3. Assets owned by a third party which are in the possession of the corporate debtor.
4. Assets subject to the determination of ownership by the court or authority.

A) Only (3)
B) Both (2) and (4)
C) Only (1)
D) (1) and (3)

Q 357 Anna, a foreign citizen has made donated variety of articles in kind, to various individuals of
Indian residence for their personal use. When shall such donation of articles in kind be excluded
from the definition of Foreign Contribution considering the provisions of Foreign Contribution
(Regulation) Act, 2010.

A) If the market value, in India, of such article, on the date of such gift, is more than₹ 1,00,000 but less than
5,00,000.
B) If the market value, in India, of such article, on the date of such gift, is more than₹ 500,000 but less than
10,00,000.
C) Any donation in kind given for personal use is always excluded.
D) If the market value, in India, of such article given for personal use, on the date of such gift, is not more than ₹
1,00,000.

October 2021 MTP

CASE SCENARIO 1
The NCLT made an order in favour of a company named as Ananya Computers Ltd (plaintiff
company) on 5 th March, 2020. He received the order on 7th March 2020. However, there was some
clerical mistake, which can apparently be seen by reading few lines of the order mentioned at the
last page under the head ‘Conclusion and decision’.
The Plaintiff company approached the NCLT on 10th April, 2021 for rectification of such mistake.
However, Sunayana Electronics Ltd (the defendant company) had already made an appeal before
the NCLAT on 25th March, 2020.
The Appellate Tribunal gave a decision in favour of the Sunayana Electronics Ltd and reversed the
decision given by the Tribunal.
Ananya Computers Ltd is now planning to move to the Supreme Court, since the matter involves
the question of law.

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Based on the above scenario, answer the following questions:

Q 358 There was an apparent mistake in the order given by the Tribunal in favour of Ananya
Computers Ltd., which was brought in the notice of the Tribunal. Whether Tribunal can amend its
order passed on 5th March, 2020:

A) Once the order has been made Tribunal cannot amend it.
B) Only the Appellate Tribunal can amend or rectify the order made by the Tribunal .
C) The Tribunal may amend / rectify its own order, which is apparent from the record within a period of two years
from the date of the order.
D) Only the High Court have to powers to amend/ rectify the orders passed by the Tribunal

Q 359 As the order of the Tribunal has been appealed by before the NCLAT on 25th March, 2020
under dispute by Sunayana Electronics Ltd, whether such apparent mistake can be rectified by the
NCLT:

A) Yes, since it is a mistake apparent so it can be rectified at any time

B) Yes, with the permission of the Appellate Tribunal at any time
C) No, such apparent mistake can not be rectified, as appeal has been already been preferred in this case.
D) No, neither the Tribunal nor the Appellate Tribunal can rectify such mistake

Q 360 The appeal of the order of the Tribunal can be made before the Appellate Tribunal latest
by……………

A) Latest by 4th April, 2020

B) Latest by 6th April, 2020
C) Latest by 7th April, 2020
D) Latest by 21st April, 2020

Q 361 What can be the time period for disposal of the appeal filed by defendant in the given case
scenario:

A) the appeal should be disposed of as expeditiously as possible latest by 25th May 2020 months from the date of
its presentation
B) the appeal should be disposed of as expeditiously as possible latest 25th June 2020 from the date of its
presentation
C) the appeal should be disposed of as expeditiously as possible latest 25th July 2020 from the date of its
presentation
D) the appeal should be disposed of as expeditiously as possible latest 25th August 2020 from the date of its
presentation

Q 362 Ananya Computers Ltd aggrieved from the order of the Appellate Tribunal can file appeal
to the Supreme Court

A) within 30 days from the date of receipt of the order of the Appellate Tribunal
B) within 60 days from the date of receipt of the order of the Appellate Tribunal
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C) within 75 days from the date of receipt of the order of the Appellate Tribunal
D) within 90 days from the date of receipt of the order of the Appellate Tribunal

Independent MCQS

Q 363 During the investigation, Inspector has reasonable ground to believe that the books and
papers of a company, are likely to be destroyed. He filed application for the same to the special
court and seized such books and papers. State which of the following statement is valid in terms of
the returning of such books and papers of a company by the Inspector:

A) It can be returned any time after the investigation is over

B) within 180th day after such seizure
C) After 180th day any time
D) Anytime once the inspector is satisfied that no such the books and papers are likely to be destroyed.

Q 364 An amalgamation has been proposed between Magnum Limited and Micro Limited. A
meeting of members of Micro Limited was convened under the orders of the Tribunal for the
purpose of considering the scheme of amalgamation. The company has a paid up share capital of ₹
1.50 crore consisting of 15,00,000 shares of ₹ 10 each. The meeting was attended by 500 members
holding 10,00,000 shares. 300 members holding 7,00,000 shares in the aggregate voted for the
scheme. 150 members holding 2,00,000 shares in aggregate voted against the scheme. 50 members
holding 1,00,000 shares walked out of the meeting in protest from voting. Choose the correct
statement regarding the validity of the approval of the Scheme based on the provisions of the
Companies Act, 2013.

A) The scheme has not been validly approved because the requisite majority in number has not voted in favour
of the scheme
B) The scheme has not been validly approved because the members who voted in favour of the scheme do not
hold 7,50,000 shares (3/4ths in value)
C) The scheme has not been validly approved because 50 members walked out in protest
D) The scheme has been validly approved.

Q 365 Mr. Rashtra, one of the parties to the proceedings applied to the Tribunal, for referring the
matter pertaining to such proceedings to the Mediation and Conciliation Panel. The Mediation and
Conciliation Panel shall dispose of the matter referred to it within a period of -------------------

A) two months from the date of such reference

B) three months from the date of such reference
C) three months from the date applied to the Tribunal for reference
D) Six months from the date of applied to Tribunal

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Q 366 The Adjudicating Authority may allow the withdrawal of application admitted under section
7 or section 9 or section 10, on an application made:

A) By the Interim Resolution Professional

B) By the applicant with the approval of sixty-six per cent voting share of the committee of creditors.
C) By the applicant with the approval of seventy-five per cent voting share of the committee of creditors.
D) By the applicant with the approval of ninety per cent voting share of the committee of creditors.

Q 367 Dhruv, is a pilot in Bangkok airways. He flies for 15 days in a month and thereafter takes a
break for 15 days. During the break, he is accommodated in ‘base’, which is normally the city
where the Airline is headquartered. However, for security considerations, he was based at Delhi.
During the financial year, he was accommodated at Delhi for 182 days. Determine the legal position
as regards the residential status of Dhruv under the given situation:

A) Dhruv cannot be considered to be a Person Resident in India.

B) Dhruv can be considered to be a Person Resident in India due to her stay for 182 days in India
C) Dhruv cannot be considered to be a Person Resident in India due to her stay for less than 183 days in India.
D) Dhruv can be considered to be a Person Resident in India due to her stay in Delhi for security consideration.

Q 368 State amongst the following options, the correct composition of the Board of Directors of
ABC Ltd, the Listed entity:

A) Combination of executive and non-executive directors.

B) Combination of executive and non-executive directors with not less than 50% of the BOD
C) Executive directors with at least one-woman director
D) Executive and non-executive directors (not less than 50% of the BOD) with at least one-woman director.

Q 369 If the Chairperson of the Commission (CCI) , is unable to attend a meeting of the
Commission, who shall preside over the meeting in his absence?

A) Any authorised person appointed by Member present at the meeting

B) Member elected by others members present at the meeting
C) Secretary of the CCI
D) the seniormost Member present at the meeting

Q 370 Where an act of parliament does not expressly specify any particular day as to the day of
coming into operation of such Act, then it shall come into operation on the day on which:

A) It receives the assent of the President

B) It receives the assent of the Governor General
C) It receives assent of both the houses of Parliament
D) It receives assent of the Prime Minister

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November 2021 MTP

CASE SCENARIO 1

Quality Wines Ltd. is a public company engaged in the manufacturing of bears and wines. Its
factory premises and registered office, situated at Industrial Area of Jaipur. It supplies the wines to
the retails merchants, who have license to operate and sale of wine from the respective State
Governments.
However, the company was not maintaining the transparency in its production and turnover of
wine business and fabricated figures were being recorded in the books of accounts and annual
return submitted to the Registrar.
Many a times the company transported some cartons without invoicing them to other States and in
the mid- way, were caught red-handed by the Police and next day became prominent headlines for
news papers and TV Channels.
At the Rajasthan Gujarat Border, the Police searched and seized 10 trucks carrying wines without
invoice, within a period of one month. In the mean time, the Excise Department also got altered.
This mal-practices came in to the knowledge of the Registrar. The Registrar after observing the
appropriate formalities along with the police force, entered in to the premises and seized the books
and relevant papers.
The income tax returns filed by the company during the last 3-4 years revealed that the company is
continuously showing losses in the books of accounts, on account of the decline the sales volume.
However, the other companies in the similar business were showing an increasing trend.
One of the person who was earlier an employee in the company in the account department made a
written complaint directly to the Central Government about the mal-practices prevailing in the
company such as scaling up the number of employees whereas no actual recruitment was done, not
paying the excise duty on the production of wines by fabricating the production volume and other
financial irregularities. The Central Government assigned the investigation into the affairs of the
said company to the Serious Fraud Investigation Office (SFIO).
The Registrar, who have earlier seized the books of the company was asked to submit all such
records to SFIO.

Based on the above scenario, answer the following questions:

Q 371 When the Registrar can exercise the right of search and seizure:

A) The Registrar do not have the right of search and seizure.

B) Where the Registrar have reasonable ground to believe that the books and papers of a company are likely to
destroyed by the company.
C) Where the Registrar have reasonable ground to believe that the books and papers of a company are likely to be
destroyed by the company and after obtaining an order from the Special Court for the seizure of such books
and papers can enter in the premises and seize such books and papers.
D) The Registrar can enter and seize the books and papers without obtaining permission of any court.

Q 372 In the given case the Registrar can keep the seized books and papers with him for the period:

(A) Not later than 45th day

(B) Not later than 90th day
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(C) Not later than 135th day
(D) Not later than 180th day

Q 373 When an investigation into the affairs of the Quality Wines Ltd. can be made by SFIO:

(A) When the Police seized the trucks carrying cartons of wines without invoice
(B) When the ex-employee of the company made a written complaint on the financial irregularities.
(C) When there was loss of revenue
(D) The Central Government may assign the task of investigation of any company to SFIO, if it is in the public
interest.

Q 374 Can SFIO demand from the Registrar to hand over all the books so seized from the
company:

(A) The Registrar has initiated first, hence he will retain the books till his investigation is over.
(B) The Registrar and SFIO will carry out the investigation simultaneously.
(C) Once the case has been assigned by the Central Government to the SFIO, not other investigating agency of
Central or State Government shall process with the investigation and the concerned agency shall transfer the
relevant documents and records in respect of such offences under this Act to Serious Fraud Investigation
Office.
(D) The SFIO may demand only the photo copies of the documents so seized by the Registrar.

Q 375 Whether SFIO can gather information from the Registrar:

(A) The Registrar shall not part with any information with the SFIO.
(B) Any investigating agency shall provide all the relevant information or documents to the SFIO in respect of
such offence.
(C) The Registrar before providing any information to such offence, shall first inform the company.
(D) Since the information may be confidential and competitions may take undue advantages, hence the sharing of
information should be avoided.

CASE SCENARIO 2

The Tribunal on an application made by the Central Government under section 271(c) of the
Companies Act, 2013, made a winding up order of Chal Chaiya-Chaiya Entertainment Co. Ltd.,
since the company was formed for purpose of making movies, having adult contents and exploiting
the youth under the minority age, to act in the film making, which is not permitted under the
existing Indian Laws.
The Tribunal appointed Mr. X, as a liquidator under section 275 of the Act, for submission of
report on the details of Assets of the Company. Mr. X included in his report his opinion that fraud
has been committed by an officer of the company in relation to the company since the formation
thereof and any other matters which, in his opinion, it is desirable to bring to the notice of the
Tribunal.
And also made a report on the viability of the business of the company which, in his opinion, are
necessary for maximising the value of the assets of the company.
Mr. Raman a creditor of the company wanted to inspect the above report submitted under this
section. Since he was not available there, so he authorised Mr. Agent to inspect the report and take
extracts therefrom on payment of the prescribed fees .
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Based on the above scenario, answer the following questions:

Q 376 In the given scenario of the winding up of the company ordered by the Tribunal, who
amongst the following shall be appointed as company liquidator

(A) Official Liquidator & Insolvency Professional

(B) Provisional Liquidator & Company Liquidator
(C) Company Liquidator & Official Liquidator
(D) Insolvency Professional, Company Liquidator & Official Liquidator

Q 377 On appointment of Mr. X as a Company Liquidator in the given case, such liquidator shall
file a declaration disclosing his conflict of interest or lack of independence within a period of:

(A) 7 days
(B) 10 days
(C) 15 days
(D) 30 days

Q 378 Who shall apply to Tribunal for monitoring of progress of liquidation proceedings by the
Company Liquidator :

(A) The Company liquidator himself

(B) creditors
(C) Contributories
(D) winding up committee

Q 379 Who shall be comprising winding up committee under the Companies Act, 2013 to assist the
Company liquidator in performance of winding up functions:

(A) Official Liquidator attached to the Tribunal

(B) nominee of secured creditors
(C) a professional nominated by the Tribunal
(D) All of the above

Q 380 Who is entitled to inspect the report submitted in accordance with section 281 of the
Companies Act, 2013 and take copies thereof :

(A) Any person

(B) Creditor
(C) Agent of creditor
(D) Both (b) and (c)

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Independent MCQS

Q 381 ABC Private Limited is a company with 10 shareholders. Mr. X, a member holding less than
1/10th of the share capital applied to the Tribunal for relief against oppression and
mismanagement. State the correct answer according to the provisions of the Companies Act, 2013.

(A) Mr. X singly cannot apply for relief against oppression and mismanagement.
(B) Mr. X holding less than 1/10th of share capital, cannot apply for relief against oppression and mismanagement
(C) Mr. X , being single and holding less than 1/10th of share capital, therefore cannot apply for relief against
oppression and mismanagement
(D) Mr. X can apply for relief as condition of the requirement of holding of 1/10th of the total number of members
is satisfied.

Q 382 Somnath Ltd. proposed a scheme of compromise and arrangement with the creditors and
members of the company on 22.03.2021. On the application, Tribunal ordered for the meeting to be
conducted. Majority agreed to the scheme and was sanctioned by the Tribunal by an order passed
on 23.4.2021 indicating a date 1.05.2021 for making effective the scheme. Identify the correct
effective date for the said scheme

(A) From the proposed date of the scheme

(B) From the date of application filed before the Tribunal
(C) From the date of order passed by the Tribunal
(D) From the appointed date given in the Scheme

Q 383 The Board of Directors of Highlight Ltd. proposes to appoint Mr. Bright, as the valuer for
carrying out valuation of the immovable property pertaining to the company. He was having a
post-graduate degree from a recognized University in India. State on the validity of appointment of
Mr. Bright as valuer as per provisions of the Companies Act, 2013.

(A) Appointment of Mr. Bright is valid as he is appointed by Board of Directors of Highlighted Ltd.
(B) Appointment of Mr. Bright is valid as he fulfills the eligibilities requirement.
(C) Appointment of Mr. Bright is invalid as he does not fulfills the eligibilities requirements.
(D) Appointment of Mr. Bright is invalid due no experience defined.

Q 384 Fam Company LLC, a company incorporated outside India, proposes to establish a place of
business in India. The list of the directors includes Mr. Arjun – Managing Director, Mr. Ranveer –
Director and Ms. Lavina – Secretary of Fam Company LLC. Mr. Malik and Mr. Arbaaz, resident
in India, are the persons who has been authorised by Fam Company LLC to accept on behalf of the
company service of process, notices or other documents required to be served to Fam Company
LLC. In relation to the company’s establishment, you are asked by the Fam Company LLC with
respect to whose declaration will be required to submit to the Registrar by the Company for not
being convicted or debarred from formation of companies in or outside India.

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(A) Mr. Arjun, Mr. Ranveer, Ms. Lavina Mr. Malik and Mr. Arbaaz.
(B) Mr. Arjun, Ms. Lavina, Mr. Malik and Mr. Arbaaz.
(C) Mr. Malik and Mr. Arbaaz.
(D) Mr. Arjun, Mr. Ranveer, Mr. Malik and Mr. Arbaaz

Q 385 Mr. V, brother of Mr. R , is a resident of Singapore and he owns an immovable property in
Chennai which he inherited from his father, who was a resident of India, Can Mr. V continue to
hold the property?

(A) No, he cannot hold transfer or invest In India, since he is resident outside India.
(B) Yes, he can continue to hold in India, since he is person of India Origin and the property is located In India
(C) Yes, he can continue to hold the property, since this was inherited from a person who was resident in India.
(D) Yes, he can continue to hold the property, since his brother (Mr. R) uses the property whenever he travels to
Chennai.

Q 386 The IRP appointed for M Ltd. is seeking your views on the constitution of the Committee of
creditors of M Ltd. M Ltd. does not have any financial debt other than loan obtained from Mr. A,
son of Mr. B, the managing director of M Ltd. Considering the above, identify the appropriate
constitution of the committee of creditors out of the following:

(A) Mr. A, 18 largest operational creditors, 1 representative of all workmen

(B) 18 largest operational creditors, 1 representative of workmen and 1 representative of employees.
(C) Only Mr. A since he is the only financial creditor
(D) 18 largest operational creditors, 1 representative of workmen and 1 representative of employees and the
resolution professional.

Q 387 Intimation of receipt of foreign contribution shall be given:

(A) Within nine months of the closure of the financial year

(B) Within six months of the closure of the financial year
(C) Within nine months of the date of receipt of the amount
(D) Within six months of the date of receipt of the amount

Q 388 In September 2016, Mr. P, went to USA, London and Germany on a month long business
trip. For this trip he got foreign exchange of US $ 50,000 from an authorized dealer. In December
2016 he remitted US$ 50,000 to his son in Canada, who was studying there. In January 2017 he sent
his mother and wife to America for his mother’s treatment and for the purpose he remitted US$
75,000 to his younger brother, who was living there. In March 2017 his daughter got engaged and
she opted for a destination marriage to be held in May 2017, in Switzerland. While on trip to Dubai
in the March end, 2017, he spent US $ 35,000 for his daughter’s shopping in Dubai. Later, the event
manager gave an estimate of US $ 250,000 for the wedding. As per the provisions of FEMA, for how
much remittance does he need to take prior approval of the Reserve bank of India.

(A) He does not need any prior approval at all

(B) For US $ 210000
(C) For US $ 250000

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(D) For US $ 15000

“SOLUTIONS”
SN Reasons
342 C Refer section 149 (Limit of women director)
343 B Refer section 149 (Limit of Independent director)
344 B Refer filling of vacancy of women director
345 The office of a director shall become vacant in case he absents himself from all the meetings of the
C Board of Directors held during a period of 12 months with or without seeking leave of absence of
the Board. Refer Section 167
346 Refer definition of Financial Creditors, also the loan is secured by current assets including receivables
D
and stock and fixed assets as they are provided as collaterals.
347 B Refer Section 10 IBC 2016
348 Refer section 5 Definition of Insolvency Commencement Date Note: “Insolvency commencement
date” means the date of admission of an application for initiating corporate insolvency resolution
process by the Adjudicating Authority under sections 7, 9 or section 10, as the case may be. The
B Adjudicating Authority shall appoint an interim resolution professional on the insolvency
commencement date.
Author’s note: Although the date of admission of application is not given in case. Hence, the most
appropriate answer has been chosen.
349 B Refer section 12 (330 days from CIRP date)
350 6th May 2020 (An insolvency professional shall make a public announcement immediately on his
C appointment as an interim resolution professional.) Refer Public announcement under IBC 2016
Explanation: ‘Immediately’ means not later than three days from the date of his appointment.
351 B Refer rule 6(d) Nidhi
352 C Refer Rule 3 Companies (Miscellaneous) Rules 2014
353 Opinion of the legal counsel of Kiara Limited is valid as the provisions given for fast track merger in
C
section 233 can be made between Holding and wholly owned subsidiary. Refer section 233
354 A Refer quorum of meeting of committee of creditors (at least thirty three percent of the voting rights)
355 D Refer section 138
356 D Refer Liquidation estate under Section 36 IBC 2016
357 If the market value, in India, of such article given for personal use, on the date of such gift, is not
D
more than ₹ 1,00, 000.Refer Rule 6 of FCRA
358 The Tribunal may amend / rectify its own order, which is apparent from the record within a
C
period of two years from the date of the order. (Refer Section 420 of Companies Act,2013)
359 No, such apparent mistake cannot be rectified, as appeal has been already been preferred
C
in this case. (Refer Section 420 of Companies Act,2013)
360 Latest by 21st April, 2020 (Refer Section 421 of Companies Act,2013) within 45 days
D
from the date of receipt of order
361 the appeal should be disposed of as expeditiously as possible latest 25th June 2020 from the
B
date of its presentation (Refer Section 422 of Companies Act,2013)
362 within 60 days from the date of receipt of the order of the Appellate Tribunal (Refer
B
Section 421 of Companies Act,2013)
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SN Reasons
363 B within 180th day after such seizure (Refer Section 209 Companies Act,2013)
364 The scheme has been validly approved. Refer Section 230 as 50 members holding 100000 shares
D abstained from voting.300 voted in favor out of (500-50) 450 which is in majority and ¾ th in value
700000*10/(10 lakh-1Lakh)*10= 77.77%
365 B three months from the date of such reference (Refer Section 442)
366 By the applicant with the approval of ninety per cent voting share of the committee of creditors.
D
(Refer Section 12A IBC 2016)
367 A Dhruv cannot be considered to be a Person Resident in India. (Refer PRI Definition under FEMA)
368 Executive and non-executive directors (not less than 50% of the BOD) with at least one-woman
D
director. (Refer composition of BOD under Regulation 17 LODR)
369 D the senior most Member present at the meeting (Refer Section 22 in the Competition Act, 2002)
370 It receives the assent of the President (Question based on general understanding of LAW framing
A
process)
371 Where the Registrar have reasonable ground to believe that the books and papers of a company are
likely to be destroyed by the company and after obtaining an order from the Special Court for the
C
seizure of such books and papers can enter in the premises and seize such books and papers (Refer
Section 209 of Companies Act 2013)
372 D Not later than 180th day (Refer Section 209 of Companies Act 2013)
373 The Central Government may assign the task of investigation of any company to SFIO, if it is in the
D
public interest (Refer Section 212 of Companies Act 2013)
374 Once the case has been assigned by the Central Government to the SFIO, not other investigating
agency of Central or State Government shall process with the investigation and the concerned agency
C
shall transfer the relevant documents and records in respect of such offences under this Act to
Serious Fraud Investigation Office. (Refer Section 212 of Companies Act 2013)
375 Any investigating agency shall provide all the relevant information or documents to the SFIO in
B
respect of such offence. (Refer Section 212 of Companies Act 2013)
376 A Official Liquidator & Insolvency Professional (Refer Section 275 )
377 A 7 days(Refer Section 275 )
378 A Company liquidator himself (Refer Section 277)
379 D All of the above (Refer Section 277 )
380 D (Refer Section 281 )
381 Mr. X can apply for relief as condition of the requirement of holding of 1/10th of the total number
D of members is satisfied (Refer Section 241)

382 D From the appointed date given in the Scheme (Refer Section 232)
383 Appointment of Mr. Bright is invalid as he does not fulfills the eligibilities requirements. (Refer
C
section 247)
384 D Mr. Arjun, Mr. Ranveer, Mr. Malik and Mr. Arbaaz (Refer section 380)
385 Yes, he can continue to hold the property, since this was inherited from a person who was resident in
C
India.
386 18 largest operational creditors, 1 representative of workmen and 1 representative of employees
B
(Refer constitution of Committee of creditors under IBC 2016 When there is no financial creditor)
387 A Within nine months of the closure of the financial year (Refer section 18 FCRA)
388 He does not need any prior approval at all as the remittance is within LRS limit of USD 250,000 per
A
financial year.

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May 2022 RTP

CASE SCENARIO 1
Mr. Charan, with qualification in MBA Finance, thought of setting up a finance business. He
discussed his thought process with his relatives and friends and decided to start a Nidhi company as
this was the most easy and affordable way to start a loan business in India which required only
seven members with easy documentation. No approval, whatsoever, was also required from Reserve
Bank of India as in the case of other finance companies. Further, the Nidhi company would be able
to accept deposits from members and lend to them as well, besides earning periodical interests on
loans while its main expenditure would be to pay interests on deposits and establishment charges,
etc.

Mr. Charan with his six other trusted friends and relatives incorporated a Nidhi company under
the name Laxmi Nidhi Limited, on 20th August, 2022 at Indore (MP). It was duly notified as Nidhi
in the Official Gazette. It was mentioned in the Memorandum that as Nidhi, the company would
cultivate the habit of thrift and savings amongst its members, receive deposits from and lend to, its
members only, for their mutual benefit and it shall comply with Nidhi Rules, 2022. The authorised
capital of the company was ₹ 1,00,00,000 divided into 10,00,000 equity shares of ₹ 10 each.

All the members of the Board of Laxmi Nidhi Limited possessed a very strong background in terms
of financial stability as also expertise in business. Mr. Charan was throughout supported by the
extraneous efforts of his younger brother, Mr. Param who was the executive president of Laxmi
Nidhi Limited and possessed administrative talent to govern the organisation without
compromising ethical practices.

With a dedicated team of staff, the company was on its growth path with utmost courteous services
rendered with able management. The company encouraged rural savings habit and believed in
rendering all financial assistance to its members by receiving both short -term and long-term
deposits.

The deposits raised by Laxmi Nidhi Limited were in the form of fixed deposits, recurring deposits
and savings deposits. While extending loans to its members, the Nidhi provided Laxmi Jewel Loan
against pledge of gold jewellery for productive and consumption purposes with minimum
documentation and utmost safety of their gold. It also provided mortgage loans and loans against
deposits. In addition, it provided locker facilities to its members.

As on 31st March 2023, the issued, subscribed and paid-up share capital of Laxmi Nidhi Limited
was ₹ 95,00,000 (9,50,000 equity shares of ₹ 10 each). Its deposits were to the extent of ₹ 315 crore
with 12,000 members. The loans aggregated to ₹ 275 crore. Keeping in view the sufficiency of
profits, the company declared a dividend of ₹ one per share. In near future, Laxmi Nidhi Limited,
plans to open its branches which proves the fact that they are securing trust of more and more
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members as the years go by.

Based on the above scenario, answer the following questions:

Q 389 It is evident from the case scenario that Laxmi Nidhi Limited started its business with paid-
up share capital of ₹ 95,00,000. Keeping in view the minimum paid-up share capital with which a
Nidhi can be started, how much is the excess paid-up share capital Laxmi Nidhi Limited had when
it started its operations with effect from 20th August, 2022:

(A) Laxmi Nidhi Limited had excess paid-up share capital of ₹ 75,00,000 when it started its operations with effect
from 20th August, 2022.
(B) Laxmi Nidhi Limited had excess paid-up share capital of ₹ 80,00,000 when it started its operations with effect
from 20th August, 2022.
(C) Laxmi Nidhi Limited had excess paid-up share capital of ₹ 90,00,000 when it started its operations with effect
from 20th August, 2022.
(D) Laxmi Nidhi Limited had excess paid-up share capital of ₹ 93,00,000 when it started its operations with effect
from 20th August, 2022.

Q 390 For the Financial Year 2021-22, Laxmi Nidhi Limited declared a dividend of ₹ one per share.
What is the maximum amount of dividend it is permitted to declare without seeking approval from
the jurisdictional Regional Director? Choose the correct option from those given below:

(A) Since Laxmi Nidhi Limited has declared maximum permitted dividend of Re. one per share, it cannot declare
dividend in excess of ₹ one per share without seeking approval from the jurisdictional Regional Director.
(B) Laxmi Nidhi Limited can declare maximum permitted dividend of ₹ two per share without seeking approval
from the jurisdictional Regional Director.
(C) Laxmi Nidhi Limited can declare maximum permitted dividend of ₹ two and fifty paise per share
(D) Laxmi Nidhi Limited can declare maximum permitted dividend of ₹ three per share without seeking approval
from the jurisdictional Regional Director.

Q 391 The case scenario states that Laxmi Nidhi Limited also provided locker facilities to its
members. What is the maximum rental income that the company can generate from locker facilities
provided to its members.

(A) Laxmi Nidhi Limited can generate rental income from locker facilities provided to its members maximum upto
ten per cent of its gross income at any point of time during a financial year.
(B) Laxmi Nidhi Limited can generate rental income from locker facilities provided to its members maximum upto
twenty per cent of its gross income at any point of time during a financial year.
(C) Laxmi Nidhi Limited can generate rental income from locker facilities provided to its members maximum
upto twenty-five per cent of its gross income at any point of time during a financial year.
(D) Laxmi Nidhi Limited can generate rental income from locker facilities provided to its members maximum upto
thirty per cent of its gross income at any point of time during a financial year.

Q 392 By declaring dividend of ₹ one per share, Laxmi Nidhi Limited is required to pay ₹ 9,50,000
as dividend amount to its members. How much amount it is required to transfer to General Reserve
when it declares dividend of ₹ 9,50,000? Select the correct alternative from the following options:

(A) Laxmi Nidhi Limited is not required to transfer any amount to General Reserve when it declares dividend of ₹
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9,50,000.
(B) Laxmi Nidhi Limited is required to transfer minimum ₹ 9,50,000 (i.e. 100% of ₹ 9,50,000) to General Reserve
when it declares dividend of ₹ 9,50,000.
(C) Laxmi Nidhi Limited is required to transfer minimum ₹ 4,75,000 (i.e. 50% of ₹ 9,50,000) to General Reserve
when it declares dividend of ₹ 9,50,000.
(D) Laxmi Nidhi Limited is required to transfer minimum ₹ 14,25,000 (i.e. 150% of ₹ 9,50,000) to General
Reserve when it declares dividend of ₹ 9,50,000.

CASE SCENARIO 2
Chitra Furnitures Ltd., is engaged in the business of manufacturing of wooden furniture and has
been classified under the MSME sector. The company made a default under section 4 of the IBC.
The company put the matter of initiation of the pre-packaged insolvency resolution process
(PPIRP) before the members for their approval, through a resolution.
The financial creditors of the company proposed the name of Vidisha, as Resolution Professional
for conducting the pre-packaged insolvency resolution process (PPIRP).
The directors of the corporate debtor have made a declaration, stating inter alia, that the corporate
debtor shall file an application for initiating pre-packaged insolvency resolution process within a
definite time period.
An application for initiation of the PPIRP was made before the Adjudicating Authority, which was
accepted.

Based on the above scenario, answer the following questions:

Q 393 Which among the following is not the eligibility criteria for applying for initiation of PPRIP
by the Corporate Debtor, if it:

(A) Is eligible to submit a resolution plan under section 29A of the IBC
(B) Has not undergone a PPIRP during the 3 years preceding the initiation date
(C) Has completed a CIRP during the 3 years preceding the initiation date
(D) Is not required to liquidated by an order under section 33 of the IBC

Q 394 Apoorva Medicines Limited shall be required to file financial statements through XBRL:

(A) If it has a paid-up capital of ₹ 5 crores and above.

(B) If it has a turnover of ₹ 75 crores and above.
(C) Both (a) and (b).
(D) Neither (a) nor (b).

Independent MCQs

Q 395 A-One Software Limited is facing continuous losses and financial crunch for the last four
years or so. In order to save company from the impending liquidation, it proposed a scheme of
compromise to its creditors worth ₹ 1,50,00,000 and accordingly filed the said Scheme with the
jurisdictional Tribunal. Minimum how many creditors in value must agree and confirm to the
scheme of compromise so that Tribunal may dispense with calling of a meeting of the creditors:

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(A) In order that the Tribunal may dispense with calling of a meeting of the creditors, it is required that creditors
having value of minimum ₹ 1,35,00,000 must agree and confirm to the scheme of compromise.
(B) In order that the Tribunal may dispense with calling of a meeting of the creditors, it is required that creditors
having value of minimum ₹ 1,20,00,000 must agree and confirm to the scheme of compromise.
(C) In order that the Tribunal may dispense with calling of a meeting of the creditors, it is required that creditors
having value of minimum ₹ 1,27,50,000 must agree and confirm to the scheme of compromise.
(D) In order that the Tribunal may dispense with calling of a meeting of the creditors, it is required that creditors
having value of minimum ₹ 1,42,50,000 must agree and confirm to the scheme of compromise.

Q 396 Shivdeep submitted his claim as an operational creditor to the liquidator of Chiranjeevi Food
Products Limited which is under liquidation. After submission of his claim, Shivdeep is desirous of
altering it. Out of the following four options, which one correctly indicates the time period within
which he can alter his claim after its submission.

(A) Shivdeep can alter his claim within five days of its submission to the liquidator of Chiranjeevi Food Products
Limited.
(B) Shivdeep can alter his claim within ten days of its submission to the liquidator of Chiranjeevi Food Products
Limited.
(C) Shivdeep can alter his claim within fourteen days of its submission to the liquidator of Chiranjeevi Food
Products Limited.
(D) Shivdeep can alter his claim within thirty days of its submission to the liquidator of Chiranjeevi Food Products
Limited.

Q 397 Nandeesh, a resident Indian, remitted USD 1,00,000 on 7th June, 2021, to his son Ishaan who
is settled in California, USA, since he urgently required funds. On 9 th July, 2021, Nandeesh again
remitted USD 71,000 to meet expenses to be incurred in respect of his ailing wife, Medhavi who had
recently gone to USA to meet his son Ishaan but had developed serious coronary disease. For
specialised treatment of Medhavi at a specialised hospital, a sum of USD 79,000 was remitted for
the second time on 30 th July, 2021 by Nandeesh. Within next 10 days, Medhavi recovered and was
allowed to return to her son’s residence from the hospital. Choose the correct option from those
stated below as to when Nandeesh can send further foreign exchange to his son Ishaan for the
purpose of purchasing a house without obtaining the prior approval of Reserve Bank of India:

(A) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign exchange to his
son Ishaan only in the month of April, 2022 or thereafter.
(B) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign exchange to his
son Ishaan only in the month of January, 2022 or thereafter.
(C) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign exchange to his
son Ishaan only in the month of July, 2022 or thereafter.
(D) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign exchange to his
son Ishaan only in the month of November, 2021 or thereafter.

Q 398 After five years of stay in USA, Mr. Umesh came to India at his paternal place in New Delhi
on October 25, 2019, for the purpose of conducting business with his two younger brothers Rajesh
and Somesh and contributed a sum of ₹ 10,00,000 as his capital. Simultaneously, Mr. Umesh also
started a proprietary business of selling artistic brassware, jewelry, etc. procured directly from the
manufacturers based at Moradabad. Within a period of two months after his arrival from USA,
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Mr. Umesh established a branch of his proprietary business at Minnesota, USA. You are required
choose the appropriate option with respect to residential status of Mr. Umesh and his branch for
the financial year 2020 -21 after considering the applicable provisions of the Foreign Exchange
Management Act, 1999:

(A) For the financial year 2020-21, Mr. Umesh and his branch established at Minnesota, USA, are both persons
resident outside India.
(B) For the financial year 2020-21, Mr. Umesh is a resident in India but his branch established at Minnesota, USA,
is a person resident outside India.
(C) For the financial year 2020-21, Mr. Umesh and his branch established at Minnesota, USA, are both persons
resident in India.
(D) For the financial year 2020-21, Mr. Umesh is a person resident outside India but his branch established at
Minnesota, USA, is a person resident in India.

Q 399 Akshara Builders and Developers Ltd., a company listed on BSE Limited, is contemplating
upper revision in the rate of interest of its existing 12% bonds by 1% so as to make them 13%
bonds with effect from August 14, 2021. The said proposal is to be laid before the Board of
Directors at a Board Meeting to be held on July 14, 2021. From the following options, choose the
one which correctly indicates the latest date by which Akshara Builders and Developers Ltd. is
required to intimate the BSE Limited about the Board Meeting where increase in rate of interest is
being considered, keeping in view the Regulation 29 of Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015:

(A) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 1, 2021.
(B) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 3, 2021.
(C) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 5, 2021.
(D) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 7, 2021.

Q 400 Mr. X receives an antique statue from his best friend(who resides abroad)as a gift on his 50th
Birthday of worth ₹ 70,000.State the nature of the gift given to Mr. X in the light of the FCRA

(A) It’s not a foreign contribution as it is not in excess of one lakh rupees.
(B) It’s a foreign contribution being made by other than his relative
(C) It’s not a foreign contribution, as it is not informed to the Central Government
(D) It’s a foreign contribution as is within the limit of one lakh rupees.

March 2022 MTP

CASE SCENARIO 1
Chirag Air-conditioners Ltd. is producing quality air-conditioners. It has 10 lakh shareholders
having face value of ₹ 10/- each. The company had called first call of ₹ 5/- per share in January
2019. Now, in December 2020, it demanded the second and final call of ₹ 5/-. Out of 10 lakh
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shareholders, 15% shareholders did not paid the second and final call.

The company demanded the second and final call from the shareholders to meet out its cost of
project for establishing second unit in Industrial Area, Jaipur. The land was already allotted by the
RIICO to the company and the capital was raised in order to import the machinery from Germany.
However, the company, instead of importing the machinery, utilised the money so raised, in
purchasing the land near by Jaipur, to develop it as a Resort, for the use of promoters of the
company. This news was widely published in the Economic Times, Business Standard and Business
Line.

Some of the shareholders of the company sought opinion from a professional, what to do, where the
company’s affairs are being conducted in a manner prejudicial to the public interest.

Based on the above scenario, answer the following questions:

Q 401 The members of the Chirag Air-conditioners Ltd., wanted to make a complaint that the
affairs of the company are being conducted in a manner prejudicial to the public interest. It may:

(A) Bring the matter in the knowledge of the Audit Committee of Board of the Company
(B) Bring the matter in the knowledge of the Investor’s Grievances Committee of the Company
(C) Apply to the Tribunal
(D) Cannot make complaint, as act of the company was made with intent to benefit the shareholders and the
company itself.

Q 402 The Central Government, after taking cognizance of the news published in the business
newspapers, is of the opinion that the affairs of the company are being conducted in a manner
prejudicial to the public interest, it may:

(A) Inform the Registrar

(B) Apply to the Tribunal
(C) Dismiss the Board of Directors of the company
(D) Ask the SEBI to banned the company from raising any further issue of capital

Q 403 Which members are eligible to apply to the Tribunal under section 241:

(A) All the members of the company

(B) Only the members who have full amount due on the shares
(C) The Tribunal have the powers to waive the condition of fully paid shares
(D) The members who have fully paid the shares can apply to the Tribunal, however the Tribunal have powers to
waive such requirements as mentioned in sub-section (1) and (2) of section 241.

Q 404 How many members are required to apply to the Tribunal:

(A) One hundred members only

(B) Not less than one hundred members only
(C) Not less than one-tenth of the total number of its members

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(D) Not less than one hundred members of the company or not less than one-tenth of the total number of its
members, whichever is less.

Q 405 How many members may apply to the Tribunal, in case the company is not having any share
capital:

(A) All the members of the company

(B) One-fifth of the total number of members of the company
(C) Not less than one-fifth of the total number of members of the company
(D) Not less than one-tenth of the total number of members of the company

CASE SCENARIO 2
Sitting over the fence, Shelly opted to face dynamism of consumer preferences, razor -cut
competition and changing Government policies to fulfill her inherent passion for exotic make-up
brands by launching a beauty product company in Bombay (now Mumbai), supported by her
advocate father Bhimsen, elder brother Ashutosh and younger brother Soumit as well as ten close
friends, way back in 1984 under the then Companies Act, 1956, much before the air of
liberalisation, privatisation and globalisation touched the soil of our country.

The company, Beauty Products Limited with an Authorised Capital of ₹ 30,00,000 divided into
3,00,000 shares of ₹ 10 each (paid-up capital ₹ 25,00,000) and under the brand ‘Angelic’ began
manufacturing cosmetic products like Nail-enamel, Foundation Cream, Compact, Mascara, Eye-
pencil, etc. Its products had an international touch and captured the Indian market at a time when
the elite class was splurging on imported cosmetics.

This unlisted company, under the strong and able leadership of Shelly, Ashutosh and Soumit, had
not only observed a growth trend in terms of its turnover and profitability but had also earned
name and fame in the hearts of consumers as well as cosmetic industry. Ashutosh directed the
company in the capacity as Managing Director up to the satisfaction of all.

In 2015, Beauty Products Limited felt the need, decided and raised its Authorised Capital to ₹
20,00,00,000. Through private placements from time to time, it pumped in more capital and its paid
-up capital reached to a level of ₹ 19,50,00,000 as on 31st March, 2021. At this juncture, its turnover
was ₹ 850 crore.

The secretarial audit of Beauty Products Limited was started in the year 2018 as the company had
crossed the threshold limit relating to turnover as per the audited financial statements as on 31st
March, 2017. M/s Keshav and Kaustubh & Associates, a firm of practicing company secretaries,
was engaged to carry out the secretarial audit.

In the beginning of the current financial year, the total strength of directors of Beauty Products
Limited had reached eleven which included two independent directors. Some of the directors of the
company were desirous of appointing Mr. Soumit as Managing Director of the company in place of
Mr. Ashutosh, who wanted to leave the office of Managing Director due to intense family pressure.
It is to be noted that Mr. Soumit was also holding the office of Managing Director in Glow and

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Glow Cosmetics Limited which was run by his father - in-law along with his relatives. For the
appointment of Mr. Soumit as Managing Director of Beauty Products Limited, a Board Meeting
was convened by giving a specific notice of such meeting and of the resolution to be moved thereat,
to all the directors then in India. At the Board Meeting, five out of nine directors present in the
meeting consented to Mr. Soumit becoming as Managing Director.

By now, Beauty Products Limited had over 150 products catering to every kind of consumer.
Included in its diverse portfolio were moisturisers, aloe-vera gels, lip balms, deodorants and a
variety of nail-paints to meet the demand of teenagers.

After some time, keeping in view the future expansion, Beauty Products Limited wanted to appoint
Mr. Amba Prasad, 74 years of age, as a Whole-time director with the approval of the Board. He
had sharp business acumen and wide experience by working at a very senior position in Rich Bank
Limited from where he superannuated 14 years back. At a Board Meeting, the proposal to appoint
Mr. Amba Prasad as Whole -Time Director was approved with full majority of eight directors
attending the Meeting. No further action was taken in this regard.

Based on the given facts, answer the following questions:

Q 406 As per the case scenario, some of the directors of Beauty Products Limited were desirous of
appointing Mr. Soumit as Managing Director of the company, who was also acting as Managing
Director in Glow and Glow Limited. At the Board Meeting convened in this respect, five out of nine
directors present in the meeting consented to his becoming as Managing Director. Considering the
applicable provisions, choose the correct alternative from those given below as to whether or not
Mr. Soumit was appointed as Managing Director of Beauty Products Limited?

(A) Since more than half directors (i.e. five out of nine directors) attending the Board Meeting consented to Mr.
Soumit becoming the Managing Director, he must have been appointed as the Managing Director of Beauty
Products Limited.
(B) Since minimum two-third directors (i.e. six out of nine directors) attending the Board Meeting must consent to
Mr. Soumit becoming the Managing Director, he could not have been appointed as the Managing Director of
Beauty Products Limited.
(C) Since minimum three-fourth directors (i.e. seven out of nine directors) attending the Board Meeting must
consent to Mr. Soumit becoming the Managing Director, he could not have been appointed as the Managing
Director of Beauty Products Limited.
(D) Since all the directors attending the Board Meeting must consent to Mr. Soumit becoming the Managing
Director, he could not have been appointed as the Managing Director of Beauty Products Limited.

Q 407 It is evident from the case scenario that the proposal to appoint Mr. Amba Prasad, aged 74
years, as Whole-time Director was approved by the Board of Directors of Beauty Products Limited.
Select the correct alternative from the following options that indicates the validity or invalidity of
appointment of Mr. Amba Prasad as a Whole-Time Director of the company after approval of
proposal by the Board:

(A) In view of the fact that Mr. Amba Prasad has crossed the age of 70 years, his appointment as a Whole-Time
Director would be considered as valid only when an ordinary resolution is passed and thereafter, sanction of
National Company Law Tribunal is sought.
(B) Even if Mr. Amba Prasad has crossed the age of 70 years, his appointment as a Whole-time Director would be

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considered as valid since it was approved by all the eight directors who attended the Board Meeting.
(C) In view of the fact that Mr. Amba Prasad has crossed the age of 70 years, his appointment as a Whole-time
Director would not be considered as valid since it was not approved by all the eleven directors.
(D) In view of the fact that Mr. Amba Prasad has crossed the age of 70 years, his appointment as a Whole-time
Director would be considered as valid only when a special resolution is passed and if no such special
resolution is passed, but the votes cast in favour of motion exceed the votes, if any, cast against the motion and
the Central Government approves such appointment.

Q 408 Suppose Mr. Amba Prasad, after due formalities, is appointed as Whole-Time Director of
Beauty Products Limited, then what would be the maximum term for which he can be so
appointed:

(A) The appointment of Mr. Amba Prasad as Whole-Time Director of Beauty Products Limited would be for a
maximum term of three years.
(B) The appointment of Mr. Amba Prasad as Whole-Time Director of Beauty Products Limited would be for a
maximum term of five years.
(C) The appointment of Mr. Amba Prasad as Whole-Time Director of Beauty Products Limited would be for a
maximum term of seven years.
(D) The appointment of Mr. Amba Prasad as Whole-Time Director of Beauty Products Limited would be for a
maximum term of ten years.

Q 409 The case scenario mentions that in the year 2018, secretarial audit of Beauty Products
Limited was started as the company had crossed the threshold limit relating to turnover. At that
time, what could be the threshold limit relating to turnover which necessitated starting of
secretarial audit:

(A) At the time starting secretarial audit in the year 2018, the turnover of Beauty Products Limited must have been
₹ 300 crore or more.
(B) At the time starting secretarial audit in the year 2018, the turnover of Beauty Products Limited must have been
₹ 250 crore or more.
(C) At the time starting secretarial audit in the year 2018, the turnover of Beauty Products Limited must have been
₹ 150 crore or more.
(D) At the time starting secretarial audit in the year 2018, the turnover of Beauty Products Limited must have been
₹ 100 crore or more.

Independent Multiple-Choice Questions

Q 410 In order to make Robotics Toys Private Limited as its subsidiary, Golden Rays Robots
Limited raised its investment in Robotics Toys from 40% to 60% of its paid-up capital. From the
options given below, choose the one which correctly indicates as to when the Robotics Toys shall be
considered as the undertaking of Golden Rays Robots Limited.

(A) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 10% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics
Toys must have contributed in generation of 10% of the total income of Golden Rays during the previous
Financial Year
(B) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 20% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics

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Toys must have contributed in generation of 20% of the total income of Golden Rays during the previous
Financial Year
(C) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 25% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics
Toys must have contributed in generation of 25% of the total income of Golden Rays during the previous
Financial Year.
(D) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest more
than 30% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or the Robotics
Toys must have contributed in generation of 30% of the total income of Golden Rays during the previous
Financial Year.

Q 411 Modern Books Publishers plc., a company incorporated in United Kingdom (UK) has a
wholly owned subsidiary by the name Beta Periodicals Limited whose Registered Office is situated
at Mumbai and which is engaged in publishing scientific, technical and specialty magazines,
periodicals and journals. Beta Periodicals Limited considers itself to be a foreign company since it
is a wholly owned subsidiary of Modern Books Publishers plc. which is a foreign company. From
the four options given below, you are required choose the one which appropriately indicates
whether Beta Periodicals Limited can be considered as a foreign company:

(A) Beta Periodicals Limited cannot be considered as a foreign company even if it is a wholly owned subsidiary of
Modern Books Publishers plc. which is a foreign company.
(B) Beta Periodicals Limited shall be considered as a foreign company since it is a wholly owned subsidiary of
Modern Books Publishers plc. which is a foreign company.
(C) Beta Periodicals Limited can be granted the status as a foreign company, if its holding company Modern
Books Publishers plc. makes an application to the Regional Director having jurisdiction over New Delhi for
considering its wholly owned subsidiary Beta Periodicals Limited a foreign company.
(D) Beta Periodicals Limited can be granted the status as a foreign company, if its holding company Modern
Books Publishers plc. makes an application to the New Delhi Bench of National Company Law Tribunal for
considering its wholly owned subsidiary Beta Periodicals Limited a foreign company.

Q 412 The Central Government may, for the purpose of providing speedy trial of offences
punishable under the Companies Act, 2013 with imprisonment of two years or more offences under
this Act, by notification, establish or designate:

(A) not more than one special court in that jurisdiction where offence took place.
(B) At least 2 special courts court in that jurisdiction where offence took place
(C) as many Special Courts as may be necessary
(D) District and Session court in that jurisdiction where offence took place

Q 413 Which amongst the following transactions, is not the current account transaction:

(A) payments due in connection with short-term banking and credit facilities in the ordinary course of business.
(B) payments due on loans.
(C) remittances for living expenses of parents residing abroad
(D) expenses in connection with foreign travel of spouse and children

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Q 414 The Central Government, after making inquiry, finds that the holder of the grant of
certificate to accept foreign contribution, has violated the terms and conditions of the certificate.
Therefore, by an order, cancelled the certificate. What shall be the cooling period for obtaining of a
grant of certificate again?:

(A) Two years from the date of cancellation of such certificate.

(B) Three years from the date of cancellation of such certificate.
(C) Five years from the date of cancellation of such certificate
(D) Once cancelled cannot be applied again.

Q 415 B. Real Estate Developers Limited was demerged to B. Reality Constructions and Developers
Limited and B. Real Estate Developers Limited. Choose the correct option from those given below
as to what type of demerger is this:

(A) Total demerger.

(B) Partial demerger.
(C) Internal reconstruction.
(D) Demerger in the ‘nature of purchase’.

Q 416 Rhea Marketing and Consultants Limited, incorporated under the Companies Act, 2013, had
made political contributions amounting to ₹ 1,00,000 to a political party registered under section
29A of the Representation of the People Act, 1951. The statutory auditor of the company, while
reviewing the donations made to the said political party, found that no proper board resolution
authorizing the donation was made. Since there is contravention of the applicable provisions, it is
imperative that the Directors of Rhea Marketing and Consultants Limited would liable to be
punished with imprisonment upto six months and with fine up to five times the amount of
contribution so made. You are required to choose the correct option which indicates the category
under which offence committed by the Directors of the company will fall considering the applicable
provisions of the Companies Act, 2013:

(A) Compoundable offence.

(B) Non-compoundable offence.
(C) Compoundable and cognizable offence.
(D) Non-compoundable and non-cognizable offence.

April 2022 MTP

CASE SCENARIO 2

Mohit did B.Tech from IIT, Mumbai. He intends to do MS from US. Based on his qualification and ranking in
the B.Tech, he got the scholarship from a US Company with a condition that he has to serve in that US
company for a period of 3 years after completing of MS.
Mohit’s father Shyam Lal is a Member of Parliament (MP). The tenure of the Lok Sabha is going to end just
after 6 months. The political party to which he is a member, has denied to give ticket to him in the forthcoming
election. Shyam Lal planned to fight election in his individual capacity. He is having some connections with
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foreign friends of political backgrounds. He asked his son Mohit to contact them for fund raising in USD. At
the time of election, funds so collected will be utilised for advertisement.
Shyam Lal’s sister is residing in US. She on the occasion of Bhai-Dooj (a festival of Hindus after Diwali) sent
USD 1,000 to his brother.
Shyam Lal went to US for official visit to study the road transportation system in US along with the Transport
Minister. In US, Shyam Lal was offered hospitality by a transport company and provided free travelling and
hotel stay.

Based on the above scenario, answer the following questions:

Q 417 Mohit is collecting funds on behalf of his father for the forthcoming elections, which will be
remitted to India. Whether such foreign contribution is permitted:

(A) Mohit is student in US so whatever the amount he is collecting is exempted

(B) Mohit is collecting the money in USD as a foreign contribution for the election of his father, hence it is
prohibited
(C) It is permitted if the Election Commission do not objects
(D) It is permitted if the RBI have no objections

Q 418 Shyam Lal’s sister is residing in US. On the occasion of Bhai-Dooj (a festival of Hindus after
Diwali) the sister has sent USD 1000 to Shyam Lal. State the correct statement in the light of
acceptance of such Foreign Contribution by Shyam Lal:

(A) Such foreign contribution by Shyam Lal’s sister is prohibited

(B) Such Foreign contribution from a relative is permitted
(C) Foreign contribution from a relative can be accepted subject to the prior approval of the RBI
(D) Parfum Foreign contribution from a relative can be accepted subject to the prior approval of the
Enforcement Directorate

Q 419 While on official visit, Shyam Lal availed hospitality from a transport company in US.
Whether such activity is permitted:

(A) Shyam Lal has not accepted any cash and the hospitality was in kind so it is permitted
(B) Shyam Lal being a Member of Parliament, should not avail that hospitality since it is prohibited
(C) Shyam Lal can enjoy the US tour since the Government of India has sent him there
(D) Shyam Lal being a Member of Parliament should take prior permission of the Central Government before
taking any foreign hospitality

Independent Multiple Choices Questions

Q 420 Business of Rozgar Ltd. is not been conducted and managed by directors in accordance with
sound business practices. On account of that shareholders of Company referred the same to the
Tribunal on 15th September 2021 with a request to the Tribunal to inquire into the case and take
action against the director of company. The Tribunal has, after making proper inquiry, passed the
order against the directors on 16th March 2022. Comment which is the correct statement as
regards the validity of the order passed by the Tribunal.
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(A) In the given case order passed is valid, as Tribunal have to pass an order within 3 month from date of
application and if not possible in 3 month, then further extension (on valid reason) by 90 days i.e., on 16th
March, 2022.
(B) In the given case order passed is not valid, as Tribunal have to pass order within 3 month from date of
application, and if not possible in 3 month, then extension may be possible (if valid reason) for further 90 days
i.e., latest by 15th March, 2022.
(C) In the given case order passed is not valid, as Tribunal have to pass order within 3 month from date of
application and if not possible in 3 month then extension may be possible (if valid reason) for further 30 days
i.e., latest by 14th January, 2022.
(D) In the given case order passed is not valid, as Tribunal have to pass order within 3 month from date of
application and if not possible in 3 month then extension may be possible (if valid reason) for further 60 days
i.e., latest by 13th February, 2022.

Q 421 Due to non-compliance of certain requirements under the Companies Act, 2013 not
amounting to fraud, Super-Market Limited was required to re-state its financial statements for the
financial year 2017-18 during the current year. After the financial statements were restated, it was
found that Mr. Kumar, the Managing Director (MD) of that period, who is now retired, was paid
excess remuneration to the extent of ₹ 5,00,000. In the given situation, choose the correct option out
of those given below, which indicates whether such excess remuneration paid to ex-MD Mr. Kumar
is recoverable or not.

(A) Excess remuneration of ₹ 5,00,000 paid to Mr. Kumar, ex-MD of Super-Market Limited, cannot be recovered
since such recovery after retirement is invalid.
(B) Excess remuneration of ₹ 5,00,000 paid to Mr. Kumar, ex-MD of Super-Market Limited, shall be recovered
irrespective of his retirement from the company.
(C) Only ₹ 2,50,000, being 50% of excess remuneration of ₹ 5,00,000, paid to Mr. Kumar, ex-MD of Super-
Market Limited, is validly recoverable because no fraud implicating him is involved.
(D) Only ₹ 1,25,000, being 25% of excess remuneration of ₹ 5,00,000, paid to Mr. Kumar, ex-MD of Super-
Market Limited, is validly recoverable because no fraud implicating him is involved.

Q 422 Comfort Mechanical Products Limited, with Registered Office in Rajender Nagar, New
Delhi, has three directors, namely, Mr. First, Mr. Second and Ms. Third, who often visit foreign
countries in order to develop and secure business opportunities for the company on sustainable
basis. One of the legal requirements for an Indian company is that at least one of its directors must
stay in India for a specified period. To reckon as ‘resident director’ for the Financial Year 2021-22,
advise the company by selecting the correct option as to which period spent in India by any one of
its directors shall count towards statutory period.

(A) Period spent in India during the previous Financial Year 2020 - 21.
(B) Total of fifty percent of the period spent in India during the Financial Year 2019 -20 and another fifty percent
of the period spent in India during the Financial Year 2020 -21.
(C) Total of fifty percent of the period spent in India during the Financial Year 2020-21 and another fifty percent
of the period spent in India during the Financial Year 2021 -22.
(D) Period spent in India during the Financial Year 2021-22.

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Q 423 The aggregate amount of dues to the secured creditors and workmen is ₹ 16,00,000 and
collateral security given to the secured creditors is ₹ 4,00,000. The proportionate amount of
workmen portion will be:

(A) 10%
(B) 20%
(C) 25%
(D) 30%

Q 424 The cooling period for re-appointment of a registered valuer for a company is-

(A) 1 year
(B) 2 year
(C) 3 years
(D) No period has been prescribed in section 247 of the Companies Act, 2013.

Q 425 Every listed company shall disclose in the Board’s report, the ratio of the remuneration of
each director to the employee’s remuneration.

(A) mean
(B) Median
(C) Highest
(D) Not required to be disclosed

Q 426 BOD of the listed entity shall be composed of executive and non-executive directors. The
optimum limit of non-executive directors shall be:

(A) less than 50% of the BOD

(B) not be more than 50% of the BOD
(C) not less than 50% of the BOD
(D) 75% of the BOD

Q 427 Within how much time period, a listed entity shall submit quarterly compliance report on
corporate governance to the recognized stock exchange:

(A) within 3 days from close of the quarter.

(B) within 5 days before the close of the quarter.
(C) within 10 days before the close of the quarter.
(D) Within 21 days from close of the quarter.
Q 428 The Adjudicating Officers for adjudicating penalty under the provisions of the Companies
Act, 2013 is appointed by:

(A) The Central Government

(B) The Registrar
(C) Chief Justice of India
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(D) The Regional Director

Q 429 Who can be appointed as Secretarial Auditor?

(A) Any person, who have the audit experience, can be appointed as Secretarial Auditor.
(B) Any person who is a member of the Institute of Chartered Accountants of India and holding a certificate of
practice, can be appointed as Secretarial Auditor.
(C) Any person who is a member of the Institute of Company Secretaries of India and holding a certificate of
practice, can be appointed as Secretarial Auditor.
(D) Any person who is a member of the Institute of Cost Accountants of India and holding a certificate of practice,
can be appointed as Secretarial Auditor.

Q 430 One of the director, who is actually residing at Nagpur, but his address as recorded with the
company and in the DIN is of Mumbai. The director wish to receive the notice / agenda papers at
Nagpur. At which address the notice for Board meeting and agenda papers may be sent?

(A) The notice/ agenda papers be sent as per the wish of the concerned director.
(B) The notice / agenda papers se sent at Nagpur address.
(C) The notice / agenda papers be sent at Mumbai address.
(D) The notice/ agenda papers be sent at both the addresses i.e. at Nagpur as well as at Mumbai.

Q 431 A public company should have minimum of:

(A) 3 Members and 3 Directors

(B) 3 Members and 7 Directors
(C) 7 Members and 3 Directors
(D) 7 Members and 7 Directors

Q 432 Which among the following is NOT the eligibility criteria for appointment of a registered
valuer:

(A) The person has passed the valuation examination conducted by the IBBI
(B) The person is a valuer member of Registered Valuers Organisation (RVO)
(C) The person has been recommended by the RVO for registration as a valuer
(D) The person has been levied a penalty under section 271J of the Income-tax Act, 1961.

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“SOLUTIONS”
SN Reasons
389 Laxmi Nidhi Limited had excess paid-up share capital of ₹ 90,00,000 when it started its operations
with effect from 20th August, 2022. Refer Rule 4 Incorporation and incidental matters The
C
Nidhi Rules, 2014 [As amended by Nidhi (Amendment) Rules 2022 A Nidhi shall be a public
company and shall have a minimum paid up equity share capital of 10 lakh rupees.
390 Laxmi Nidhi Limited can declare maximum permitted dividend of ₹ two and fifty paise per share
without seeking approval from the jurisdictional Regional Director. Refer Rule 18 Dividend The
C Nidhi Rules, 2014 [As amended by Nidhi (Amendment) Rules 2020 A Nidhi shall not declare
dividend exceeding 25%. The paid up capital is ₹ 10/share hence maximum dividend can
given up to ₹ 2.5 .
391 Laxmi Nidhi Limited can generate rental income from locker facilities provided to its members
B maximum upto twenty per cent of its gross income at any point of time during a financial year. Refer
Rule 6(e) of Nidhi rules 2020
392 Laxmi Nidhi Limited is required to transfer minimum ₹ 9,50,000 (i.e. 100% of ₹ 9,50,000) to General
Reserve when it declares dividend of ₹ 9,50,000. Refer Rule 18 Dividend The Nidhi Rules, 2022
B [As amended by Nidhi (Amendment) Rules 2020 A Nidhi shall not declare dividend
exceeding 25% in a financial year.

393 Has completed a CIRP during the 3 years preceding the initiation date Refer Section 54A IBC 2016
Without prejudice to sub-section (1), an application for initiating pre-packaged insolvency resolution
process may be made in respect of a corporate debtor, who commits a default referred to in section 4
(minimum default of ₹ 10 Lakhs),subject to the following conditions, that––
(a) it has not undergone pre-packaged insolvency resolution process or completed corporate
C
insolvency resolution process, as the case may be, during the period of three years preceding
the initiation date; (cooling off period of 3 years)
(b) it is not undergoing a corporate insolvency resolution process;
(c) no order requiring it to be liquidated is passed under section
(d) it is eligible to submit a resolution plan under section 29A;
394 A If it has a paid-up capital of ₹ 5 crores and above.
395 In order that the Tribunal may dispense with calling of a meeting of the creditors, it is required that
creditors having value of minimum ₹ 1,35,00,000 must agree and confirm to the scheme of
compromise .Refer Section 230(9) Power to compromise or make arrangements with creditors
A
and members The Tribunal may dispense with calling of a meeting of creditor or class of creditors
where such creditors or class of creditors, having at least ninety per cent. value, agree and confirm, by
way of affidavit, to the scheme of compromise or arrangement.
396 Shivdeep can alter his claim within fourteen days of its submission to the liquidator of Chiranjeevi
Food Products Limited Refer Section 38 of IBC 2016 Consolidation of claims. A creditor may
C
withdraw or vary his claim under this section within fourteen days of its submission

397 Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign
A exchange to his son Ishaan only in the month of April, 2022 or thereafter. Refer LRS limit of USD
250000 per financial year.Since he already send USD 250000 for FY 2021-22
398 For the financial year 2020-21, Mr. Umesh and his branch established at Minnesota, USA, are both
C
persons resident in India. Refer PRI definition under FEMA

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399 Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting,
where increase in rate of interest is being considered, latest by July 3, 2021.as the said proposal is to
be laid before the Board of Directors at a Board Meeting to be held on July 14, 2021
Refer Regulation 29 SEBI LODR Prior Intimations The listed entity shall give intimation to the
stock exchange(s) at least eleven working days before any of the following proposal is placed
B before the board of directors -
a) any alteration in the form or nature of any of its securities that are listed on the stock exchange or
in the rights or privileges of the holders thereof.
b) any alteration in the date on which, the interest on debentures or bonds, or the redemption
amount of redeemable shares or of debentures or bonds, shall be payable.
400 It’s a foreign contribution being made by other than his relative Refer Foreign contribution definition
B
Author’s note- Its answer should be A as the limit has not crossed ₹ 1,00,000
401 Apply to the Tribunal Refer Section 241. Application to Tribunal for relief in cases of oppression,
C
etc
402 Apply to the Tribunal Refer Section 241(2) Application to Tribunal for relief in cases of oppression,
etc The Central Government, if it is of the opinion that the affairs of the company are being
B
conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order
under this Chapter.
403 The members who have fully paid the shares can apply to the Tribunal, however the Tribunal have
D powers to waive such requirements as mentioned in sub-section (1) and (2) of section 241.
Refer Section 244 Right to apply under section 241
404 Not less than one hundred members of the company or not less than one-tenth of the total number
D
of its members, whichever is less. Refer Section 244 Right to apply under section 241
405 Not less than one-fifth of the total number of members of the company Refer Section 244 Right to
C
apply under section 241
406 Since all the directors attending the Board Meeting must consent to Mr. Soumit becoming the
D Managing Director, he could not have been appointed as the Managing Director of Beauty Products
Limited. Refer Section 203 Appointment of key managerial personnel
407 In view of the fact that Mr. Amba Prasad has crossed the age of 70 years, his appointment as a
Whole-time Director would be considered as valid only when a special resolution is passed and if no
D such special resolution is passed, but the votes cast in favour of motion exceed the votes, if any, cast
against the motion and the Central Government approves such appointment. Refer Section 196
Appointment of managing director, whole-time director or manager
408 The appointment of Mr. Amba Prasad as Whole-Time Director of Beauty Products Limited would
B be for a maximum term of five years. Refer Section 196 Appointment of managing director,
whole-time director or manager
409 At the time starting secretarial audit in the year 2018, the turnover of Beauty Products Limited must
B
have been ₹ 250 crore or more. Refer Section 204 Secretarial audit for bigger companies
410 In order that Robotics Toys is considered as one of its undertaking, Golden Rays is required to invest
more than 20% of its ‘net worth’ calculated as per the audited balance sheet of the preceding year or
the Robotics Toys must have contributed in generation of 20% of the total income of Golden Rays
B during the previous Financial Year Refer Regulation 24 SEBI LODR The term “material
subsidiary” shall mean a subsidiary, whose income or net worth exceeds twenty percent of
the consolidated income or net worth respectively, of the listed entity and its subsidiaries in
the immediately preceding accounting year.
411 Beta Periodicals Limited cannot be considered as a foreign company even if it is a wholly owned
A subsidiary of Modern Books Publishers plc. which is a foreign company. Refer definition of foreign
company
412 C as many Special Courts as may be necessary Refer Section 435 Special Courts
413 B payments due on loans. Refer Section 5 FEMA current account transaction:

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414 Three years from the date of cancellation of such certificate. Refer section 14 Cancellation of
certificate under FCRA Any person whose certificate has been cancelled under this section shall
B
not be eligible for registration or grant of prior permission for a period of three years from the
date of cancellation of such certificate.
415 Partial demerger. Partial demerger results when a part/department/division of company is separated
and transferred to one or more new company/companies formed with the same shareholders
B
allotted shares in new company in same proportion as held by them in the demerged company. Ques
based on general understanding
416 Non-compoundable and non-cognizable offence. Refer Section 439. Offences to be non-
D
cognizable
417 Mohit is collecting the money in USD as a foreign contribution for the election of his father, hence it
B
is prohibited Refer Section 3 Prohibition to accept foreign contribution FCRA
418 Such Foreign contribution from a relative is permitted Refer section 4 FCRA Exceptions i.e.
B
situations where section 3 shall not apply
419 Shyam Lal being a Member of Parliament should take prior permission of the Central Government
D before taking any foreign hospitality Refer section 6 FCRA Restriction on acceptance of foreign
hospitality
420 In the given case order passed is not valid, as Tribunal have to pass order within 3 months from date
B of application, and if not possible in 3 months, then extension may be possible (if valid reason) for
further 90 days i.e., latest by 15th March, 2022.
421 Excess remuneration of ₹ 5,00,000 paid to Mr. Kumar, ex-MD of Super-Market Limited, shall be
B recovered irrespective of his retirement from the company. Refer Section 199. Recovery of
remuneration in certain cases
422 D Period spent in India during the Financial Year 2021-22. Refer Section 149 Resident director
423 25% Refer Section 326 Overriding preferential payments It is ranked pari-passu among secured
C
creditors and work men dues hence 4L/16L =25%
424 C 3 years (Note ICAI gave answer B 2 years) Refer Section 247 Registered Valuers
425 Median Refer Section 197(12) Overall maximum managerial remuneration and managerial
B
remuneration in case of absence or inadequacy of profits
426 not less than 50% of the BOD
C
Refer Verification regarding Composition of Board Regulation 17 SEBI LODR
427 within 21 days from close of the quarter. Refer Regulation 27- Other Corporate Governance
D
Requirements SEBI LODR
428 A The Central Government Refer Section 454 Adjudication of Penalties
429 Any person who is a member of the Institute of Company Secretaries of India and holding a
C
certificate of practice, can be appointed as Secretarial Auditor. Refer Section 203
430 C The notice / agenda papers be sent at Mumbai address. Refer Section 173 Meetings of Board
431 C 7 Members and 3 Directors Refer Section 149
432 The person has been levied a penalty under section 271J of the Income-tax Act, 1961 Refer section
D
247

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“MCQs for NOV 2022”

“QUESTIONS”
NOV 2022 RTP

Case Scenario 1
DS Jewellers Ltd., a recent launched showroom, have taken a loan of amount 4 crore from
ABC Bank Ltd. It defaulted in repaying the dues and so, the ABC Bank initiated application
for Corporate Insolvency Resolution Process (CIRP) in NCLT. The NCLT accepted the
application for initiation of CIRP. It appointed Ms. Nimmi as Resolution Professional (RP)
and the moratorium was declared.

The RP, after collation of all claims received against DS Jewellers Ltd, (the corporate
debtor) and determination of the financial position of the corporate debtor, constituted a
Committee of Creditors (CoC). There were 6 members.

The first meeting of the CoC was held within 7 days of the constitution of the CoC. The
Quorum of the meeting was present throughout the meeting and the Chairperson presided
over the meeting.
The Chairperson of the meeting of the CoC drafted the minutes and circulated to all the
participants. The RP appointed two registered valuers to find out the fair value and
liquidation value of the company.

Based on the above scenario, answer the following questions:

Q 433 Ms. Nimmi, a Resolution Professional (RP) wants to convene CoC Meeting. State the
requirement for valid holding of meeting of the Creditors:

(A) RP shall convene a meeting of the Creditors as and when she considers necessary and if requested by the
members of the committee representing 33% of the voting rights
(B) RP shall convene a meeting of the Creditors if requested by the members of the committee representing 66%
of the voting rights
(C) RP shall convene a meeting of the Creditors by the members representing 75% of the voting rights
(D) RP shall convene a meeting of the Creditors if requested by all of the members of the committee

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Q 434 What shall be the quorum of the meeting of creditors convened by the RP in the given
scenario?

(A) At least 33% of the total number of creditors are present

(B) At least 33% of the voting right are present
(C) At least 66% of the total number of creditors are present
(D) At least 66% of the voting right are present

Q 435 Who will act as Chairperson of the Committee of Creditors :

(A) The Managing Director of the DS Jewellers Ltd

(B) The Company Secretary of the DS Jewellers Ltd.
(C) The Financial Creditor having the highest voting rights
(D) Ms. Nimmi

Q 436 What shall be notice period for calling of the CoC Meeting by Ms. Nimmi in the given case

(A) three days' notice in writing.

(B) not less than five days' notice in writing.
(C) seven days' notice in writing.
(D) within 48 hours of the scheduled meeting.

Q 437 For conduct of the CoC meeting, whom amongst the following shall be served the notice of
the CoC meeting :

(A) members of Committee of creditors, including the authorized representatives

(B) members of the Board of Directors of the corporate persons,
(C) operational creditors or their representatives if the amount of their aggregate dues is less than ten per cent of the
debt.
(D) Financial and Operational creditors both

Case Scenario 2
Toy Steel Limited (TSL), a famous steel manufacturing company sharing good ethical values
with good clienteles in the market. Following were the financial position as on March 31,
2017, the company had a paid-up share capital of ₹ 20 crores with 1150 shareholders and
after-tax net profit to the tune of ₹10.25 crores. However, a shocking event took place in
May 2017 which led to the downfall of the company. It so happened that, Mr. Pratap, the
owner of the company was diagnosed with serious disease due to which he was unable to
manage the rising business and consequently, the reins of the business slipped into the hands
of his two young but inexperienced sons V and S.

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In an attempt to raise the company to further heights, the Gen-Next management took a
heavy loan of ₹ 70 crores from National Bank Limited. The funds so borrowed were not
properly utilised due to the weak managerial skills of the new leadership and for want of
guidance from Mr. Pratap; and it caused the company to fall to such an extent that in just
four years after Mr. Pratap’s illness it was felt expedient to go for some kind of compromise
or arrangement if the company had to survive in the near future.
The top management of the company decided to provide for the following scheme of
arrangement:

“Sale of a part of plant and machinery and also a vacant plot for appropriating the proceeds so
received for repayment of 70% of the outstanding term loan availed from National Bank
Limited. The remaining 30% of loan shall be rescheduled for repayment in installments spread
over next five years.”

It is noteworthy that National Bank Limited had given in-principle approval to the above
repayment plan, if sanctioned.

Accordingly, TSL made an application in the specified Format along with requisite
documents to the jurisdictional National Company Law Tribunal (NCLT).

The Tribunal ordered for a meeting of the shareholders to be held on 10th October, 2021 at
11.00 A.M. at the registered office of the company situated at Connaught Place, New Delhi
and the company was directed to issue a suitable notice for conducting the meeting of the
shareholders. Some of the shareholders raised objections against the said arrangement

Based on the above scenario, answer the following questions:

Q 438 The Case Scenario states that some of the shareholders raised objections against the said
arrangement. Since the compromise or arrangement is to be agreed in compliance to majority of
persons (without considering the value) as prescribed in the Companies Act, 2013, who attend and
vote at the meeting through specified modes. State the Compliance requirement of majority
required for approval:

(A) Simple majority where votes cast in favour of compromise or arrangement exceed the votes cast against it.
(B) Sixty percent or more majority where votes cast in favour of compromise or arrangement are 60% or more.
(C) Seventy five percent or more majority where votes cast in favour of compromise or arrangement are 75% or
more.
(D) Full majority where all the votes are cast in favour of compromise or arrangement.

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Q 439 It is observed from the above Case Scenario that the Tribunal has ordered for a meeting of
the shareholders to consider the scheme of arrangement. The notice of such meeting shall provide
that the persons to whom the notice is sent may vote on the scheme of compromise or arrangement:

(A) Only by themselves keeping in view the importance of meeting.

(B) By themselves or through proxies appointed by them.
(C) By themselves or through proxies appointed by them but any such appointed proxy must hold minimum one
share in the company.
(D) By themselves or through proxies appointed by them or by postal ballot.

Q 440 In the said Case Scenario some of the shareholders raised objections against the said
arrangement. Since the compromise or arrangement is to be agreed by specified majority of
persons (considering the value they hold) who attend and vote at the meeting through specified
modes, then which kind of majority in value is required for approval of the scheme:

(A) Specified majority of persons who cast votes in favour of compromise or arrangement must hold fifty one
percent or more in value.
(B) Specified majority of persons who cast votes in favour of compromise or arrangement must hold sixty percent
or more in value.
(C) Specified majority of persons who cast votes in favour of compromise or arrangement must hold seventy five
percent or more in value.
(D) Full majority where all the votes are cast in favour of compromise or arrangement

Q 441 A reading of the above Case Scenario reveals that some of the shareholders raised objections
against the said arrangement. From the legal point of view who is eligible to raise an objection to
the scheme of compromise or arrangement if he is a shareholder of the company:

(A) Persons holding not less than 10% of the shareholding as per the latest audited financial statement.
(B) Persons holding not less than 5% of the shareholding as per the latest audited financial statement.
(C) Persons holding not less than 7.5% of the shareholding as per the latest audited financial statement.
(D) Persons holding not less than 15% of the shareholding as per the latest audited financial statement.

Independent MCQs

Q 442 A certificate of registration was granted to an NGO on the 1st January, 2018. A request for
renewal of the certificate was received by the Central Government, by the 30th June, 2022. But the
request was not accompanied by the renewal fee. Comment on the validity of the registration
certificate issued on 1st January 2018.

A) A certificate of registration granted on the 1st January, 2018 shall be valid till 30th June, 2018.
B) A certificate of registration granted on the 1st January, 2018 shall be valid till 30th June, 2022.
C) A certificate of registration granted on the 1st January, 2018 shall be valid till 30th July, 2022.
D) A certificate of registration granted on the 1st January, 2018 shall be valid till the 31st December, 2022.

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Q 443 Mr. X, a person comes to India on 1st June 2019 for visiting his parents. However, his
parents fall sick and he stays till 31st March 2020. Thereafter he continues to stay in India. He
decided to live in India for next 6 months by the time his parents recovers. In the light of the given
case, determine the correct residential status of Mr. X from the given statements.

A) Mr. X is PRII as he did reside in India in the FY 2019-2020.

B) Mr. X is PRII as he reside in India for more than 182 days in the FY 2019 -20.
C) Mr. X is PROI in the FY 2019-20, but will be treated as PRII from 1st April, 2020, as he resides in India for
more than182 days in the previous FY.
D) In His stay in India is neither for employment, nor for business, nor for circumstances which show that his stay
in India for an uncertain period. In FY 2019-20, he is a PROI as he did not reside in India for more than 182 in
FY 2018-19.

Q 444 Under the garb of cement business, some of the directors of Royal Cement Limited, a
company incorporated in the year 2001 and having its factories at Rohtak and Bhiwani, were
involved in several illegal activities. In such a situation, on receipt of a report of the Registrar of
Companies or inspector under Section 208 or in the public interest or on request from any
Department of the Central Government or a State Government, the Central Government may, by
order, assign the investigation into the affairs of Royal Cement Limited to the Serious Fraud
Investigation Office (SFIO). In addition to the above bases, there is one more basis which may
prompt the Central Government to assign the investigation to the Serious Fraud Investigation
Office (SFIO). From the following four options, choose such appropriate basis for assigning the
investigation to the SFIO.

A) On intimation through an Ordinary Resolution passed by the shareholders of Royal Cement Limited that the
affairs of the company are required to be investigated.
B) On intimation through a Special Resolution passed by the shareholders of Royal Cement Limited that the
affairs of the company are required to be investigated.
C) On an intimation received from certain senior employees of Royal Cement Limited that the affairs of the
company are required to be investigated.
D) On an intimation received from certain ex-directors of Royal Cement Limited that the affairs of the company
are required to be investigated.

Q 445 Due to non-compliance of certain requirements under the Companies Act, 2013 not
amounting to fraud, Shikha Super-Market Limited was required to re-state its financial statements
for the financial year 2017-18 during the current year. After the financial statements were restated,
it was found that Mr. Kumar, the Managing Director (MD) of that period, who is now retired, was
paid excess remuneration to the extent of ₹ 5,00,000. In the given situation, choose the correct
option out of those given below, which indicates whether such excess remuneration paid to ex-MD
Mr. Kumar is recoverable or not.

A) Excess remuneration of ₹ 5,00,000 paid to Mr. Kumar, ex-MD of Shikha Super-Market Limited, cannot be
recovered since such recovery after retirement is invalid.
B) Excess remuneration of ₹ 5,00,000 paid to Mr. Kumar, ex-MD of Shikha Super-Market Limited, shall be
recovered irrespective of his retirement from the company.
C) Only ₹ 2,50,000, being 50% of excess remuneration of ₹ 5,00,000, paid to Mr. Kumar, ex-MD of Shikha
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Super-Market Limited, is validly recoverable because no fraud implicating him is involved.
D) Only ₹ 1,25,000, being 25% of excess remuneration of ₹ 5,00,000, paid to Mr. Kumar, ex-MD of Shikha
Super-Market Limited, is validly recoverable because no fraud implicating him is involved.

September 2022 MTP

CASE SCENARIO 1

Manit persuaded his B.Tech studies from IIT, Kanpur. He plans to do MS from US. Based
on his qualification and ranking in the B.Tech, he got the scholarship from a US Company
with a condition that he has to serve in that US company for a period of 3 years after
completing of MS.
Manit’s father Shyam Lal is a Member of Parliament (MP). The tenure of the Lok Sabha is
going to end just
after 6 months. The associated political party this time denied him to give ticket in the
forthcoming election.
Therefore, Mr. Shyam Lal planned to fight election in his individual capacity. He contacted
with his many friends of political backgrounds. He asked Manit over there, to contact them
for providing of funds. These funds so collected will be utilized, at the time of election, for
campaigning.
Manit’s paternal aunt, (father’s sister) is residing in US. She on the occasion of his 25th
marriage anniversary sent USD 1000 to his brother as token of love.
Mr. Ram, a construction company, was assigned with a project on the development of model
transportation system with many basic and latest facilities under the Ministry of
Transportation. Being a good friend of Mr. Shyam, he asked Mr. Shyam to take with him,
visit to US as he was to go on for official visit to study the road transportation system in US
on behalf of transportation ministry. In US, Shyam Lal was also offered hospitality and was
provided free travelling and hotel stay.

Based on the above scenario, answer the following questions:

Q 446 Who amongst the following, shall not be prohibited to accept foreign contribution;

A) Manit
B) Mr. Shyam, being a candidature for coming election
C) Mr. Shyam, being a member of legislature
D) Mr. Ram, being a government representative

Q 447 Manit collected funds on behalf of his father for the forthcoming elections, which he remitted
to India. Whether such foreign contribution is permissible:

A) Yes, as Manit is student in US so whatever the amount he is collecting is exempted, therefore such
contribution is permissible.
B) No, as Manit is collecting the money in USD as a foreign contribution for the election of his father, hence it is
prohibited.
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C) Yes, it is permitted, if the Election Commission do not objects on the amount.
D) Yes, if it is permitted by the RBI, having no objections on such collection of fund for the election purpose.

Q 448 Manit’s Aunt residing in US, sent USD 1000 to Mr. Shyam Lal. Whether Shyam Lal can
receive such foreign contribution:

A) No, as foreign contribution for a candidate for election is prohibited

B) Yes, subject to the prior approval of the RBI
C) Yes, subject to the prior approval of the Enforcement Directorate
D) Yes, Foreign contribution from a relative is permitted

Q 449 While on official visit with Mr. Ram, Shyam Lal availed hospitality from a transport
company in US. Whether such activity is permitted:

A) Shyam Lal has not accepted any cash and the hospitality was in kind so it is permitted
B) Shyam Lal being a Member of Parliament, should not avail that hospitality since it is prohibited
C) Shyam Lal can enjoy the US tour since the Government of India has sent him there
D) Shyam Lal being a Member of Parliament should take prior permission of the Central Government before
taking any foreign hospitality

CASE SCENARIO 2

Subh-Labh Savings and Investments (Nidhi) Ltd. was incorporated for the purpose of
inculcating savings habits among its members on 31st July 2022. The company filed a
prescribed Form with the Registrar, for declaration it as a Nidhi company.
Just after the incorporation, the company issued 3 lakh shares of ₹ 10/- each and made a
first call of ₹ 5/- only.
The company is paying interest on deposits to its members @ 6% p.a. whereas the interest
on loan is charged @15%.
After the end of one year from the date of incorporation, the company’s membership
strength reached to 560 and its Net Owned Funds (NOF) ₹ 15 lakhs. The deposits mobilized
through the members reached to ₹ 375 lakhs.

Based on the above scenario, answer the following questions:

Q 450 State in which of the business, Subh–Labh Ltd. can be engaged:

A) enter into any partnership arrangement in its borrowing or lending activities

B) raise loans from banks or financial institutions or any other source
C) business of borrowing or lending in its own name
D) carry on the business of leasing finance

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Q 451 By what time, Subh–Labh Ltd. is required to ensure that they may have atleast 200
members:

A) By 31st December 2022

B) 31st March 2023
C) 30th April 2023
D) 30th July 2023

Q 452 In the given case, if, the NOF is ₹ 15 lakh and deposits mobilised from members is ₹ 375 lakh,
which gives ratio of NOF to deposit as 1: 25. State what shall be the correct answer with respect to
the ratio of Net Owned Funds for deposits

A) 1:10
B) 1:15
C) 1:20
D) 1:25

Q 453 What shall be the minimum paid up equity share capital requirement of Subh-Labh Ltd:

A) Five lakh rupees

B) Ten lakh rupees
C) Twenty lakh rupees
D) Twenty-Five rupees

Q 454 A Subh–Labh Ltd. shall not accept deposits:

A) exceeding twenty times of its Net Owned Funds as per its last audited financial statements.
B) Not exceeding twenty times of its Net Owned Funds as per the last financial year.
C) Not less than twenty times of its Net Owned Funds as per the last financial year
D) more than twenty five times of its Net Owned Funds as per the last financial year

Independent MCQS

Q 455 Mr. Q, a Director of PQR Limited, is proceeding on a foreign tour covering entire Europe
for four months. He proposes to appoint Mr. Y as an alternate Director to act on his behalf during
his absence. The Articles of Association of PQR Limited provide for the appointment of alternate
Directors. Mr. Q claims that he has a right to appoint alternate Director of his choice. Which of the
following options is applicable in the given situation:

A) Claim made by Mr. Q to appoint Mr. Y as alternate Director is valid as the Articles of Association of PQR
Limited provide for such appointment.
B) Claim made by Mr. Q to appoint Mr. Y as alternate Director is not valid as the authority to appoint alternate
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Director has been vested in the Board of Directors only and that too subject to empowerment by the Articles of
Association.
C) Mr. Y cannot be appointed as an alternate Director in place of Mr. Q since Mr. Q is proceeding on a foreign
tour covering entire Europe for four months only which is less than the required absence of minimum six
months.
D) Mr. Y cannot be appointed as an alternate Director in place of Mr. Q since Mr. Q is proceeding on a foreign
tour covering entire Europe for four months which is more than the required absence of maximum three
months.

Q 456 Requisite number of shareholders of Vimaan Aerospace Limited, which has been
incorporated under the Companies Act, 2013, filed an application with the National Company Law
Tribunal (NCLT) under Section 241 highlighting the mismanagement in the conduct of the affairs
of the company. Taking cognizance of the application, the National Company Law Tribunal
(NCLT) passed an order under Section 420 on November 23, 2021, providing the sought after relief
to the shareholders of Vimaan Aerospace Limited. On finding some mistake in the order, the
shareholders brought the same to the notice of NCLT for rectification. You are required to select
the correct statement from those given below as to the circumstances under which NCLT would be
able to amend its order and the maximum period which the said order can be amended

A) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at
any time within a period of six months from the date of such order provided no appeal has been made against
the said order.
B) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at
any time within a period of one year from the date of such order provided no appeal has been made against the
said order.
C) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at
any time within a period of two years from the date of such order provided no appeal has been made against
the said order.
D) National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from the record
when such mistake is brought to its notice by the parties and further, the order can be amended by NCLT at
any time within a period of three years from the date of such order provided no appeal has been made against
the said order.

Q 457 On June, 20, 2017, Mr. Anil Mehra was appointed as Manager of PQR Music Systems
Limited for a period of five years. Considering his performance and dedication towards the
company, the management of PQR Music Systems Limited decided to re-appoint him as Manager
before the completion of his tenure. Out of the following four options, choose the one which
indicates the date on which his re-appointment will be considered valid?

A) June 24, 2021.

B) February 1, 2021.
C) March 12, 2020.
D) September 10, 2020

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Q 458 Akshara Builders and Developers Ltd., a company listed on BSE Limited, is contemplating
upper revision in the rate of interest of its existing 12% bonds by 1% so as to make them 13%
bonds with effect from August 14, 2021. The said proposal is to be laid before the Board of
Directors at a Board Meeting to be held on July 14, 2021. From the following options, choose the
one which correctly indicates the latest date by which Akshara Builders and Developers Ltd. is
required to intimate the BSE Limited about the Board Meeting where increase in rate of interest is
being considered, keeping in view the Regulation 29 of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015:

A) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 1, 2021.
B) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 3, 2021.
C) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 5, 2021.
D) Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting, where
increase in rate of interest is being considered, latest by July 7, 2021.

Q 459 As per the Companies Act, 2013, every petition filed before the Tribunal shall be disposed of:

A) Within 1 month from the date application is admitted

B) within 2 months from the date of first hearing
C) within 3 months from the date of its presentation
D) within 6 months from its filing

Q 460 Trial of an offence under the Companies Act, by special court shall be of such an offence:

A) which is punishable with imprisonment for a term exceeding one year

B) which is punishable with imprisonment for a term not exceeding one year
C) which is punishable with imprisonment for a term exceeding three years
D) which is punishable with imprisonment for a term not exceeding three years

Q 461 Who amongst the following may file an application for the restoration of the name of the
company in the register of company and within the period of:

A) The Company itself and within 2 years from the date of passing of the order dissolving the company
B) The authorised officials of the company and within 2 years from the date of passing of the order dissolving the
company
C) NCLT and within 3 years from the date of passing of the order dissolving the company
D) Registrar and within 3 years from the date of passing of the order dissolving the company

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Q 462 Chetan Motorboats Limited, incorporated on 25th June, 2021 is desirous of making
donations to a reputed political party. Out of the following options, choose the one which correctly
depicts as to when Chetan Motorboats Limited shall be eligible to make such donations to a
political party:

A) Chetan Motorboats Limited shall be eligible to make donations to a political party after one year from the date
of its incorporation.
B) Chetan Motorboats Limited shall be eligible to make donations to a political party after two years from the
date of its incorporation.
C) Chetan Motorboats Limited shall be eligible to make donations to a political party after three years from the
date of its incorporation.
D) Chetan Motorboats Limited shall be eligible to make donations to a political party after five years from the
date of its incorporation.

October 2022 MTP

CASE SCENARIO 1

Maps and Architectures Ltd., (the Company) was incorporated as a public limited company
and the Certificate of Incorporation was given on 15th April 2021. Its Authorised Capital is
500 crores rupees and paid-up capital is 100 crores rupees. The Articles of the Company do
not have any provision relating to the appointment of the first director. Satish is holding a
degree in BE (Civil) and the company want him to have in its Board as an Independent
Director. Satish is a partner in ‘Satish Consultants LLP’ (A Limited Liability Partnership)
and holds Designated Partnership Identification Number (DPIN). The Company appointed
Ms. Surekha (wife of Praveen, the Promoter and Managing Director of the Company) as
Woman Director with effect from 1st December, 2021. Ms. Surekha, however, failed to
inform the Company about the Director’s Identification Number (DIN).

Based on the above scenario, answer the following questions:

Q 463 Can the company in the given case, appoint Ms. Surekha as a woman director on the Board:

A) No, being an unlisted company

B) Yes, it’s a mandatory requirement for every Public Limited Company having Authorised Capital of 100 Crore
Rupees to appoint at least one woman director.
C) No, as the company is not meeting the requirement of holding more than Paid-up Capitals of 100 Crore
D) Yes, as every Public Limited Company having Paid-up Capitals of 100 Crore or more is eligible to appoint at
least one-woman director

Q 464 In given case scenario, who shall be appointed as the first directors of the Company?

A) The first directors shall be, those who are appointed by the company in the General Meeting.
B) The first directors shall be, those who are appointed by the Promoters of the Company.
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C) Where the Articles of the Company have no provision for the appointment of the first directors, then
subscribers to the Memorandum, shall be the first directors of the Company.
D) Till the directors are appointed by the Company in General Meeting, the Promoters will run the company.

Q 465 Satish is a partner in ‘Satish Consultants LLP’ (A Limited Liability Partnership) and holds
Designated Partnership Identification Number (DPIN). Whether Satish shall be required to apply
for Director Identification Number (DIN) for being an Independent Director in the Company:

A) Yes, Satish is required to apply for the DIN

B) Since Satish shall hold the position of Independent Director, hence he is not required to apply for the DIN
C) Since Satish is already having the DPIN hence there is no need to apply for DIN.
D) For each of the entity (Whether LLP or a Company) one has to apply for the separate DIN.

Q 466 Ms. Surekha, failed to inform the Company about the Director’s Identification Number
(DIN). What are the consequences for such failure:

A) Since Surekha, who has been appointed as ‘Woman Director’, is the wife of wife of Praveen, (the Promoter
and Managing Director of the Company), hence not liable for any penalty
B) Surekha being a ‘Woman Director’ is exempted from the penal provisions
C) Surekha shall be liable for a penalty of 50,000 rupees
D) Surekha shall be liable for a penalty up to 50,000 rupees

CASE SCENARIO 2

Sumona is the Managing Director of Everest Marbles Limited (EML). She joined the EML
as an Officer and gradually promoted and reached to the position of General Manager. She
was elevated to the post of Managing Director with effect from 30th April, 2021. Sumona
celebrated her 70th birth day on 10th June 2022.

Dharmesh, one of the directors of the company went to Germany in May 2021 for his
medical treatment. After May 2021 to June 2022, the Board’s Meetings of the Company
were held 6 times and in all these meetings Dharmesh neither joined the Board’s Meeting
physically nor through the Video Conferencing. However, every time he sought the leave of
absence of the Board quoting the reason of having undergone major surgical operation in
Germany, he is confined to bed and cannot move.

Samant, another director of the company got a ticket of MP from a political party, for the
upcoming election to be held in December, 2022. The Political Party insisted Samant to get
some contribution from his company. Samant put a request before the Board Members to
make political contribution to the tune of 10 lakh rupees. It is to mention here that the
company is incurring losses for the past three years and the accumulated losses as at the end
of the FY ending of March 2022 amounted to 25 crores. The company’s paid-up is 150 crore
rupees.
Raghvan, is a Chartered Accountant (CA) and is designated as Chief Financial Officer
(CFO) of the company. He tendered his resignation to the company on account of personal
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reasons. Triloki, who is junior to Raghvan, was designated as new CFO. Triloki is not
having formal qualification of accounting like CA, but is well versed with the accounting
principles by virtue of his experience in the accounts department.

Based on the above scenario, answer the following questions:

Q 467 Whether Sumona, after reaching of age of 70 years, can continue to remain on the position of
Managing Director:

A) No, after reaching of the age of 70 years, no person is allowed to remain on the position of Managing Director
B) The Company may by passing a special resolution along with the explanatory statement annexed to the notice
for such motion, in the General Meeting, may continue Sumona for the post of Managing Director
C) Since Sumona was appointed as Managing Director with effect from 30 th April, 2021, so she can continue up
to 5 years from the date of appointment
D) The Board of Directors may pass a resolution for continuation of Sumona for the post of Managing Director

Q 468 What is the consequence for not attending of the Board’s Meeting by Dharmesh:

A) Dharmesh will continue to hold the position of directorship.

B) Dharmesh has every time sought the leave of absence of the Board, hence he can continue to hold the
directorship.
C) Dharmesh shall be required to vacate his office of director irrespective of the fact that he sought absence of
leave of the Board
D) Since Dharmesh could not joined the Board’s Meeting due to his ill health, so on the medical ground, he is
exempted from the provision and can continue to hold the office of director.

Q 469 Samant put a request before the Board Members to make political contribution to the tune of
10 lakh rupees on being insisted by the Political Party insisted. In the light of the given facts, which
among the following statement with regards to political contribution by a EML, is correct:

A) Only a profit-making company can make political contribution.

B) There is ceiling of 0.10% of the paid-up capital.
C) There is ceiling of 0.10% of the profit as per the latest audited financial statements, since the company has
incurred losses, hence not eligible to make political contribution.
D) A company which has been in existence for 3 years or more may contribute any amount to anypolitical party
subject to the passing of such resolution in its Board’s Meeting.

Q 470 State whether Triloki is eligible to be appointed as CFO:

A) No, as CFO should necessarily be a Chartered Accountant

B) No, as CFO should have accounting knowledge
C) Yes, he can be appointed as CFO, as he is well versed with the accounting principles by virtue of his
experience in the accounts department.
D) No, as per requirement, CFO should be a Cost Accountant

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Q 471 What’s the requirement for the appointment of Triloki as CFO in the company?

A) The CFO shall be appointed by means of a resolution of the Board containing the terms and conditions of the
appointment including the remuneration.
B) The CFO shall be appointed by the Audit Committee of the Board by means of a resolution containing the
terms and conditions of the appointment including the remuneration.
C) The CFO shall be appointed by means of a special resolution by the members in the General Meeting
containing the terms and conditions of the appointment including the remuneration.
D) The CFO shall be appointed by means of an ordinary resolution by the members in the General Meeting
containing the terms and conditions of the appointment including the remuneration.

Independent MCQS

Q 472 Innovations Ltd. is a company engaged in the business of manufacturing and selling of
electronic goods which are used for domestic purpose. The company is having its registered office
at Mumbai with 500 members. Some of the members came to know that the business of the
company is being conducted with intent to defraud its members. The promoters of the company are
actually enjoying with the public money, siphoned the shareholders capital in purchasing the real
estate in the names of the promoters.
During the course of the AGM of company in Mumbai, the members assembled there, planned to
have an investigation of the affairs of its business.
In order to make an application to the National Company Law Tribunal, how many members are
required?:

A) Not less than 50 members or members holding not less than one-fifth of the total voting power
B) Not less than 100 members or members holding not less than one-tenth of the total voting power
C) Not less than 150 members or members holding not less than one-tenth of the total voting power
D) Not less than 200 members or members holding not less than one-tenth of the total voting power

Q 473 Accurate Arms and Ammunitions Ltd. is a company engaged in manufacturing of ultra -
powered sophisticated guns. The company has tie-up arrangement of supply of 100% of its
production to the Central Government. The production capacity and the actual number of guns
manufactured is required to be shown to the Central Government. During the course of the audit, it
was revealed that the company was actually manufacturing more guns whereas less quantity was
being declared. The undeclared manufactured guns were being sold to a group of persons having
connections with terrorist groups. On what ground the Central Government can make an
application to the NCLT:

A) The company has mis-reported the count of the manufactured guns

B) The manufacturing of the guns is against the public policy and only he Government owned company can
manufacture the guns
C) The company has acted against the interests of the sovereignty and integrity of India
D) The Company has supplied less number of guns to the Central Government

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Q 474 Shrenik Ltd. is a listed entity and comes under the top 2000 listed entities (as of 1st April,
2020). The Board consists of 10 directors. Abhijit, one of the directors of the company has
celebrated his 75th Birthday on 10th June 2022. By virtue of his rich qualifications and experiences,
the company want to continue him. What procedure is to be followed by the company:

A) The Company has to pass a special resolution to this effect.

B) The Company has to pass a resolution in its Board’s Meeting.
C) The requirement of passing a special resolution is only in case of Managing Director and not for the any other
Director.
D) A person can continue to hold the directorship, as far as he is of good health and have willingness to continue.

Q 475 Priti, on 1st September, 2021 went to UK for doing one year MBA course. Her MBA course
completed on 31st August, 2022 and she returned India on the next day. What shall be her
residential status for the FY 2022-23 and 2023-24

A) Resident in India for FY 2022-23 and FY 2023-24

B) Resident in India for FY 2022-23 and Resident outside India for FY 2023-24
C) Resident outside India for FY 2022-23 and FY 2023-24
D) Resident outside India for FY 2022-23 and Resident in India for FY 2023-24

Q 476 Kamlesh has got the admission in a US based University names as ‘Illinois Institute of
Technology’, where he does the MS in Technology. The initial expenses for travelling and other
miscellaneous expenses to US were born by the Kamlesh’s father. After taking the formal
admission i n the course, the University provide scholarship to Kamlesh to cover the cost of
education and stay. Other expenses are to be meet out by the candidate from his own source. In
light of this fact, what shall be the treatment of receiving of the scholarship from the Foreign
Source in reference to the Foreign Contribution (Regulation) Act, 2010

A) Receiving of such foreign contribution is prohibited under the FCRA.

B) Receiving of such foreign contribution require prior registration with the Central Government.
C) Receiving of such foreign contribution in the nature of scholarship comes under the exempted category.
D) Receiving of scholarship from foreign university is not permitted activity since no reciprocal arrangement are
present in India.

Q 477 New Era Financial Services Limited of New Delhi, registered with Reserve Bank of India as
Non-banking Financial Company (NBFC), has defaulted in the payment of dues to its catering
contractor, Samarth Sweets, a partnership concern owned by two real brothers Swarn and Shivi.
From the following four options, select the one which indicates whether Samarth Sweets being
catering contractor can initiate insolvency resolution process under the Insolvency and Bankruptcy
Code, 2016, against the company in the capacity as an operational creditor:

A) The catering contractor Samarth Sweets in the capacity as operational creditor is entitled to initiate insolvency
process against New Era Financial Services Limited.
B) The catering contractor Samarth Sweets in the capacity as operational creditor is not entitled to initiate
insolvency process against New Era Financial Services Limited because ‘financial service providers’ are
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excluded.
C) The catering contractor Samarth Sweets in the capacity as operational creditor is not entitled to initiate
insolvency process against New Era Financial Services Limited since it is a partnership concern and not a
limited company.
D) Since ‘catering service provider’ is an excluded service, the catering contractor Samarth Sweets in the capacity
as operational creditor is not entitled to initiate insolvency process against New Era Financial Services
Limited.

“SOLUTIONS”
SN Reasons
433 RP shall convene a meeting of the Creditors as and when she considers necessary and if requested by
the members of the committee representing 33% of the voting rights
A
Refer Regulation 18 of the of IBBI (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016
434 At least 33% of the voting right are present
B Refer Regulation 22 of the of IBBI (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016]
435 D Ms. Nimmi as she is the Resolution Personal
436 not less than five days' notice in writing.
B [Refer Regulation 19 of the of IBBI (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016.]
437 members of Committee of creditors, including the authorized representatives
A
Refer Section 24 IBC 2016
438 Simple majority where votes cast in favour of compromise or arrangement exceed the votes cast
A
against it Refer Section 230 Companies Act 2013
439 By themselves or through proxies appointed by them or by postal ballot. Refer Section 230
D
Companies Act 2013
440 Specified majority of persons who cast votes in favour of compromise or arrangement must hold
C
seventy five percent or more in value. Refer Section 230 Companies Act 2013
441 Persons holding not less than 10% of the shareholding as per the latest audited financial statement.
A
Refer Section 230(4) Companies Act 2013
442 A certificate of registration granted on the 1st January, 2018 shall be valid till the 31st December,
D
2022.Refer Section 12 FCRA (as registration is valid for 5 years)
443 His stay in India is neither for employment, nor for business, nor for circumstances which show that
D his stay in India for an uncertain period. In FY 2019-20, he is a PROI as he did not reside in India
for more than 182 in FY 2018-19 Refer PRI definition under FEMA
444 On intimation through a Special Resolution passed by the shareholders of Royal Cement Limited
B that the affairs of the company are required to be investigated. Refer Section208 Companies Act
2013
445 Excess remuneration of ₹ 5,00,000 paid to Mr. Kumar, ex-MD of Shikha Super-Market Limited, shall
B be recovered irrespective of his retirement from the company. Refer section 199 Companies Act
2013
446 A Manit Refer Section 3 FCRA
447 B No, as Manit is collecting the money in USD as a foreign contribution for the election of his father,
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hence it is prohibited Refer Section 3 FCRA
448 D Yes, Foreign contribution from a relative is permitted Refer Section 4 FCRA
449 Shyam Lal being a Member of Parliament should take prior permission of the Central Government
D
before taking any foreign hospitality Refer Section 6 FCRA
450 business of borrowing or lending in its own name Refer Rule 6 - General restrictions or
C
prohibitions of Nidhi rules
451 31st March 2023 Answer seems to be incorrect as correct answer should be within 120 days
B of incorporation 200 members should be there ,count 120 days from 31st July 2022 ,answer
should be 28th Nov 2022 Refer Rule 3B - Declaration of Nidhis
452 C 1:20 Refer Acceptance of Deposits by Nidhi (Rule 11)
453 B Ten lakh rupees Refer Rule 4 - Incorporation and incidental matters
454 exceeding twenty times of its Net Owned Funds as per its last audited financial statements Refer
A
Acceptance of Deposits by Nidhi (Rule 11)
455 Claim made by Mr. Q to appoint Mr. Y as alternate Director is not valid as the authority to appoint
B alternate Director has been vested in the Board of Directors only and that too subject to
empowerment by the Articles of Association Refer Section 161 of Companies Act 2013
456 National Company Law Tribunal (NCLT) can amend its order to rectify any mistake apparent from
the record when such mistake is brought to its notice by the parties and further, the order can be
C
amended by NCLT at any time within a period of two years from the date of such order provided no
appeal has been made against the said order. Refer Section 420 of Companies Act 2013
457 A June 24, 2021 Refer Section 196 of Companies Act 2013
458 Akshara Builders and Developers Ltd. is required to intimate BSE Limited about the Board Meeting,
where increase in rate of interest is being considered, latest by July 3, 2021. Refer Regulation 29
SEBI LODR -The listed entity shall give intimation to the stock exchange(s) at least eleven working
days before any of the following proposal is placed before the board of directors –
B
(a) any alteration in the form or nature of any of its securities that are listed on the stock exchange or
in the rights or privileges of the holders thereof.

(b) any alteration in the date on which, the interest on debentures or bonds, or the redemption
amount of redeemable shares or of debentures or bonds, shall be payable.
459 C within 3 months from the date of its presentation Refer section 422 of Companies Act 2013
460 which is punishable with imprisonment for a term not exceeding three years Refer section 436 of
D
Companies Act 2013
461 Registrar and within 3 years from the date of passing of the order dissolving the company Refer
D
section 252 of Companies Act 2013
462 Chetan Motorboats Limited shall be eligible to make donations to a political party after three years
C
from the date of its incorporation Refer Section 182 of Companies Act 2013
463 Yes, as every Public Limited Company having Paid-up Capitals of 100 Crore or more is eligible to
D
appoint at least one-woman director. Refer Section 149 of Companies Act 2013
464 Where the Articles of the Company have no provision for the appointment of the first directors,
C then subscribers to the Memorandum, shall be the first directors of the Company. Refer Section 152
of Companies Act 2013
465 C Since Satish is already having the DPIN hence there is no need to apply for DIN.
466 D Surekha shall be liable for a penalty up to 50,000 rupees Refer Section 159 of Companies Act 2013
467 The Company may by passing a special resolution along with the explanatory statement annexed to
B the notice for such motion, in the General Meeting, may continue Sumona for the post of Managing
Director Refer Section 196 of Companies Act 2013
468 C Dharmesh shall be required to vacate his office of director irrespective of the fact that he sought
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absence of leave of the Board Refer Section 167 of Companies Act 2013
469 A company which has been in existence for 3 years or more may contribute any amount to any
political party subject to the passing of such resolution in its Board’s Meeting. Refer Section 182 of
D
Companies Act 2013

470 Yes, he can be appointed as CFO, as he is well versed with the accounting principles by virtue of his
C
experience in the accounts department.
471 The CFO shall be appointed by means of a resolution of the Board containing the terms and
A
conditions of the appointment including the remuneration.
472 Not less than 100 members or members holding not less than one-tenth of the total voting power
B
Refer Section 213 of Companies Act 2013
473 C The company has acted against the interests of the sovereignty and integrity of India
474 The Company has to pass a special resolution to this effect. Refer Section 213 of Companies Act
A
2013
475 Resident outside India for FY 2022-23 and Resident in India for FY 2023-24 Refer PRI definition
D
under FEMA
476 Receiving of such foreign contribution in the nature of scholarship comes under the exempted
C
category. Refer Section 4 FCRA
477 The catering contractor Samarth Sweets in the capacity as operational creditor is not entitled to
B initiate insolvency process against New Era Financial Services Limited because ‘financial service
providers’ are excluded. Refer applicability of IBC 2016

Space for Notes

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“MCQs for Nov 2023”

“QUESTIONS”
May 2023

Integrated Case Scenario 1

The Central Government is empowered under Section 212(1)(c) to order
investigation into the affairs of a company in public interest by the Serious Fraud
Investigation Office (SFIO). For this purpose, SFIO is established under section
211, comprising director, expert and other officers as Government consider
necessary. Director of SFIO shall be officer of the Government of India having
knowledge and experience in dealing with matters relating to corporate affairs.
Any person who is booked for offence investigated by SFIO is punishable under
section 447. In order to bring ease for SFIO in conducting investigation, the
power of inspector vested upon it, therefore SFIO may examine the person on
oath.
An order issued by the Central Government for investigation in the Modern
Furniture Limited. Sufficient and convincing evidences has been found against
Ms. Smriti Shah, who is finance director, prima facie such evidences are enough
to order the recovery through attachment of asset obtained by her out of fraud
apart from other action. Ms. Smriti examined on oath, wherein she admits her
involvement in fraud and misappropriation. Investigating officers are following
this lead to identify who are all involved in trail thereof.
Officers and Employees are expected to provide required assistance to SFIO in
investigation, but assistance as well as required information not provided. As a
result, delay in completion of investigation took place, therefore it is not possible
to submit the report to government by the date specified in order issued by the
Central Government. The director of SFIO approached to you ‘a young
professional, and functional expert at SFIO’ and willing to know the recourse if
they not able to complete investigation and submit the report specified in the
order.
Your preliminary answer to Director is;

A question regarding the scope of Section 212 of the Companies Act, 2013 was
considered by hon’ble Apex Court in matter of Serious Fraud Investigation
Office v. Rahul Modi. Court observed that Section 212(3) provides that the
investigation orders are required to be completed within the specified time. If it
not so done, what should be the consequences and whether further proceedings
or investigations shall be unlawful.
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Court was of opinion that “the provision has to be seen in the context in which it
occurs in the statute. Therefore, the stipulation of Section 212(3) regarding
submission of the report ‘within such period as may be specified in the order’ is
not to be taken as mandatory, but as purely directory. On the objective
interpretation of the statutory provision, it cannot be said that on the expiry of
that period the mandate in favour of SFIO must come to an end. If it was to come
to an end, the legislation would have contemplated certain results thereof. In the
absence of any clear stipulation, an interpretation that with the expiry of the
period, the investigation must come to an end, will cause great violence to the
scheme of legislation and with the expiry of mandate SFIO would also be
powerless which would lead to an incongruous situation that serious frauds
would remain beyond investigation”.

You are required to pick correct option for following MCQs (1 – 5):

Q 478 Director of Serious Fraud Investigation Office, shall be an officer to the Government of
India having knowledge and experience in dealing with matters relating to corporate affairs, not
below the rank of -

A. Assistant Secretary
B. Deputy Secretary
C. Joint Secretary
D. Additional Secretary

Q 479 The investigation conducted under section 212(3) wherein investigation continues beyond
the time prescribed in the order of investigation and report has not been submitted to central
government, shall be -

A. Void
B. Valid
C. Irregular
D. Invalid

Q 480 Considering the expression of Section 212(6), an offence under Section 447 of the
Companies Act, 2013 shall be -
I. Cognizable
II. Non-cognizable
III. Bailable
IV. Non-bailable

A. I and III
B. I and IV
C. II and III
D. II and IV

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Q 481 The expression ‘officers and employees’ under Section 212(5) denotes -

A. Persons who are in employment of the company.

B. Persons who have been in employment of the company during period for which investigation is taking place.
C. Persons who are or have been in employment of the company.
D. Persons who are deemed to be in employment of the company, in opinion of SFIO

Q 482 The note of examination of Ms. Smriti shah, wherein she admitted her involvement in fraud
and misappropriation can be used as evidence against her if -
I. Taken down in wiring
II. Read over to Mr. Smriti
III. Signed by Ms. Smriti
IV. A copy of same handed over to Ms. Smriti

A. I and III is fulfilled

B. I, II and III is fulfilled
C. I, III and IV is fulfilled
D. All of I, II, III and IV fulfilled.

Independent MCQs

Q 483 Modern Furniture Limited is in expansion mode. Recently it has established the branches
and showroom in 25 different cities of India. Following are the balances shown on 9th December
2022 when board of Modern Furniture is considering to borrow money for expansion activities:
Particulars Amount (in ‘crore)
Share Capital 50000
Free Reserves 116000
Capital Redemption Reserve 28000
Revaluation Reserve 59400
Security Premium 32000
Secured Debt/Loans 98500
Unsecured Debt/Loan 33200
Unsecured Debt/Loan includes temporary loans of 30 lakhs, out which 13 lakhs raised for the purpose of
financial expenditure of a capital nature, whereas 8 lakhs repayable on demand and remaining 9 lakhs will be
repayable in three equal installment starting from next month. Advice the board of directors how much they can
borrow, with board resolution only.

A. 3.60 Crore
B. 3.73 Crore
C. 6.80 crore
D. 6.93 crore

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Q 484 In September, 2020, Mr. Purshottam Saha visited Atlanta as well as Athens and thereafter,
London and Berlin on a month-long business trip, for which he withdrew foreign exchange to the
extent of US$ 50,000 from his banker, State Bank of India, New Delhi branch. In December, 2020
he further, withdrew US$ 50,000 from SBI and remitted the same to his son Raviyansh Saha who
was studying in Toronto, Canada. In the first week of January, 2021, he sent his ailing mother
Mrs. Savita Saha for a specialised treatment along with his wife Mrs. Rashmi Saha to Seattle
where his younger brother Pranav Saha, holder of Green Card, is residing. For the purpose of his
mother’s treatment and to help Pranav Saha to meet increased expenses, he requested his banker
SBI to remit US$ 75,000 to Pranav Saha’s account maintained with Citibank, Seattle. In
February, 2021, Mr. Purshottam Saha’s daughter Devanshi Saha got engaged and she opted for a
‘destination marriage’ to be held in August, 2021 in Zurich, Switzerland. While on a trip to Dubai
in the last week of March, 2021, he again withdrew US$ 35,000 to be used by him and Devanshi
Saha for meeting various trip expenses including shopping in Dubai. Later, the event manager
gave an estimate of US$ 2,50,000 for the wedding of Devanshi Saha at Zurich, Switzerland. Which
option do you think is the correct one in the light of applicable provisions of Foreign Exchange
Management Act, 1999 including obtaining of prior approval, if any, from Reserve Bank of India
since Mr. Purshottam Saha withdrew foreign exchange on various occasions from his banker,
State Bank of India.

A. In respect of withdrawal of foreign exchange on various occasions from his banker State Bank of India and
remitting the same outside India during the financial year 2020-21, Mr. Purshottam Saha is not required to
obtain any prior approval.
B. In respect of withdrawal of US$ 35,000 in the last week of March, 2021, for a trip to Dubai, Mr. Purshottam
Saha must have obtained prior approval of Reserve Bank of India since the maximum amount of foreign
exchange that can be withdrawn in a financial year is US$ 1,75,000.
C. After withdrawing US$ 1,00,000, Mr. Purshottam Saha must have obtained prior approval of Reserve Bank of
India for the remaining remittances made during the financial year 2020-21, otherwise SBI would not have
permitted further withdrawals.
D. After withdrawing US$ 50,000, Mr. Purshottam Saha must have obtained prior approval of Reserve Bank of
India for the remaining remittances made during the financial year 2020-21, otherwise SBI would not have
permitted further withdrawals

Q 485 W Ltd. made the following compliances for the June 2022 quarter, as required by
SEBI(LODR) Regulations, 2015 :-
(1) It submitted its unaudited quarterly financial statements to the recognised stock exchange on
31st July, 2022.
(2) It submitted its quarterly compliance report on corporate governance on 10th July, 2022.
What shall be the last date of submission of quarterly financial statements to the stock exchange
for W Ltd., in case W Ltd. was not able to submit the same on 31st July, 2022, and whether it can
be submitted in unaudited form also?

A. 15th August, 2022 and no, it needs to be submitted in audited form.

B. 31st August, 2022 and yes, it can be submitted in unaudited form.
C. 31st July, 2022 and no, it needs to be submitted in audited form.
D. 15th August, 2022 and yes, it can be submitted in unaudited form.

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Q 486 Alexander Philip, a foreign citizen, has made donations in kind to his known resident
Indians for their personal use. When shall such donation in kind be excluded from the definition
of ‘foreign contribution’ considering the relevant provisions of Foreign Contribution (Regulation)
Act, 2010?

A. A donation in kind by a foreign citizen to a resident Indian shall be excluded from the definition of ‘foreign
contribution’, if the market value, in India, of such article, on the date of such gift, is more than ₹ 1,00,000 but
less than ₹ 5,00,000.
B. A donation in kind by a foreign citizen to a resident Indian shall be excluded from the definition of ‘foreign
contribution’, if the market value, in India, of such article, on the date of such gift, is more than ₹ 5,00,000 but
less than ₹ 10,00,000.
C. Any donation in kind given by a foreign citizen to a resident Indian for personal use is always excluded.
D. A donation in kind by a foreign citizen to a resident Indian shall be excluded from the definition of ‘foreign
contribution’, if the market value, in India, of such article, on the date of such gift, is not more than ₹ 1,00,000.

March MTP 2023

Case scenario 1

To provide banking services to the people living in Emakulam, Kerala, which still
was a far off location and devoid of accessing finance from nationalised banks and
Non-Banking Financial Companies (NBFCs), Nagarajan, his close friends
Krishnamurti, Raghunath, Govindam, Radhakrishnan, Vijay Krishnan and
Chaitanya, who were experienced and dedicated persons from the field of
business, trade and industry, thought of opening a Nidhi company which would
act as the safest and cheapest way of inviting deposits from them and granting
them loans.

Vinayak Strotram Nidhi Limited was thus incorporated by Nagarajan along with
this group of close friends on 10th July, 2014 in Emakulam District of Kerala.
The Authorised Capital of this Nidhi, which wanted to nurture the habit of
caution and savings among the members by receiving deposits from them and
lending money to them only for their mutual benefit, was ₹70,00,000 divided into
7,00,000 equity shares of ₹10 each while issued and paid-up capital stood at a
figure of ₹60,00,000 with just eight employees.
Through this Nidhi, savings could be deposited in the form of Savings Account,
Recurring Deposit Account, Fixed Deposit Account and Daily Deposit Accounts
while Vinayak Strotram Nidhi Limited granted loans to the members only against
securities of immovable properties and movables such as gold, silver, jewellery,
deposits, National Saving Certificates, life insurance policies and other
Government securities as per the prescribed rules for Nidhi companies.
Customer centricity was at the core of Managing Director Nagarajan and three
executive directors Krishnamurti, Raghunath and Govindam and it was this
belief that had led the business to build long term relationships.

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Since its inception, the Nidhi was earning profits year by year. In anticipation of
growing and rendering better services to their members and stabilizing it as a
profit centre, Nagarajan and his dedicated team felt that there was a demand for
opening some branches in the district itself. Thus, Vinayak Strotram Nidhi
Limited opened three more branches at Aluva, Kanayannur and Kothamanglam
in Emakulam district of Kerala. These branches were inaugurated with more
focus on deposit mobilization and lending which was a core business of this Nidhi.
The Nidhi brought within its fold experienced persons like retired senior
executives from national and multi-national banks to seek guidance and build it
as the pioneer in rendering best services by adopting latest technology.
By the end of March, 2021, Vinayak Strotram Nidhi Limited had 11,000 members
and 200 employees.
In the track of fast growth and with foresightedness in mind, Nagarajan desired
to open a new branch in another district of Kerala. He chose Kannaur district
since he had a special bonding with this place because he was an alumnus of
Kannaur University, having graduated in commerce from this famous University.
But instead of doing that way, he opened another Nidhi company by the name
Vinayak Strotram Kannaur Nidhi Limited in Kannaur district of Kerala.

Multiple Choice Questions

Q 487 What is the nature of the Vinayak Strotram Nidhi Limited :

A. It’s a public company with a minimum share capital exceeding 5 crore

B. It’s a Public company with a minimum share capital not exceeding 5 crore
C. It’s a public company with a minimum share capital of 10 crore
D. It’s a Public company with a maximum of share capital of 10 lakh .

Q 488 Suppose Krishnamurti, was appointed as one of the directors of Vinayak Strotram Nidhi
Limited in 2014 when the company was incorporated. He was eligible to hold the office for
consecutive 10 Years. Determine when he shall be eligible for re-appointment as director? Choose
the correct alternative from those stated below:

A. After expiry of six months of ceasing to be director of Vinayak Strotram Nidhi Limited, he shall be eligible for
re-appointment as director (i.e., after 9th January 2025)
B. After expiry of one year of ceasing to be director of Vinayak Strotram Nidhi Limited, he shall be eligible for
re-appointment as director (i.e., after 9th July 2025)
C. After expiry of two years of ceasing to be director of Vinayak Strotram Nidhi Limited, he shall be eligible for
re-appointment as director (i.e. after 9th July 2026)
D. After expiry of three years of ceasing to be director of Vinayak Strotram Nidhi Limited, he shall be eligible for
re-appointment as director (i.e. after 9th July 2027)

Q 489 Maximum how much interest Vinayak Strotram Nidhi Limited can offer on fixed and
recurring deposits accepted from its members? Select the correct option from those mentioned
below:

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A. Vinayak Strotram Nidhi Limited is permitted to offer interest on fixed and recurring deposits at a rate not
exceeding the maximum rate of interest that a Non-Banking Financial Company can pay on its public deposits.
B. Vinayak Strotram Nidhi Limited is permitted to offer interest on fixed and recurring deposits at a rate not
exceeding the maximum rate of interest that a nationalised bank can pay on its public deposits.
C. Vinayak Strotram Nidhi Limited is permitted to offer interest on fixed and recurring deposits at a rate not
exceeding the maximum rate of interest that a Rural Regional Bank can pay on its public deposits.
D. Vinayak Strotram Nidhi Limited is permitted to offer interest on fixed and recurring deposits at a rate not
exceeding the maximum rate of interest that a Co-operative Bank can pay on its public deposits.

Q 490 In which year at the earliest, Vinayak Strotram Nidhi Limited would have got the approval
to open branches at Aluva, Kanayannur and Kothamanglam in Emakulam district of Kerala.

A. At the earliest, after 9th July, 2015, Vinayak Strotram Nidhi Limited would have got the approval to open
branches at Aluva, Kanayannur and Kothamanglam in Emakulam district of Kerala.
B. At the earliest, after 9th July, 2016, Vinayak Strotram Nidhi Limited would have got the approval to open
branches at Aluva, Kanayannur and Kothamanglam in Emakulam district of Kerala.
C. At the earliest, after 9th July, 2017, Vinayak Strotram Nidhi Limited would have got the approval to open
branches at Aluva, Kanayannur and Kothamanglam in Emakulam district of Kerala.
D. At the earliest, after 9th July, 2018, Vinayak Strotram Nidhi Limited would have got the approval to open
branches at Aluva, Kanayannur and Kothamanglam in Emakulam district of Kerala

Case Scenario 2

Daily Needs Ltd. is a unlisted public company, engaged in the business of

supplying the daily needs of the house hold. It receives orders, on online basis and
make supplies to the customers at their door steps.
As on 31.03.2021, the total number of shareholders were 500. The share capital of
the company is 100 lakh rupees.
Gyan Singh is the Managing Director of the company. He joined this company in
April 2020. Prior to joining this company, Gyan Singh was the General Manager
in a NBFC. From the media sources, it came into picture that Gyan Singh was
involved in sanctioning the proposal of big loans without insisting the security from
the borrowers and many of the loan accounts during his tenure turned into NPA.
It shows the intention of Gyan Singh that he might have been involved in accepting
the bribe in sectioning the clean loans.
After joining this company, Gyan Singh started ordering his employees to supply
the goods at the shops of the retailers also on credit. Whereas the company’s policy
was to supply the essential daily needs at the door steps of consumers only. Many
of retailers used to visit the the MD’s office to supply the goods on credit. In some
of the cases the recovery from that retailers became difficult and the company had
to write -off these debts while finalising the annual accounts as of 31.03.2021.
Aggrieved from this, some 10 members of the company made an application before
the Tribunal making the company and its MD as respondents, that the affairs of
the company are being conducted in a manner prejudicial to the public interest
and requested for removal of the Managing Director.
The Tribunal turned down the application of the members mentioning therein that
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the members who applied for are not eligible to apply.
When Dharmesh, one of the shareholder came into the knowledge that the
Tribunal has turned down the application of 10 member, he himself alone applied
to the Tribunal making the company and its MD as respondent. Dharmesh is
holding 2 lakh of shares, consisting the face value of ₹ 20 lakh. He is also the
Member of the Parliament.
After accepting the application, the Tribunal heard both the parties and observed
that Gyan Singh was involved in mal-practices, on the basis of his past track
record and the present working. It opined tha t this person is not a fit and proper
person to continue as MD of the company and ordered for removal of Gyan Singh
from the post of Managing Director. The Managing Director claimed for the
compensation for removal of the office from the company, from the date of
removal to the remaining period.

Based on the above scenario, answer the following questions:

Q 491 In case of oppression and mismanagement, how many members can apply to the Tribunal:

A. Not less than 100 members are required to file an application with the Tribunal.
B. Not less than one-tenth of the total number of members i.e. 50 members (500/10= 50) are required to file an
application with the Tribunal
C. Not less than 100 members of the company or not less than one-tenth of the total number of its members,
whichever is less. i.e. 50 members are required to file an application with the Tribunal.
D. Not less than 100 members of the company or not less than one-tenth of the total number of its members,
whichever is higher i.e. 100 members are required to file an application with the Tribunal.

Q 492 On what grounds the application of Dharmesh was accepted by the Tribunal:

A. Dharmesh is the reputed person in the society.

B. Dharmesh is having the majority of shares in the company.
C. Dharmesh is having more than one-tenth share in the share capital of the company.
D. Dharmesh is Member of Parliament.

Q 493 Whether Tribunal have powers to remove the Managing Director, who was appointed by
the Board and the shareholders in the General Meeting:?

A. No, Tribunal do not have the powers to remove any official.

B. The Tribunal can only order for the winding up of the company if it is just and equitable for the company.
C. The Tribunal may after observing the mal-practices of the MD, can ask not to repeat it.
D. The Tribunal can terminate the service agreement arrived at between the company and the MD

Q 494 Whether Gyan Singh, the Managing Director can demand compensation from the company
from the date of removal to the remaining period:

A. The MD can demand the compensation from the date of removal to the remaining period.
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B. The MD can be relieved by notice with three month’s salary.
C. The MD can be relieved by notice with one month’s salary.
D. The MD cannot demand any compensation for loss of office

Q 495 Whether Gyan Singh after being terminated from this company, can apply to any other
company for the post of director or any other office:

A. After termination from this company, Gyan Singh can apply to any other company for the post of director or
any other office.
B. After termination from this company, Gyan Singh cannot apply to any other company for the post of director
or any other office, a period of one year.
C. After termination from this company, Gyan Singh cannot apply to any other company for the post of director
or any other office, a period of three years.
D. After termination from this company, Gyan Singh cannot apply to any other company for the post of director
or any other office, a period of five years.

Independent MCQs
Q 496 Supriya holds shares worth ₹13,50,000 in the capacity as one of the directors of Paridhi
Tours and Travels Limited (PTTL) whose paid-up share capital is ₹4,50,00,000. Swikriti Bus
Suppliers Limited (SBSL) with paid-up capital of ₹2,00,00,000 is in the business of supplying
tourist buses. Being in need of adding three more tourist buses in its existing fleet of ten buses,
PTTL through Supriya approached SBSL for the purpose of purchasing the required buses
knowing fully well that Supriya holds certain amount of shares in SBSL making her an interested
director. Out of the following four options, which one is applicable in the given situation

A. Supriya, as interested director, holds shares of SBSL of the value exceeding ₹1,00,000 but not exceeding ₹
1,50,000
B. Supriya, as interested director, holds shares of SBSL of the value exceeding ₹1,50,000 but not exceeding ₹
2,00,000
C. Supriya, as interested director, holds shares of SBSL of the value exceeding ₹2,00,000 but not exceeding ₹
3,00,000
D. Supriya is not an interested director as in order to be considered as an interested director Supriya was required
to have holding of shares exceeding ₹4,00,000 in SBSL

Q 497 Vinayak Pharmaceuticals Limited decided to amalgamate Super Medicines Limited and
accordingly, an application for amalgamation was submitted to the jurisdictional National
Company Law Tribunal (NCLT). If the Tribunal is satisfied that the specified procedure has been
complied with, it may, by order, sanction the scheme of arrangement leading to amalgamation and
may make provision for various matters. From the following options, choose the one which may
find place in the order of arrangement leading to amalgamation made by the Tribunal:

A. Vinayak Pharmaceuticals Limited shall discontinue its legal proceedings pending against Super Medicines
Limited after amalgamation
B. Super Medicines Limited shall be dissolved, without winding up
C. On dissolution of Super Medicines Limited, the fee paid by it on its authorised capital shall not be set off
against any fees payable by Vinayak Pharmaceuticals Limited on its authorised capital subsequent to the
amalgamation
D. Super Medicines Limited shall be dissolved, after winding up

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Q 498 Saurabh, after winding up the affairs of Shobhna Plastics Limited in the capacity as
company liquidator, made an application to the jurisdictional National Company Law Tribunal
(NCLT), for its dissolution. Taking note of the dissolution application, NCLT proceeded to make
an order that Shobhna Plastics Limited be dissolved from the date of the order. From the given
options, choose the one that shall be applicable in the given situation

A. Within a period of fifteen days from the date of the order, NCLT shall forward a copy of the order to the
Registrar and to Saurabh
B. Within a period of thirty days from the date of the order, NCLT shall forward a copy of the order to the
Registrar and also direct Saurabh to forward a copy of the order to the Registrar.
C. Within a period of forty-five days from the date of the order, NCLT shall forward a copy of the order to the
Registrar or direct Saurabh to forward a copy of the order to the Registrar.
D. Within a period of thirty days from the date of the order, Saurabh shall forward a copy of the order to the
Registrar.

Q 499 Overseas Investment as per the Foreign Exchange Management (Overseas Investment)
Rules, 2022 means:

A. Financial Commitment by a PRII

B. Overseas Portfolio Investment (‘OPI’) by a PROI
C. Financial Commitment or Overseas Portfolio Investment (‘OPI’) by a PROI
D. Financial Commitment and Overseas Portfolio Investment (‘OPI’) by a PRII

Q 500 The bench mark rate for calculating the all in cost for foreign currency ECBs is amended,
due to Libor transition made vide circular dated 8.12.2021, by-

A. 30 bps
B. 40 bps
C. 50 bps
D. 60 bps

April 2023 MTP

Case Scenario 1

Sahayata Foundation is a company registered under section 8 of the companies Act,

2013, mainly engaged in the social activities of providing relief to poor people.
A Board Meeting was arranged on 30th April, 2022, which was attended by all the 10
directors of the company, to discuss on the formalities to be fulfilled with the respect to
the amounts received or receivable by it, from various sources as under:
(a) Jim Ltd. to contribute ₹ 10 lakhs, in which Government of US holds 50% and T-
cap Ltd., an Indian Company, holds 49%, respectively, of the nominal value of its
share capital. The foreign investment by US Government in Jim Ltd. was made
beyond the limits specified under the FEMA, 1999.
(b) Rasvil Ltd., in which Rasvil Inc., a UK company, holds more than 50% of
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nominal value of its share capital, to contribute ₹ 15 lakhs. The foreign
investment by Rasvil Inc. in Rasvil Ltd. was made beyond the limits specified
under the FEMA, 1999.(c) A specialized agency of the United Nations, to
contribute ₹ 6 lakhs.
(d) Mr. Christian, an Italian citizen, but a person resident in India, to contribute ₹ 9
lakhs. Also, Mr. Christian, gifted a wrist watch worth ₹ 60,000 each to two
directors of Sahayata Foundation, as an acknowledgement to their efforts during
the tough times of the pandemic Covid-19.
(e) Care-covid Foundation, a Singapore based trust, to contribute ₹ 4 lakhs.
(f) Saam Ltd., in which citizens of US and Canada, hold in aggregate 60% of
nominal value of it s share capital, to contribute ₹ 9 lakhs. The foreign investment
by such citizens in Saam Ltd. was made within the limits specified under the
FEMA, 1999.
(g) Ksuit Inc., a French company, to contribute or pay ₹ 6 lakhs towards the cost of
goods procured from Sahayata Foundation, in the ordinary course of business.(h)
Interest of ₹ 3 lakhs has accrued on the earlier foreign contributions
received by Sahayata Foundation, so deposited in the FCRA account with SBI.
One director of Sahayata Foundation, Mr. Jayesh, resigned from his offices on 20 th
May, 2022 and other director Mr. Mahesh, resigned from his office on 29th May, 2022,
and the offices, both the directors, remained vacated for the remaining financial year.
On 1st June, 2022, a second half yearly board meeting of directors of Sahayata
Foundation was called for, which was attended by 4 directors, with respect to discussion
of the budget to be allocated for the expenses to be incurred for the purpose of
administration of the company, which was decided at 30% of the total contributions
received or receivable during the financial year 2022-23. The total contributions of ₹
100 lakhs were estimated to be received during the financial year.

Multiple Choice Questions

Q 501 Which of the aforementioned persons can be considered as a ‘Foreign source’?

A. Jim Ltd., Rasvil Ltd., Mr. Christian, Care-covid Foundation, Saam Ltd. and Ksuit Inc.
B. Jim Ltd., Rasvil Ltd., Mr. Christian, Care-covid Foundation and Ksuit Inc.
C. Jim Ltd., Rasvil Ltd., Mr. Christian and Care-covid Foundation
D. Jim Ltd., Rasvil Ltd., Care-covid Foundation and Ksuit Inc

Q 502 What shall be total amount of ‘Foreign contribution’ received or receivable by Sahayata
Foundation during F.Y. 2022-23?

A. ₹ 41 lakhs
B. ₹ 50 lakhs
C. ₹ 38 lakhs
D. ₹ 47 lakhs

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Q 503 How much administrative expenses can be defrayed by Sahayata Foundation of the foreign
contributions of ₹ 100 lakhs, received or receivable by it during F.Y. 2022-23, without prior
approval and prior approval of which authority shall be required to defray admin expenses above
the specified limit?

A. ₹ 50 lakhs and for defrayal of excess amount, prior approval of Central Government is necessary.
B. ₹ 20 lakhs and for defrayal of excess amount, prior approval of RBI is necessary.
C. ₹ 20 lakhs and for defrayal of excess amount, prior approval of Central Government is necessary.
D. ₹ 30 lakhs and for defrayal of excess amount, prior approval of its authorised dealer (i.e. SBI) is necessary.

Case Scenario 2
Mr. Raj, a director of Gem Ltd. (Transferor Company) prepared a circular,
addressed to all the members of Gem Ltd., disclosing the offer made by Diamond
(Transferee Company) to the members of Gem Ltd.
The total members of Gem Ltd. are 40,000, holding total 3,00,000 shares of the
company, with face value of ₹ 5 per share, out of which 25,000 shares are held by
Diamond Ltd. and 5,000 shares are held by Silver Ltd., a subsidiary of Diamond
Ltd.
The said circular was presented to the Registrar, Mr. Ramesh, for registration on
24th May, 2022, who refused to register the said circular and he communicated
such refusal at the registered address of both the companies on 24th June, 2022.
Mr. Raj filed an appeal with the NCLT against such refusal order of Mr. Ramesh
on the grounds that, in the impugned order, the reasons for rejection were not
mentioned and also the order was communicated to the parties after the expiry of
the prescribed time limit.
The Tribunal allowed the appeal and in its appellate order, it directed the
Registrar, Mr. Ramesh, to register the said circular. The said circular was then
registered by Mr. Ramesh on 14 th July, 2022 and accordingly, the said circular,
containing the offer, was issued on 15th July, 2022, to all the members of Gem
Ltd., which was kept open as per the statutory time limit. In response to the same,
the responses of its members were as follows:
1. 30,000 members, holding shares valued ₹ 12,50,000, agreed to the offer
made by Diamond Ltd. The consent was given by such members by 10th
November, 2022.
2. 8,500 members, holding shares valued ₹ 70,000, did not give their assent on
the said offer.
3. 1,000 members, holding shares valued ₹ 20,000, refused to transfer their
shares to Diamond Ltd.
4. 500 members, holding shares valued ₹ 10,000, failed to transfer their shares
to Diamond Ltd. Diamond Ltd. gave notice of acquisition to the dissenting
shareholders on 20th November, 2022.
5000 of such dissenting shareholders made application to the Tribunal on 5th
December, 2022. However, the other dissenting shareholders didn’t file an
application with the Tribunal within the prescribed time limit.
The Tribunal dismissed the applications made by 2000 shareholders, holding total
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4,500 shares, and allowed the application made by 3000 shareholders, holding total
3000 shares.
Diamond Ltd. again issued notice of acquisition earlier send to the dissenting
shareholders along with transfer deed. The transfer deed was executed by Gem
Ltd., on behalf of the dissenting shareholders, with the person authorised by
Diamond Ltd. to do so.
On execution of the aforesaid transfer deed, Diamond Ltd. paid to Gem Ltd., the
consideration amount, in respect of the shares of the dissenting shareholders
acquired by it, on 5th January, 2023. The said consideration amount was deposited
by Gem Ltd. in a separate bank account opening with a branch of State Bank of
India.
Gem Ltd. registered the shares of dissenting shareholders in the name of Diamond
Ltd. on 8th January, 2023 and it informed the same to the dissenting shareholders
on 23rd January, 2023. Also, the consideration received from Diamond Ltd. was
paid to such dissenting shareholders on 9 th February, 2023.

Multiple Choice Questions

Q 504 On what grounds, Tribunal would have allowed the appeal filed Mr. Raj?

A. For non-recording of reasons of such refusal, in writing, in the order. However, the said order was
communicated within the prescribed time limit i.e. on or before 24 th June, 2022.
B. For non-recording of reasons of such refusal, in writing, in the order and also communicating the same beyond
the prescribed time limit i.e. after 23rd June, 2022.
C. For not giving an opportunity of being heard to the concerned parties before making such refusal.
D. For communicating the said order beyond the prescribed time limit i.e. after 23 rd June, 2022. Recording of
reasons, in writing, is not necessary, in this case.

Q 505 By what percentage, the offer would have been considered to be approved and what shall be
the total number of dissenting shareholders?

A. 92.59% and total number of dissenting shareholders shall be 9,500.

B. 93.33% and total number of dissenting shareholders shall be 9,500.
C. 92.59% and total number of dissenting shareholders shall be 10,000.
D. 93.33% and total number of dissenting shareholders shall be 10,000.

Q 506 What shall the last date available with Diamond Ltd. for giving notice of acquisition to the
dissenting shareholders and what shall be the last date for the dissenting shareholders to make an
application with the tribunal against the same?

A. 15th November, 2022 and 20th December, 2022, respectively.

B. 15th January, 2023 and 15th December, 2022, respectively.
C. 15th November, 2022 and 15th December, 2022, respectively.
D. 15th January, 2023 and 20th December, 2022, respectively.

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Q 507 What shall the last date available with Gem Ltd. to inform to the dissenting shareholders
with the respect to registration of their shares in the name of Diamond Ltd. as well as to pay
consideration to the dissenting shareholders received by it from Diamond Ltd.?

A. 8th February, 2023 and 5th March, 2023, respectively.

B. 7th February, 2023 and 5th March, 2023, respectively.
C. 8th February, 2023 and 6th March, 2023, respectively.
D. 7th February, 2023 and 4th February, 2023, respectively

Q 508 How many shares Diamond Ltd. shall be entitled to take and not entitled to take,
respectively?

A. Diamond Ltd. shall be entitled to take 2,67,000 shares and not entitled to take 7,500 shares, respectively.
B. Diamond Ltd. shall be entitled to take 2,72,000 shares and not entitled to take 3000 shares, respectively.
C. Diamond Ltd. shall be entitled to take 2,67,000 shares and not entitled to take 3000 shares, respectively.
D. Diamond Ltd. shall be entitled to take 2,72,000 shares and not entitled to take 7,500 shares, respectively.

Independent MCQs
Q 509 Raman is a member and director of a pharmaceutical company. The company proposed to
raise capital for strengthening its structure and reputation in the market. Such matter came for
approval before Board for consideration. Specify the correct statement in the light of the above
situation as per the provision under the SEBI Act, 1992:

A. Member shall participate in the meeting of the Board to protect its interest in the Company.
B. Member shall not participate in the meeting of the Board being interested party.
C. Member, shall only participate in the meeting of the Board being interested party, after disclosure of his
interest
D. Member being a director with pecuniary interest, shall disclose his interest but shall not take any part in any
decision of the Board.

Q 510 Mr. Amar is holding the post of directorship in following Listed entities - LE 1, LE 2, LE 3,
LE 4, LE 5 LE 6, and LE 7 as on January 2020. He received an offer of directorship from LE 8 in
April , 2022. Whether Amar can join the LE 8?

A. Yes, as per the SEBI(LODR)Regulation, directorship is restricted to 8 listed entities. Hence Mr. Amar can.
B. Yes, as per the SEBI(LODR)Regulation read with the companies Act, 2013, Mr. Amar can accept directorship
in 10 listed companies.
C. No, as per the SEBI(LODR)Regulation, directorship cannot be in more than seven listed entities, Mr. Amar
cannot.
D. Yes, as no restriction is marked on holding of directorship in the Listed companies.

Q 511 Mr. D holds directorship in 10 Public Companies and 11 Private Companies as on

31.05.2022. One of the above Private Company is a dormant Company. Further on 30.06.2022 a
Private Company has become a subsidiary of a Public Company.

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In the light of the provisions of the Companies Act, 2013 examine and decide the validity of
holding directorship of Mr.D with reference to number of directorship as on 31.05.2022 and as on
30.06.2022.

A. Holding of directorship of Mr. D as on 31.05.2022 is invalid whereas holding of directorship of Mr. D as on

30.06.2022 is valid
B. Holding of directorship of Mr. D as on 31.05.2022 is valid whereas holding of directorship of Mr. D as on
30.06.2022 is not valid
C. Holding of directorship of Mr. D as on 31.05.2022 is valid whereas holding of directorship of Mr. D as on
30.06.2022 is also valid
D. Holding of directorship of Mr. D as on 31.05.2022 is invalid whereas holding of directorship of Mr. D as on
30.06.2022 is also invalid.

Q 512 Out of the total strength of six Directors of SQ Transformers Limited, five are attending a
Board Meeting to consider the investment of funds of the company. The resolution relating to
investment shall be taken as passed in which of the following cases:

A. When all the five Directors of SQ Transformers Limited attending the meeting consent to such investment of
funds.
B. When any four Directors of SQ Transformers Limited out of five attending the meeting consent to such
investment of funds.
C. When any three Directors of SQ Transformers Limited out of five attending the meeting consent to such
investment of funds.
D. Investment proposal must be consented to by the total strength of six Directors of SQ Transformers Limited.

Q 513 Mr. Ravi, an Inspector appointed under the Companies Act, 2013, started investigations
into the affairs of A Innovative Solutions Ltd. During the process of investigation, Mr. Ravi came
across certain facts and information regarding the transactions made by A Innovative Solutions
Ltd. with its subsidiary company B InfoTech Solutions Ltd. Based on the information so collected
from the investigation, Mr. Ravi wanted to investigate the affairs of B InfoTech Solutions Ltd.
also. Find the correct answer from the provided options, whether Mr. Ravi can proceed with the
investigation of the affairs of subsidiary company B InfoTech Solutions Ltd. in the light of the
applicable provisions of the Companies Act, 2013.

A. Mr. Ravi shall be able to proceed with the investigation of the affairs of B InfoTech Solutions Ltd. after
obtaining the prior approval of the Director, Serious Fraud Investigation Office (SFIO).
B. Mr. Ravi shall not be able to proceed with the investigation of the affairs of B InfoTech Solutions Ltd. since it
is not within his powers to undertake investigation of any other entity.
C. Mr. Ravi shall be able to proceed with the investigation of the affairs of B InfoTech Solutions Ltd. after
obtaining the prior approval of the National Company Law Tribunal in whose jurisdiction the registered office
of the subsidiary company is located.
D. Mr. Ravi shall be able to proceed with the investigation of the affairs of B InfoTech Solutions Ltd. after
obtaining the prior approval of the Central Government.

Q 514 Mr. X, a Director of a company, was appointed as Managing Director on 1st April 2021.
One of the terms of appointment was that in the absence of adequacy of profits or if the company
had no profits in a particular year, he will be paid remuneration in accordance with Schedule V.
For the financial year ended 31st March 2023, the company suffered heavy losses. The company

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was not in a position to pay any remuneration but he was paid 100 lakhs for the year. The
effective capital of the company is 150 crore. Referring to the provisions of the Companies Act,
2013, as contained in Schedule V, examine the validity of the above payment of remuneration to
Mr. X.

A. Payment of 100 lakhs being made to Mr. X is within the prescribed limit and can be validly made to him.
B. Payment of 100 lakhs being made to Mr. X is not within the prescribed limit and cannot be validly made to
him.
C. Payment of 100 lakhs being made to Mr. X is less than the prescribed limit and so cannot be validly made to
him.
D. Payment of 100 lakhs being made to Mr. X is not the prescribed limit and can be validly made to him.

Q 515 Krishna Kant, Surya Kant and other persons known to them from close quarters formed
Gopala Money Nidhi Limited with a paid-up capital of Rs. 20,00,000 in Gujarat. Choose the
correct option from those given below that indicates the nature of activity in which Gopala Money
Nidhi Limited would be involved in:

A. Gopala Money Nidhi Limited was formed with the object to deal with savings amongst its members
B. Gopala Money Nidhi Limited was formed with the object of receiving deposits from its members and others
C. Gopala Money Nidhi Limited was formed with the object of lending money to its members only
D. Gopala Money Nidhi Limited was not formed with the object to deal with savings amongst its members but for
deposit of money from others

Q 516 Neelima was an interested director when her company Sagar Suppliers Limited entered
into a supply contract worth Rs. 20,00,000 with Sriniwas Tubes and Pipes Limited under which
the latter company would supply requisite items for full one year to the former company.
However, Neelima did not disclose her interest at the time when Board Meeting of Sagar Suppliers
Limited where the issue of supply contract was discussed and even participated in the discussion.
Which of the following options is applicable in the given situation:

A. Since Neelima did not disclose her interest, the contract is voidable at the option of Sriniwas Tubes and Pipes
Limited
B. Since Neelima did not disclose her interest, the contract is voidable at the option of Sagar Suppliers Limited
C. Since Neelima did not disclose her interest, the contract can be enforced only upto 50% of its valuei.e.
maximum upto Rs. 10,00,000
D. Since Neelima did not disclose her interest, the whole contract is void and cannot be enforced

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“SOLUTIONS”
SN Reasons
478 C Joint Secretary Refer Section 211 Establishment of Serious Fraud Investigation Office
479 B Valid Refer Section 212
480 B I and IV Refer Section 212
481 C Persons who are or have been in employment of the company. Refer Section 212
482 I, III and IV is fulfilled Refer Section 217 (7) The notes of any examination under sub-section
B (4) shall be taken down in writing and shall be read over to, or by, and signed by, the person
examined, and may thereafter be used in evidence against him.
483 6.80 crore Refer Section 180 (share capital + Security premium+ free reserves =
500+1160+320=1980 lakhs – secured loan 985 lakhs= 995 l they can take, out of which they took
332 l unsecured loan already 332-temporary loans = 332-17 =315) they can further take 995-315 =
C
680 lakhs = 6.80 crores
Author’s note- The question amount seems to be given incorrectly. We assumed it to be in
lakhs and removed last 2 digits and solved the question)
484 In respect of withdrawal of foreign exchange on various occasions from his banker State Bank of
A India and remitting the same outside India during the financial year 2020-21, Mr. Purshottam Saha is
not required to obtain any prior approval
485 15th August, 2022 and yes, it can be submitted in unaudited form. Refer Regulation 33 The listed
D entity shall submit quarterly and year-to-date standalone financial results to the stock
exchange within forty-five days of end of each quarter, other than the last quarter.
486 A donation in kind by a foreign citizen to a resident Indian shall be excluded from the definition of
‘foreign contribution’, if the market value, in India, of such article, on the date of such gift, is not
D
more than ₹ 1,00,000. Note : Amendment is for gift from Relative for which limit is 10 Lacs
now. This limit is still one lac only.
487 C It’s a public company with a minimum share capital of 10 Lakhs Refer Rule 4 nidhi rules
488 After expiry of two years of ceasing to be director of Vinayak Strotram Nidhi Limited, he shall be
eligible for re-appointment as director (i.e. after 9th July 2026) Refer Rule 17 Nidhi rules
C The Director of a Nidhi shall hold office for a term up to ten consecutive years on the Board of
Nidhi.The Director shall be eligible for re-appointment only after the expiration of two years of
ceasing to be a Director.
489 Vinayak Strotram Nidhi Limited is permitted to offer interest on fixed and recurring deposits at a
A rate not exceeding the maximum rate of interest that a Non-Banking Financial Company can pay on
its public deposits.Refer Rule 13 Nidhi rules
490 At the earliest, after 9th July, 2017, Vinayak Strotram Nidhi Limited would have got the approval to
C open branches at Aluva, Kanayannur and Kothamanglam in Emakulam district of Kerala.(3 years
from incorporation)
491 Not less than 100 members of the company or not less than one-tenth of the total number of its
C members, whichever is less. i.e. 50 members are required to file an application with the Tribunal.
Refer Section 244
492 Dharmesh is having more than one-tenth share in the share capital of the company. Refer Section
C
244
493 The Tribunal can terminate the service agreement arrived at between the company and the MD.
D
Refer Section 242 Powers of Tribunal

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494 The MD cannot demand any compensation for loss of office. Refer Section 243 Consequence of
D
termination or modification of certain agreements
495 After termination from this company, Gyan Singh cannot apply to any other company for the post of
D director or any other office, a period of five years Refer Section 243 Consequence of termination or
modification of certain agreements
496 Supriya is not an interested director as in order to be considered as an interested director Supriya was
D
required to have holding of shares exceeding ₹ 4,00,000 in SBSL. Refer Section 184
497 Super Medicines Limited shall be dissolved, without winding up .
B
Refer Section 232
498 Within a period of thirty days from the date of the order, NCLT shall forward a copy of the order to
B the Registrar and also direct Saurabh to forward a copy of the order to the Registrar.
Refer Section 302
499 D Financial Commitment and Overseas Portfolio Investment (‘OPI’) by a PRII
500 C 50 bps Refer LIBOR amendment NOV 2022
501 Jim Ltd., Rasvil Ltd., Mr. Christian, Care-covid Foundation and Ksuit Inc. Refer foreign source
B
definition under FCRA
502 A ₹ 41 Lakhs Refer foreign contribution definition (10+15+9+4+3) lakhs
503 ₹ 20 lakhs and for defrayal of excess amount, prior approval of Central Government is necessary
C
(20% *100 Lakhs) Refer restriction on administrative expenses under FCRA
504 For non-recording of reasons of such refusal, in writing, in the order and also communicating the
B same beyond the prescribed time limit i.e. after 23rd June, 2022.Refer section 238 of Companies Act
2013
505 92.59% and total number of dissenting shareholders shall be 10,000 (1250000/1350000=92.59 %
C
,8500+1000+500=10000 members)
506 15th January, 2023 and 20th December, 2022, respectively. (Refer Section 235 of the Act) POWER
TO ACQUIRE SHARES OF SHAREHOLDERS DISSENTING FROM SCHEME OR
CONTRACT APPROVED BY MAJORITY Acquisition of the remaining shares of dissenting
shareholders: The shares already held at the date of the offer by Transferee Company, or by a
D nominee of the transferee company or its subsidiary companies shall not be counted for this purpose.
The transferee company shall express his desire to acquire the remaining shares of dissenting
shareholders within two months after the expiry of the said four months and shall give notice in the
prescribed manner to any dissenting shareholder that it desires to acquire his shares.i.e. 6 months
from 15th Jan 2023,one month from order 20th nov 2022)
507 8th February, 2023 and 6th March, 2023, respectively (Refer Section 235 of the Act)
The transferor company shall—
(a) thereupon register the transferee company as the holder of those shares; and
(b) within one month (8th Jan 2023) of the date of such registration, inform the dissenting
shareholders of the fact of such registration and of the receipt of the amount or other consideration
representing the price payable to them by the transferee company.
C
Separate Bank account for disbursement to entitled shareholders [Sub-section (4)]: Any sum received
by the transferor company under this section shall be paid into a separate bank account, and any such
sum and any other consideration so received shall be held by that company in trust for the several
persons entitled to the shares in respect of which the said sum or other consideration were
respectively received and shall be disbursed to the entitled shareholders within sixty days.(from 5th
Jan 2023)
508 Diamond Ltd. shall be entitled to take 2,67,000 shares and not entitled to take 3000 shares,
C
respectively. (Since tribunal allowed 3000 shares application valid) (300000-3000=267000)
509 Member being a director with pecuniary interest, shall disclose his interest but shall not take any part
D
in any decision of the Board. Refer Section 7A of SEBI Act 1992

Compiled by APNAMENTOR [190] “APNA MENTOR” 976-040-0350

CA FINAL – LAW SPOM SET A Nov 2024
510 No, as per the SEBI(LODR)Regulation, directorship cannot be in more than seven listed entities,
C
Mr. Amar cannot. Refer Regulation 17A SEBI LODR
511 Holding of directorship of Mr. D as on 31.05.2022 is valid whereas holding of directorship of Mr. D
B
as on 30.06.2022 is not valid Refer Section 165 of the Act
512 When all the five Directors of SQ Transformers Limited attending the meeting consent to such
A
investment of funds. Refer Section 186 of the Act
513 Mr. Ravi shall be able to proceed with the investigation of the affairs of B InfoTech Solutions Ltd.
D after obtaining the prior approval of the Central Government. Refer Section 219 Power of
inspector to conduct investigation into affairs of related companies, etc.
514 Payment of 100 lakhs being made to Mr. X is within the prescribed limit and can be validly made to
A
him. Refer Sch V of the Act.as 120 Lakhs is the upper limit as it has effective capital of ₹ 150 crores.
515 C Gopala Money Nidhi Limited was formed with the object of lending money to its members only
516 Since Neelima did not disclose her interest, the contract is voidable at the option of Sagar Suppliers
B
Limited

Space for Notes

Compiled by APNAMENTOR [191] “APNA MENTOR” 976-040-0350