9460654256

1. Immediate Changes in letterhead, bills or other official communications, as if full

name, address of its registered office, Corporate Identity Number (21 digit number
2. allotted by Government), Telephone number, fax number, Email id, website address
if any.
3. One Person Company (OPC): It's a Private Company having only one Member
and at least One Director. No compulsion to hold AGM. Conversion of existing
private Companies with paid-up capital up to Rs 50 Lacs and turnover up to Rs 2
Crores into OPC is permitted.
4. Woman Director: Every Listed Company /Public Company with paid up capital of
Rs 100 Crores or more / Public Company with turnover of Rs 300 Crores or more
shall have at least one Woman Director.
5. Resident Director: Every Company must have a director who stayed
in India for a total period of 182 days or more in previous calendar year.
6. Accounting Year: Every company shall follow uniform accounting year i.e. 1 st April
-31st March.
7. Loans to director – The Company CANNOT advance any kind of loan / guarantee
/ security to any director, Director of holding company, his partner, his relative, Firm
in which he or his relative is partner, private limited in which he is director or
member or any bodies corporate whose 25% or more of total voting power or board
of Directors is controlled by him.
8. Articles of Association- In the next General Meeting, it is desirable to adopt Table
F as standard set of Articles of Association of the Company with relevant changes
to suite the requirements of the company. Further, every copy of Memorandum and
Articles issued to members should contain a copy of all resolutions / agreements
that are required to be filed with the Registrar.
9. Disqualification of director- All existing directors must have Directors
Identification Number (DIN) allotted by central government. Directors who already
have DIN need not take any action. Directors not having DIN should initiate the
process of getting DIN allotted to him and inform companies. The Company, in turn,
has to inform registrar.
10. Financial year- Under the new Act, all companies have to follow a uniform
Financial Year i.e. from 1st April to 31st March. Those companies which follow a
different financial year have to align their accounting year to 1st April to 31st March
within 2 years. It is desirable to do the same as early as possible since most the
compliances are on financial year basis under the new Companies Act.
11. Appointment of Statutory Auditors- Every Listed company can appoint an
individual auditor for 5 years and a firm of auditors for 10 years. This period of 5 /
10 years commences from the date of their appointment. Therefore, those
companies have reappointed their statutory auditors for more than 5 / 10 years,
have to appoint another auditor in Annual General Meeting for year 2014.
AUDIT & AUDITORS
The Ministry has taken a big step by notifying 183 major sections of Companies Act, 2013
w.e.f. 01.04.2014 out of which the provisions relating to Audit & Auditors is of utmost
importance for all the Chartered professionals out there. This article contains the key
amendments bought into effect in relation to audit and auditors and the way forward.
Chapter X –Audit & auditors ranging from Sections 139 to 148 of the Companies Act, 2013 (the
‘Act’) alongwith Companies (Audit and Auditors) Rules, 2014( the ‘Rules’) have been notified &
they shall come into force on the 1st day of April, 2014.

Below is the summary of all the sections within the ambit of this Chapter alongwith the
corresponding section form Companies Act, 1956:

Companies Companies Act, Section Title

Act, 1956(Old Act)
2013(New
Act)

139 224, 224A, 619 Appointment of Auditors

140 225 Removal, Resignation of auditor and giving of special

notice.

141 226 Eligibility, qualifications and disqualifications of auditors.

142 224(8) Remuneration of auditors.

143 227, 228, 263A Powers and duties of auditors and auditing standards.

144 Nil Auditor not to render certain services.

145 229, 230 Auditors to sign audit reports, etc. (similar)

146 231 Auditors to attend general meeting.(similar)

147 232, 233, 233A Punishment for contravention.

148 233B Central Government to specify audit of items of cost in

respect of certain companies. (Cost Audit)

Note: Sub-section 5 & proviso to sub-section 4 of Section 140 of Companies Act, 2013 has not
been yet notified & Proviso to sub-section (3) of Section 225 of Companies Act, 1956 still
remains in effect.
KEY CHANGES :
1) The term of auditor holding the office in a company is increased to 5 years subject to
ratification at every AGM as compared to one year in the previous act.
2) Mandatory rotation of auditors in case of listed companies, certain unlisted companies &
certain private companies after 5 years.
3) No. of audits per individual/partner reduced to twenty including private limited companies.
4) LLP is eligible to be appointed as an auditor
5) A firm/LLP can partner with non-CA’s and still be appointed as auditor.
6) Automatic re-appointment of retiring auditor in case of other companies where no
resolution is passed in AGM
7) Certain services named in Section 144 which an auditor cannot provide to its auditee
8) Compliances in relation to appointment, resignation of auditor have increased and
changed significantly.
9) Acts of Relative is included within the ambit of disqualification of an auditor
10) Limits for disqualification in case of holding of security, indebtness to a company or
providing guarantee to a company have increased.
11) Business relationship with a company is bought within the ambit of disqualification of an
auditor
12) As per Section 143 (2), an auditor is required to make a report to the members on the
accounts examined by him and on every financial statement which are required by or under
this Act to be laid in GM report shall after taking into account the provisions of this Act, the
accounting and auditing standards and matters which are required to be included in the audit
report
a. Balance Sheet
b. Profit & Loss Account
c. Cash Flow Statement
d. A statement of changes in equity if applicable
e. Other Statements as prescribed
Note : CFS is not mandatory in case of One Person Company, Small Company & Dormant
Company.
Small Company means a company other than public company of which Paid up share
capital does not exceed Rs. 50 lakh or such prescribed amount & T/o of which as per its
last P & L A/c does not exceed 2 crores or such amount as prescribed. These do not include
holding or subsidiary company.
13) As per 143(9) of the company’s act 2013, every auditor shall comply with the auditing
standards.
14) Fraud Reporting to CG has been introduced and provisions regarding this are required to
be followed by auditor immediately within the specified time.
SECTION 139 – Appointment of auditors:
1) Appointment of Auditors other than First:
A company shall, at the 1st AGM, appoint an individual or an audit firm (always includes LLP)
as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its
6th AGM and thereafter till the conclusion of every 6th AGM.
Appointment of First Auditors:
However, the first Auditors of a company are to be appointed always by the BOD within 30
days of registration of company and in case of failure to do so, the members shall be informed
who shall within 90 days at an EGM appoint such auditor and such auditor shall hold office till
conclusion of 1st AGM.
2) Ratification at every AGM :
Company shall place the matter relating to such appointment for ratification by members at
every AGM.
Note : If the appointment is not ratified, the rules prescribe that the Board of Directors shall
appoint another individual or firm as its auditor or auditors after following the procedure laid
down in this behalf under the Act.
3) Compliance before appointment by company/auditor:
Before the appointment, a company shall obtain from the auditor–
a. Written consent of the auditor to such appointment
b. Certificate that
(a) auditor is eligible for appointment and is not disqualified for appointment under the Act, the
Chartered Accountants Act, 1949 and the rules or regulations made there under;
(b) the proposed appointment is as per the term provided under the Act;
(c) the proposed appointment is within the limits laid down by or under the authority of the
Act;
(d) the list of proceedings against the auditor or audit firm or any partner of the audit firm
pending with respect to professional matters of conduct, as disclosed in the certificate, is true
and correct.
4) Compliance after Appointment by Company:
A Company shall inform the auditor of his appointment & is to file a notice of appointment with
ROC within 15 days of the meeting in which auditor is appointed. (Form No. ADT – 1)
Note : Earlier auditor used to file Form 23B and inform ROC, now the company is to inform
ROC, so in a way they shifted the burden to inform on Company.
5) Mandatory Rotation of Auditors in case of Listed Companies & Certain classes of
Companies :
All Listed companies and Companies prescribed by CG shall not appoint or re-appoint–
 an individual – for more than one term of 5 consecutive years
 an audit firm – for more than two terms of 5 consecutive years

Classes of Company prescribed by CG under the Rules :

(a) all unlisted public companies having paid up share capital of rupees ten crore or more;
(b) all private limited companies having paid up share capital of rupees twenty crore or
more;
(c) all companies having paid up share capital of below threshold limit mentioned in (a) & (b)
above, but having public borrowings from financial institutions, banks or public deposits
of rupees fifty crores or more.
Cooling Period:
An individual or audit firm as the case may be who/which has completed the abovementioned
terms shall not be eligible for re-appointment as auditor in the same company for 5 years
from the completion of such term
Common Partners Restriction:
As on the date of appointment, no audit firm having a common partner/s to the other audit
firm, whose tenure has expired in a company immediately preceding the F.Y., shall be
appointed as auditor of the same company for a period of 5 years.
Transition Period :
Every company required to comply as above, existing on or before the commencement of this
Act, shall comply with the above requirements within 3 years from 01.04.2014.
Rights of shareholders/ auditor unharmed :

Nothing contained above with respect to rotation shall prejudice the right of the company
to remove an auditor or the right of the auditor to resign from such office of the company.
Provisions in Rules regarding rotation :
– The period for which the individual/firm has held office as auditor prior to the commencement
of the Act shall be taken into account for calculating the period of 5 or 10 years, as the
case may be.
– The incoming auditor/audit firm shall not be eligible if such auditor/audit firm is associated
with the outgoing auditor/audit firm under the same network of audit firms.
Here, “same network” includes the firms operating or functioning, hitherto or in future,
under the same brand name, trade name or common control.
For the purpose of rotation of auditors,-
(a) a break in the term for a continuous period of five years shall be considered as fulfilling the
requirement of rotation;
(b) if a partner, who is in charge of an audit firm and also certifies the financial statements of
the company, retires from the said firm and joins another firm of chartered accountants, such
other firm shall also be ineligible to be appointed for a period of five years.
Illustration explaining rotation in case of audit firm :

Number of consecutive years
for which an audit firm has
been functioning as auditor in
the same company [in the
first AGM held after the
commencement of provisions
of section 139(2)]
Maximum number of
consecutive years for which the
firm may be appointed in the
same company (including
transitional period)
Aggregate period which the firm
would complete in the same
company in view of column I
and II

I II III

10 years (or more than 10 3 years 13 years or more

years)

9 years 3 years 12 years

8 years 3 years 11 years

7 years 3 years 10 years

6 years 4 years 10 years

And so on

6) Reappointment in case of other than listed companies possible:

A retiring auditor is eligible for reappointment at an AGM, if
a) He is not disqualified for re-appointment
b) He has not given notice in writing of unwillingness to be re-appointed
c) SR passed at a meeting that some other auditor is to be appointed or expressly
providing that he shall not be re-appointed (Read special notice requirement in Section 140)
Where at any AGM, no auditor is appointed or re-appointed, the existing auditor shall continue
to be the auditor of the company.
7) Additional rights provided to Shareholders :
Subject to the provisions of this Act, members of a company may resolve to provide that –
  In the audit firm appointed by it, the auditing partner and his team shall be rotated at
such intervals as may be resolved by members; or
 The audit shall be conducted by more than one auditor.

8) Casual Vacancy (CV):

 CV caused because of resignation : By BOD within 30 days but the same should be
approved by the company within 3 months of recommendation and shall hold office till
conclusion of next AGM
 CV caused because of other reasons (disqualifications as per 141) : By BOD
within 30 days, No approval

9) Where a company is required to constitute an Audit Committee u/s 177, all

appointments, including the filling of a CV of an auditor shall be made after taking into account
the recommendations of such committee.
Section 140 : Removal, Resignation of auditor and giving of special notice
 The auditor appointed u/s 139 may be removed from his office before the expiry of
his term only by way previous approval of CG and a special resolution of the
company to be passed in a general meeting within 60 days of receipt of approval of
CG. However, before such step, the auditor shall be given a reasonable opportunity of
being heard. The application to CG has to be made within 30 days of passing the
board resolution. (Form No. ADT- 2 along with fees).

Here, a long-term relationship is built for 5 years, since removal before 5 years would be
considered as removal before the expiry of his term. And for removal before the expiry of an
auditor’s term requires strict formalities to be followed.
 Compliance by auditor after resignation : The auditor who has resigned from the
company shall file within a period of 30 days from the date of resignation, a
statement in the prescribed form with the company and the ROC, indicating the
reasons and other facts as may be relevant. (Form No. ADT-3)

Punishment if auditor doesn’t comply : Fine of Rs. 50,000 to Rs. 5,00,000

 Special Notice : Special notice shall be required for a resolution at an annual general
meeting appointing as auditor a person other than a retiring auditor, or providing
expressly that a retiring auditor shall not be re-appointed, except in case of mandatory
rotation in case of listed companies. Other provisions w.r.t special notice are similar to
the old Act.

Section 141 : Eligibility, Qualifications & Disqualifications

Eligibility:
a) Individual : Only if is a CA holding certificate of Practice as per Section 2(17) of the
Companies Act,2013.
b) Audit Firm/LLP : Majority of partners who are CA are practicing in India, apptd in Firm
name. Only the partner’s who are CA’s are authorised to act as auditors and sign.
Note : Thus, it seems Firm/LLP can contain partner’s who are Non-CA’s. The introduction
of LLP as an auditor and ability of a firm/LLP to operate with partners who are not Chartered
Accountants is a welcome change and in line with international practices. This will also result
in multi-disciplinary firms providing vide range of services.
Disqualifications : The following persons shall not be eligible for appointment as auditors of a
company or shall vacate the office after appointment :—
Disqualifications similar to old act :
(a) a body corporate other than a LLP
(b) an officer or employee of the company;
(c) a person who is a partner, or who is in the employment, of an officer or employee of the
company;
Disqualifications amended and its limits :
(d) a person who, or his relative or partner—
(i) is holding any security of or interest in the company or its subsidiary, or of its
holding or associate company or a subsidiary of such holding company:
Provided that the relative may hold security or interest in the company of face value not
exceeding 1000 rupees or such sum as may be prescribed; (Prescribed sum is Rs. 1 lakh)
(ii) is indebted to the company, or its subsidiary, or its holding or associate company or a
subsidiary of such holding company, in excess of such amount as may be prescribed;
(Prescribed sum is Rs. 5 lakh)
(iii) has given a guarantee or provided any security in connection with the indebtedness of
any third person to the company, or its subsidiary, or its holding or associate company or a
subsidiary of such holding company, for such amount as may be prescribed;(Prescribed sum
is Rs. 1 lakh)
NEWLY ADDED disqualifications provided in the ACT:
(e) a person or a firm who, whether directly or indirectly, has business relationship with the
company, or its subsidiary, or its holding or associate company or subsidiary of such
holding company or associate company of such nature as may be prescribed;
The rules define the “business relationship” as any transaction entered into for a
commercial purpose, except –
(i) commercial transactions which are in the nature of professional services
permitted to be rendered by an auditor or audit firm under the Act and the Chartered
Accountants Act, 1949 and the rules or the regulations made under those Acts;
(ii) commercial transactions which are in the ordinary course of business of the
company at arm’s length price – like sale of products or services to the auditor, as
customer, in the ordinary course of business, by companies engaged in the business of
telecommunications, airlines, hospitals, hotels and such other similar businesses.
(f) a person whose relative is a director or is in the employment of the company as a
director or key managerial personnel;
(g) a person who is in full time employment elsewhere
or
a person or a partner of a firm holding appointment as its auditor, if such persons or
partner is at the date of such appointment or reappointment holding appointment as auditor
of more than 20 companies;
(h) a person who has been convicted by a court of an offence involving fraud and a period of
ten years has not elapsed from the date of such conviction;
(i) any person whose subsidiary or associate company or any other form of entity, is
engaged as on the date of appointment in consulting and specialised servicesas
providedin section 144.
Note :
BUSINESS RELATIONSHIP IS AN INCLUSIVE TERM WHICH IS OPEN TO VIDE
INTERPRETRATIONS THOUGH THE EXCEPTIONS ARE PROVIDED BUT THE
EXCEPTIONS ARE LIMTED TO CERTAIN COMMERICAL TRANSACTION OF CERTAIN
INDUSTRIES
LIMITS FOR AN INDIVIDUAL/PARTNER REDUCED TO TWENTY :
The 1956 Act and the Institute of Chartered Accountants of India (‘ICAI’) restrict the number of
companies in which a person/ firm can be appointed as auditor. An individual cannot be
appointed as auditor for more than 30 companies. Further, an individual cannot be appointed
as auditor for more than 20 public companies and of which not more than 10 companies
should have a paid up share capital of more than Rs 25 lakh. In case of a firm, such ceiling is
determined for every partner of the firm. This limits specifically excluded private companies.
However, the ICAI had notified that an auditor could accept 30 audits including private
companies.
But the Companies Act, 2013 simply restricts the number of audits to 20 companies for
an individual/ partner. It does not provide any restrictions based on nature/ size of the
companies. Thus, this limit is further reduced.
Note : For the audits taken up by auditor for F.Y. 2013-14, the limits won’t be applicable since
the appointment for the same was made before 01.04.2014.
Section 144 – New Insertion : AUDITOR NOT TO RENDER CERTAIN SERVICES :
In Old Act, there was no provision as to rendering of non-audit services to an audit client. It was
determined by applying the Code of Ethics and the Guidance Note on Independence of
Auditors issued by the ICAI. But the New Act contains specific provisions that prohibit auditors
of a company to render non-audit services to an audit client directly or indirectly or its holding
company or subsidiary company.
Prohibited services include:
• Accounting and book keeping services;
• Internal audit;
• Design and implementation of any financial information system;
• Actuarial services;
• Investment advisory services;
• Investment banking services;
• rendering of outsourced financial services; and
• Management services.
Here, the Act has provided a transition period 1 year meaning an auditor who has already been
performing any non-audit services shall comply with this section till 31.03.2015.
Directly or Indirectly Defined :
Auditor – Individual : His Relative, Any other person connected/associated with such
individual, entity in which such individual has significant influence or control or whose
name/trademark/brand is used by such individual.
Auditor – Audit Firm : All partners, parent/subsidiary/Associate Entity or entity in which
firm/partner has significant influence or whose name/trademark/brand is used by such
firm/partners.
Comments :
This section will significantly damage the ability of an audit-firm/individual to provide most non-
audit services. The requirements appear to be quite onerous and indeed would appear to
prohibit an audit firm from providing a wide range of services, even when those are non-
material.
Section 142 : Remuneration of auditors
First Auditor : Board
Other : GM
As per the old Act, any sums paid by the company in respect of the auditors’ expenses
shall be deemed to be included in the expression “remuneration”. But as per the new act, the
remuneration in addition to the fee payable to an auditor, include the expenses, if any,
incurred by the auditor in connection with the audit of the company and any facility extended to
him but does not include any remuneration paid to him for any other service rendered
by him at the request of the company.
This means, the board is free to decide the remuneration for other services provided by auditor
provided they don’t come within Section 144.
Section 147 : Penalty
Penalty w.r.t to contravention of Section 139 to 146 :
Company : Rs. 25,000 to Rs. 5,00,000
Officer in Default : Rs. 10,000 to Rs. 1,00,000 or imprisonment upto 1 year or both
Auditor (Sec 139, 143, 144, 145) : Rs.25000 to Rs. 5,00,000
- See more at: http://taxguru.in/company-law/provisions-related-audit-auditors-companies-act-
2013.html#sthash.aaddk951.dpuf

Introduction

 In health care system, material management is concerned with providing the drugs, supplies and equipment
needed by health personnel to deliver health services.
 The right drugs, supplies and equipment must be at the right place, at the right time, and in the right quantity
in order that health personnel deliver health services.

 Inventory control it is an important aspect of material management.

 Inventory control is a scientific system which indicates as to what to order, when to order, and how much to
order, and how much to stock so that purchasing costs and storing costs are kept as low as possible.

Objectives of Inventory Control

1. To keep the investment on inventories to the minimum.

2. To minimize idle time by avoiding stock outs and shortages.
3. To avoid carrying cost.
4. To improve quality of care with lesser inventory.
5. To avoid obsolescence of inventor

Te c h n i q u e s i n I n v e n t o r y C o n t r o l
  ABC Analysis (Always Better Control)
 VED Analysis (Vital, Essential, Desirable)

 HML Analysis (High, Medium, Low)

 FSN Analysis (Fast, Slow moving and Non-moving)

 SDE Analysis (Scarce, Difficult, Easy)

ABC Analysis

 ABC analysis is the analysis of the store items cost criteria.

 It is a simple approach, which avoids being money wise.

 The cost of each item is multiplied by the number used in a given period and then these items are tabulated
in descending numerical value order.

 It will be seen that first 10% of items approximately account for 70%, the next 20% for 20% of value and the
last 70% account for 10% of value.

 It has been seen that a large number of items consume only a small percentage of resources and vice-
versa.

 A – Items represent the high cost centre, B items represent the immediate cost centres, and C- items
represent low cost centres.

 A very close control is exercised over A items while less stringent control is adequate for those in the
category B, and less attention for category C.

A- Items

1. Tight controls
2. Rigid estimates of requirements

3. Strict and close watch

4. Safety stocks should be low

5. Management of items should be done at top management level.

B- Items

1. Moderate control
2. Purchase based on rigid requirements

3. Reasonably strict watch and control

4. Safety stocks moderate

5. Management be done at middle level

C- Items

1. Ordinary control measure

2. Purchase based on usage estimates

3. Controls exercises by store keeper.

4. Safety stocks high

5. Management be done at lower levels..

Class Number of items Rupee value in items

A 10% of total items 70%

B 20% of total items 20%

C 70% of total items 10%

FSN Analysis

 It is based on rate of consumption.

 The items can be classified into:

1. Fast moving

2. Slow moving

3. Non- moving

4. Obsolete

An understanding of the movement of items helps to keep proper levels of inventories by deciding a rational policy or
reordering. This method is based on the fact that some stock items have a much higher annual usage value than
others. This after doing a cost analysis, stock items are separated into three classes with the following characteristics

V E D A N A LY S I S

The stores when subjected to analysis based on their criticality can be classified into vital, essential and desirable
stores. This analysis is termed as VED analysis.

1. Vital: items without which treatment comes to standstill: i.e. non- availability can not be tolerated.
2. Essential: items whose non availability can be tolerated for 2-3 days, because similar or alternative items
are available.

3. Desirable: items whose non availability can be tolerated for a long period. Although the proportion of vital,
essential and desirable items varies from hospital to hospital depending on the type and quantity of
workload, on an average vital items are 10%, essential items are 40% and desirable items make 50% of
total items available.

Although not included in scientific VED analysis, in some public organizations which are static or inefficiently
managed, there is a peculiar category of ‘U’ items which can be grouped as unnecessary. These unnecessary items
get purchased due to the following reasons.

a) Thoughtless continuation of previous purchase.

b) Indifferent attitude towards hospital formulary

c) Fear of change

d) Poor supervision and control

e) Unfair practice due to vested interest.

 The vital items are stocked in abundance; essential items are stocked in medium amounts, and desirable
items we stocked in small amounts.
 By stocking the items in order of priority, vital and essential items are always in stock which means a
minimum disruption in the services offered to the people.

SDE Analysis

 Unit value is the basis of this analysis and not the annual consumption value.
 H - Unit value > 1000 (Sanctioned by higher officials)
  M - Unit value 100 to 1000

 L - Unit value < 100

ABC & VED Analysis (Matrix module: criticality Vs cost)

It is possible to conduct a two dimensional analysis taking into consideration cost on one hand , i.e. A,B,C categories,
and critically VED on the other. Findings of ABC and VED analysis can be coupled and further grouping can be done
to evolve a priority system of management of stores:

Coupling matrix model

Cat I Cat II Cat III

V E D

A Av Ae Ad

B Bv Be Bd

C Cv Ce Cd

An example for the coupling matrix model for equipment between criticality and cost

V E D
Defibrillator X-ray machine Air- curtains
H
1 2 3
Ventilator Electric cautery Ultrasonic wash machine
M
4 5 6
Oxygen regulator Patient trolley Electronic BP machine
L
7 8 9

 Cell 1 contains vital and high cost items like defibrillator. It must be noted that a material manager has to
comprehensively supervise category 1 items since an item may be a low cost one but critical for patient
care. ( oxygen regulator)
 Category I items: these items are the most important ones and require control by the administrator himself.

 Category II items: these items are of intermediate importance and should be under control of the officer in
charge of the stores.

 Category III items: these items are of least importance which can be left under the control of the store
keeper.

 The grouping will essentially depend upon the strategy of management and the environment of functioning.
However these simple techniques can be effective in material management system.

 Items with high criticality (V), but required in small quantity (A) should receive highest priority. Items with
low criticality (D) and which are required in big quantity should receive least priority.

Conclusion

 A thorough understanding and use of the techniques of materials management would help in ordering the
supplies when needed, controlling their use, keeping them safely and in working order.
 This also prevents chances of non availability of equipments and drugs as being out of stock of these
reduces the usefulness of the hospital system.
www.icaiknowledgegateway.org/littledms/folder1/sa-320-sa-330.pdf

which the internal audit shall be conducted and reported to the Board. CHAPTER X
AUDIT AND AUDITORS 139. (1) Subject to the provisions of this Chapter, every
company shall, at the first annual general meeting, appoint an individual or a firm as an
auditor who shall hold office from the conclusion of that meeting till the conclusion of its
sixth annual general meeting and thereafter till the conclusion of every sixth meeting and
the manner and procedure of selection of auditors by the members of the company at such
meeting shall be such as may be prescribed: Provided that the company shall place the
matter relating to such appointment for ratification by members at every annual general
meeting: Provided further that before such appointment is made, the written consent of the
auditor to such appointment, and a certificate from him or it that the appointment, if made,
shall be in accordance with the conditions as may be prescribed, shall be obtained from the
auditor: Provided also that the certificate shall also indicate whether the auditor satisfies
the criteria provided in section 141: Provided also that the company shall inform the auditor
concerned of his or its appointment, and also file a notice of such appointment with the
Registrar within fifteen days of the meeting in which the auditor is appointed. Explanation.
—For the purposes of this Chapter, “appointment” includes reappointment. (2) No listed
company or a company belonging to such class or classes of companies as may be
prescribed, shall appoint or re-appoint— (a) an individual as auditor for more than one
term of five consecutive years; and (b) an audit firm as auditor for more than two terms of
five consecutive years: Provided that— (i) an individual auditor who has completed his
term under clause (a) shall not be eligible for re-appointment as auditor in the same
company for five years from the completion of his term; (ii) an audit firm which has
completed its term under clause (b), shall not be eligible for re-appointment as auditor in
the same company for five years from the completion of such term: Provided further that as
on the date of appointment no audit firm having a common partner or partners to the other
audit firm, whose tenure has expired in a company immediately preceding the financial
year, shall be appointed as auditor of the same company for a period of five years: Provided
also that every company, existing on or before the commencement of this Act which is
required to comply with provisions of this sub-section, shall comply with the requirements
of this sub-section within three years from the date of commencement of this Act: Provided
also that, nothing contained in this sub-section shall prejudice the right of the company to
remove an auditor or the right of the auditor to resign from such office of the company. (3)
Subject to the provisions of this Act, members of a company may resolve to provide that—
(a) in the audit firm appointed by it, the auditing partner and his team shall be rotated at
such intervals as may be resolved by members; or (b) the audit shall be conducted by more
than one auditor. (4) The Central Government may, by rules, prescribe the manner in which
the companies

A company may issue preference shares redeemable after 20 years for infrastructure
projects as may be specified and redeemed as may be prescribed on an annual basis at the
option of such preference shareholders.

WHAT IS SECRETARIAL AUDIT?‘

‘Secretarial Audit’ is introduced by recently enacted Companies Act, 2013. It is a process to
check compliances made by the Company under Corporate Law & other laws, rules,
regulations, procedures etc. It is a mechanism to monitor compliance with the requirements of
stated laws and processes. Periodically examination of work is necessary to point out errors &
mistakes and to make a robust compliance mechanism system in an organization.
Every company needs to comply hundreds of Laws, rules, regulations. These laws are
complex and non-compliances would attract major risk to company. Periodically inspecting the
records of company gives exact information whether, and if so, to what extent Company has
complied with the laws applicable to the Company.
Secretarial Audit gives comfort to the regulators, stakeholders and management that company
has disciplined approach to evaluate and improve effectiveness of risk management, control,
and governance processes
TO WHICH COMPANIES SECRETARIAL AUDIT IS MANDATORY?
As per section 204 of the Companies Act, 2013 read with Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, following companies are required to
obtain ‘Secretarial Audit Report’ form independent practicing company secretary;
(1) Every listed company
(2) Every public company having a paid-up share capital of Fifty Crore rupees or more; or
(3) (b) Every public company having a turnover of Two Hundred Fifty Crore rupees or more.
  “Turnover” means the aggregate value of the realisation of amount made from the sale,
supply or distribution of goods or on account of services rendered, or both, by the
company during a financial year. [Section 2(91)]

 Secretarial Audit is also mandatory to a private company which is a subsidiary of a

public company, and which falls under the prescribed class of companies

WHO CAN BE APPOINTED AS SECRETARIAL AUDITOR?

Only a member of the Institute of Company Secretaries of India holding certificate of practice
(company secretary in practice) can conduct Secretarial Audit and furnish the Secretarial Audit
Report to the Company.
APPOINTMENT OF SECRETARIAL AUDITOR
As per Rule 8 of the Companies (Meetings of Board and its powers) Rules, 2014, Secretarial
Auditor is required to be appointed by means of resolution passed at a duly convened Board
meeting and resolution for appointment shall be filed with Registrar of Companies within 30
days in E-form MGT-14.
It is advisable for Secretarial Auditor to get the letter of engagement from the company.
Secretarial Auditor should formally accept the letter of engagement. Further, as a prudent
corporate practice, it is advisable that change in the Secretarial Auditor during the year is
reported to the members in the Board’s Report.
SCOPE OF SECRETARIAL AUDIT
A secretarial auditor has to check compliances by the company under the following laws and
rules made there-under;
i. The Companies Act, 2013 (the Act) and the rules made there-under;
ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made there-under;
iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed there-under;
iv. Foreign Exchange Management Act, 1999 and the rules and regulations made there-under
to the extent of Foreign Direct Investment, Overseas Direct Investment and External
Commercial Borrowings;
v. The following Regulations and Guidelines prescribed under the Securities and Exchange
Board of India Act, 1992 (‘SEBI Act’):-
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,
1992;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009;
d. The Securities and Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999;
e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008;

f. The Securities and Exchange Board of India (Registrars to an Issue and Share
Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009;
and
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;
vi. Secretarial Standards issued by The Institute of Company Secretaries of India.
 vii. The Listing Agreements entered into by the Company with Stock Exchange(s), if
applicable;
viii. Other laws as may be applicable specifically to the company
Thus the scope of Secretarial audit is not limited to the corporate laws applicable to company
but it extent to all laws applicable to Company.
Recently Institute of Company Secretaries of India (ICSI) has issued a FAQ on Secretarial
Audit and has clarified “Other Laws”, the text of the same is reproduced as below:
The Council of the ICSI at its 226th meeting held on November 21, 2014 decided on the Scope
of Secretarial Audit as regards “point (vi) …….( other laws as may be applicable specifically to
the company)”, which is placed as under:
 Reporting on compliance of ‘Other laws as may be applicable specifically to the
company’ shall include all the laws which are applicable to specific industry for
example; for Banks- all laws applicable to Banking Industry; for insurance company-all
laws applicable to insurance industry; likewise for a company in petroleum sector- all
laws applicable to petroleum industry; similarly for companies in pharmaceutical sector,
cement industry etc.

 Examining and reporting whether the adequate systems and processes are in place to
monitor and ensure compliance with general laws like labour laws, competition law,
environmental laws etc.

Format of Secretarial Audit Report also requires reporting on whether-

 The Board of Directors of the Company is duly constituted with proper balance of
Executive Directors, Non-Executive Directors and Independent Directors.

 The changes in the composition of the Board of Directors that took place during the
period under review were carried out in compliance with the provisions of the Act.

 Adequate notice is given to all directors to schedule the Board Meetings, agenda and
detailed notes on agenda were sent at least seven days in advance, and a system
exists for seeking and obtaining further information and clarifications on the agenda
items before the meeting and for meaningful participation at the meeting.

 Majority decision is carried through while the dissenting members‟ views are captured
and recorded as part of the minutes.

 There are adequate systems and processes in the company commensurate with the
size and operations of the company to monitor and ensure compliance with applicable
laws, rules, regulations and guidelines.

Moreover Secretarial Auditor is required to report and provide details of specific events and
actions occurred during the reporting period having major bearing on the affairs of the
Company in pursuant to above referred laws/ rules & regulations. Few events were also given
as example in the format of audit report.
However in case of financial laws like tax laws and Customs Act etc., Secretarial Auditor may
rely on the Reports given by Statutory Auditors or other designated professional.
POWER TO SECRETARIAL AUDITOR
The Companies Act, 2013 has empowered secretarial auditor and has given him all rights and
powers as given to statutory auditor. As per section 204 of the Companies Act, 2013, the
secretarial auditor company shall be entitled to require from the officers of the company such
information and explanation as he may consider necessary for the performance of his duties as
auditor.
IS SECRETARIAL AUDIT MANDATORY FOR FINANCIAL YEAR 2013-14?
The secretarial audit report shall annex with its Board’s report made in terms of sub-section (3)
of section 134, of the Companies Act, 2013.
Ministry of Corporate Affairs, vide its circular No. 08/2014, dated 4 th April 2014, has clarified that
Board Report of the Company relating to financial year that commenced before 1 st April 2014,
shall be made in accordance with the relevant provisions of the Companies Act, 1956.
As the secretarial audit report is an annexure to Board’ Report thus the secretarial audit is not
mandatory for financial year ended on 31st March 2014.
PUNISHMENT FOR DEFAULT
Sub-Section 4 of Section 204 of the Companies Act, 2013, provides that if a company or any
officer of the company or the company secretary in practice, contravenes the provisions of
section 204 of the Act, the company, every officer of the company or the company secretary in
practice, who is in default, shall be punishable with fine which shall not be less than 1 lakh
rupees but which may extend to 5 lakh rupees.
Moreover as per sub section (15) of section 143 of the Companies Act, 2013, if a secretarial
auditor, has reason to believe that an offence involving fraud is being or has been committed
against the company by officers or employees of the company, he shall immediately report the
matter to the Central Government within such time and in such manner as may be prescribed.
Failure to do so shall attract a fine which shall not be less than 1 lakh rupees but which may
extend to 25 lakh rupees.
PROFESSIONAL RESPONSIBILITY AND PENALTY FOR INCORRECT AUDIT REPORT
Section 448 of Companies Act, 2013 deals with penalty for false statements. the section
provides that if in any return, report, certificate, financial statement, prospectus, statement or
other document required by, or for the purposes of any of the provisions of this Act or the rules
made thereunder, any person makes a statement,
(a) Which is false in any material particulars, knowing it to be false; or
(b) Which omits any material fact, knowing it to be material,
he shall be liable under section 447.
Section 447 deals with punishment for fraud which provides that any person who is found to be
guilty of fraud, 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. In case, the fraud in question involves public interest, the term of
imprisonment shall not be less than three years.
In terms of Section 448, a Company Secretary in Practice is liable to attract penal provision if,
he makes statement in the Secretarial Audit Report which is false is any material particulars,
knowing it be false or omits any material fact knowing it to be material.
Besides, the Company Secretary in Practice shall be liable for professional or other misconduct
mentioned in First or Second Schedule or in both the Schedules to the Company Secretaries
Act, 1980 and where held guilty, be liable for the following actions:
(i) where found guilty of professional or other misconduct mentioned in the First Schedule:
(a) reprimand;
(b) removal of name from the register of members upto a period of three months;
(c) fine which may extend to one lakh rupees.
(ii) where found guilty of professional or other misconduct mentioned in the Second Schedule:
(a) reprimand;
(b) removal of name from the register of members permanently or such period as may be
thought fit by the Disciplinary Committee;
(c) fine which may extend to five lakh rupees.
- See more at: http://taxguru.in/company-law/secretarial-audit-companies-act-
2013.html#sthash.SShOdIpo.dpuf

1) RESOLUTION:

As per section 117 every Company shall file resolution and agreement with ROC in MGT-14 within 30
days from the date passing of such resolution. We can divide in four category of such resolution which to
be file with ROC:-

i) Resolution which is prescribed under section 117(3)

ii) Resolution which is prescribed under section 179(3)

iii) Resolution which is prescribed under Companies Rule 8(5) of (Meeting of Board and its Power)
Rule,2014

iv) Others provisions

i) Resolution which is prescribed under section 117(3):-

a. Special Resolution;

b. Resolutions which have been agreed to by all the members of a company, but which, if not so
agreed to, would not have been effective for their purpose unless they had been passed as special
resolutions;

c. Resolution which is related to appointment and re-appointment of MD;

d. Resolutions or agreements which have been agreed to by any class of members but which, if not so
agreed to, would not have been effective for their purpose unless they had been passed by a specified
majority or otherwise in some particular manner; and all resolutions or agreements which effectively
bind such class of members though not agreed to by all those members;

e. Resolution which is related to power of Board of Director under clause (a) and (b) of section
180(1);

f. Resolution which is related to winding-up of a company;

ii) Resolution which is fall under section 179(3):-

a) Resolution which is related to call of unpaid money;

b) Resolution which is related to buy back of shares;

c) Resolution which is related to issue of securities;

d) Resolution which is related to borrow of money;

e) Resolution which is related to investment of fund;

f) Resolution which is related to give loan or guarantee;

g) Resolution which is related to approval of financial statement;

h) Resolution which is related to diversification of business;

i) Resolution which is related to Amalgamation or Merger or Re-Construction;

j) Resolution which is related to take over or acquire substantial part of business;

iii) Resolution which is fall under Rule(8) :-

a) Resolution which is related to donation of political party;

b) Resolution which is related to appointment(s) and removal(s) of KMP

c) Resolution which is related to appointment(s) and removal(s) of one level below of KMP;

d) Resolution which is related to appointment(s) of secretarial auditor and internal auditor;

e) Resolution which is related to accept noting of interest of director;

f) Resolution which is related to investment above of 5% of Paid up share capital or Free reserve;

g) Resolution which is related to accept Public deposit ;

h) Resolution which is related to change term and conditions of Public deposit;

i) Resolution which is related to approval of quarterly, half yearly and annual financial statements;

2) Loan from Directors ,Relatives, shareholders and Company:-

After 1st April, 2014 many companies is facing lot of problem regarding generation of funds because all
way of traditional source for generation of fund has been dead after Companies Act,2013 i.e. loan from
Friends and Relatives, loan from share holders and loan from same management company.

A Private Limited company can generate fund only through following source:-

a) Loan from Bank and Financial institutions;

b) Loan from director: any amount received from a person who, at the time of the receipt of the
amount, was a director of the company The director from whom money is received, furnishes to the
company at the time of giving the money, a declaration in writing to the effect that the amount is not
being given out of funds acquired by him by borrowing or accepting loans or deposits from others;

c) Loan From Company: But shall not same management company because as per section 185 no
company can directly or “indirectly” advance loan to its “directors” or to “other persons in whom
directors are interested”.

 Meaning of ‘indirect’: The word ‘indirect’ used means that the company does not give a
loan to director through the agency of one or more intermediaries. The word ‘indirect’
cannot be read as converting what is not a loan into a loan.
 Meaning of ‘other persons’: in case of Private Limited Company of which such director
is a director or member;

[Note – Relative of Director are not covered under this]

Conclusion: A Company can not give loan to such company where common director

d) Issue securities: A private company may issue securities only through following way:-

 Issue Right shares

 Issue fresh issue through Private placement
e) Advance from Debtors: Company may accept advance from debtors but such advance should not
exceed from 365 days otherwise these types of advances treat as a deposit and all the provisions of
section 73 and 74 shall apply accordingly.

3) Maximum cap on loan and investment:

As per section 186 Board of Directors of a company can approve transactions if the aggregate of all such
existing and proposed transactions does not exceed higher of the following two limits:

a. 60% of its paid-up share capital, free reserves and securities premium account; or

b. 100% of its free reserves and securities premium account.

→ Section 186 covers 3 types of specified transactions entered into by a company directly or indirectly:

a. Loans to any person or other body corporate;

b. Guarantee or security given in connection with a loan to any other body corporate or person; and

c. Acquisition by way of subscription, purchase or otherwise, the securities of any other body corporate.

→Section 186 is applicable from 1.4.2014. All transactions entered into up to 31.3.2014 will be covered
by corresponding Section 372A of Companies Act 1956 which is not in force now.

→ Section 185 is applicable from 12.9.2013. All transactions entered into up to 12.9.2013 will be
covered by corresponding Section 295 of Companies Act 1956 which is not in force now.

- See more at: http://taxguru.in/company-law/major-areas-requires-attention-professionals-

companies-act-2013.html#sthash.MQ3BdHsR.dpuf

406. (1) In this section, “Nidhi” means a company which has been incorporated as a Nidhi
with the object of cultivating the habit of thrift and savings amongst its members, receiving
deposits from, and lending to, its members only, for their mutual benefit, and which
complies with such rules as are prescribed by the Central Government for regulation of
such class of companies. (2) Save as otherwise expressly provided, the Central Government
may, by notification, direct that any of the provisions of this Act shall not apply, or shall
apply with such exceptions, modifications and adaptations as may be specified in that
notification, to any Nidhi or Nidhis of any class or description as may be specified in that
notification. (3) A copy of every notification proposed to be issued under sub-section (2),
shall be laid in draft before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in disapproving the issue of the
notification or both Houses agree in making any modification in the notification, the
notification shall not be issued or, as the case may be, shall be issued only in such modified
form as may be agreed upon by bot

Requirements for Nidhi Company

A Nidhi company to be incorporated under this Act shall be a Public Company;

It shall have a minimum paid up equity share capital of Rs.5,00,000/-;
No preference shares shall be issued.
If preference shares had already been issued by a Nidhi Company before
commencement of this Act,
such preference shares are to be redeemed in accordance with the terms of issue
of such shares;
The object of the company shall be cultivating the habit of thrift and savings
amongst its members, receiving deposits from and lending to its members only for
their mutual benefits;
It shall have the words ‘Nidhi Limited’ as part of its name; - See more at:
http://taxguru.in/company-law/nidhi-company-companies-act-2013.html#sthash.rs1kJ9Kh.dpuf

Requirement after Incorporation: Every Nidhi shall, within a period of one year from the
commencement of these rules, ensure that it has—

 Minimum number of members should be 200;

 Net owned funds shall be Rs.10,00,000/- or more (‘Net owned funds’ means the
aggregate of paid up equity share capital and free reserved as reduced by the
accumulated and intangible assets appearing in the last audited balance sheet);
 Ratio of net owned funds to deposit shall be not more than 1:20;
 Unencumbered term deposits of not less than 10% of the outstanding deposits
as specified in Rule 14

The fixed deposits shall be accepted for a minimum period of 6 months and a
maximum period of 60 months.
Recurring deposits shall be accepted for a minimum period of 12 months and a
maximum period of 60 months. –

The maximum balance in a savings deposit account at any given time qualifying for
interest shall not exceed Rs.1,00,000/-

Loan
A Nidhi shall provide loans only to its members. The loans given to a member
shall be subject to the following limits:
 Rs.2,00,000/- where the total amount of deposits from members is less than
Rs.2 crores;
 Rs.7,50,000/- where the total amount of deposits from its members more
than Rs.2 crores but less than Rs.20 crores;
 Rs.12,00,000/- where the total amount of deposits from its members is more
than Rs.25 crores but less than Rs.50 crores;
 Rs.15,00,000/- where the total amount of deposits from its members is more
than Rs.50 crores.

The rate of interest to be charged on any loan shall not exceed 7.5% above the
highest rate of interest offered on deposits by Nidhi and shall be calculated on
reducing balance method. –

CAS-1 * Classification of Cost

(Revised 2015)

CAS2** Capacity Determination

Production and Operation Overheads
CAS3** Overheads
CAS4 Cost of Production for Captive Consumption
CAS5** Average (equalized) Cost of Transportation
CAS6** Material Cost
CAS7** Employee Cost
CAS8** Cost of Utilities
CAS9** Packing Material Cost
CAS10** Direct Expenses
CAS11** Administrative Overheads
CAS12** Repairs And Maintenance Cost
CAS13** Cost of Service Cost Centre
CAS14** Pollution Control Cost*
CAS15** Selling and Distribution Overheads
CAS16** Depreciation and Amortisation
CAS17** Interest and Financing Charges.
CAS18** Research and Development Costs
CAS19** Joint Costs
CAS20** Royalty and Technical Know-How Fee
CAS21** Quality Control
CAS22 Manufacturing Cost
CAS23 Overburden Removal Cost
CAS24 Treatment of Revenue in Cost Statements

“employees’ stock option” means the option given to the directors, officers or employees
of a company or of its holding company or subsidiary company or companies, if any, which
gives such directors, officers or employees, the benefit or right to purchase, or to subscribe
for, the shares of the company at a future date at a pre-determined price;

“Private company” means a company having a minimum paid-up share capital of one lakh
rupees or such higher paid-up share capital as may be prescribed, and which by its articles,
—

“Public company” means a company which—

(a) is not a private company;
(b) has a minimum paid-up share capital of five lakh rupees or such higher paid-up capital,
as may be prescribed:

‘‘Small company’’ means a company, other than a public company,—

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount
as may be prescribed which shall not be more than five crore rupees; or
(ii) turnover of which as per its last profit and loss account does not exceed two crore
rupees or such higher amount as may be prescribed which shall not be more than twenty
crore rupees:

“Sweat equity shares” means such equity shares as are issued by a company to its
directors or employees at a discount or for consideration, other than cash, for providing
their know-how or making available rights in the nature of intellectual property rights or
value additions, by whatever name called .

The dissenting shareholders being those shareholders who have not agreed to the proposal
to vary the terms of contracts or objects referred to in the prospectus, shall be given an exit
offer by promoters or controlling shareholders at such exit price, and in such manner and
conditions as may be specified by the Securities and Exchange Board by making
regulations in this behalf.
"Red herring prospectus" means a prospectus which does not include complete
particulars of the quantum or price of the securities included therein.

Company Law Objective Questions

Limited Liability Partnership Act, 2008 1. Every LLP shall have at least _____ designated
partners who are individuals and at least _____ of them shall be a resident in India.
2. LLP Act received the assent of the President on the ________________ and was
published in the Official Gazette of India on __________________.

An Introduction to e-governance
1. An ________ is a re-engineered conventional form, which represents a document in
electronic format. 2. There is a provision of __________ method for paying filing fees,
which is purely a _______ method. 3. A user can check the status of transactions by
entering the ______________________. 4. The e-forms are being constantly revised. The
updated e-forms are available at the website of __________________________. 5. DIN,
CIN and DSC are important features under ___________________________________.

Sole Selling and Sole Buying Agents 1. The relationship of sole selling agent and the
appointing company is that of a ____________________ and is governed by provisions of
______________. 2. The term ‘appointment’ in relation to sole selling agent and sole
buying or purchasing agents includes ________________. 3. A company shall not appoint
any individuals, firms or body corporate having _____________ in the company as its sole
buying or purchasing agent unless such an appointment has been previously ___________
by the __________________.

Investments and Loans 1. The word ‘Investments’ in common parlance would include any
property or right in which ___________________ is invested. 2. The term ‘Investments’ is
used in a limited sense to mean the investing of money in ______________________. 3.
The power to invest the funds of the company is the _____________ of the Board of
Directors. 4. In case of default, the company and every officer of the company who is in
default shall be punishable with fine of ______________.

Striking Off Names of Companies (U/S 560) 1. A company comes into existence by
registration in the __________________________. 2. On registration of a company, the
registrar issues a certificate called _____________________. 3. Every company so
registered shall be assigned a number in one consecutive series called
______________________. 4. Striking off implies ________________. 5. A company no
longer in function is ______________.

6. The company must file electronically with the Registrar a certified true copy of the order
passed by the court along with _____________. 7. Company Law Board has no power to
restore the company in terms of section 560(6), as the powers under that section were
vested in the _____________. 8. Company or members or creditor may make application to
court for restoration of the company to the register, if they feel aggrieved by such decision
of_______________, within ___________ from the publication in the Official Gazette of
the notice of the striking off.
Application of Company Law to different sectors And Offences and Penalties – an
overview And Winding up of companies 1. A ‘banking company’ means any company
which transacts the business of ____________. 2. Private sector banks are fast emerging as
an important segment of ___________________. 3. The working and operations of banks
are regulated by the __________________ within the framework of RBI Act, 1934 and the
directions issued by it under the Act. 4. As per the RBI Act, it is ___________ for bank to
get itself registered with the ____________. 5. A company incorporated under the erstwhile
Companies Act, 1950 and desirous of commencing business of ___________, should have
an initial minimum paid-up capital of Rs. 200 crores which is to be raised to Rs. _______
within ______ of commencement of business. 6. The promoter’s contribution shall be
minimum of ______ of the paid-up capital of the bank at any point of time. It shall be
locked in for ________. 7. Every insurer seeking to carry out the business of insurance in
India is required to obtain a _____________________ from the ________ prior to
commencement of business. 8. An applicant granted certificate of registration may
commence the insurance business within ____________ from the date of registration. 9.
The authority (IRDA) consists of a chairperson, not more than __________________ and
not more than ________________________. 10. The aggregate equity participation of a
foreign company in the applicant company cannot exceed __________________ of the
paid up capital of the insurance company. 11. A _________ of a company at anytime is not
permitted to hold, more than ___________ of the paid up capital in any Indian insurance
company. 12. The first private bank in India to be set up in private sector in India was
_____________. 13. ________ ranks as the ______ largest development bank in the world
in the private sector and has promoted a world class institution in India. 14. Individual
companies, directly or indirectly connected with large industrial houses may be permitted to
participate in the equity of a now private sector bank up to a __________ of _________ but
will not have controlling interest in the bank. 15. The applicant may apply to the authority
within ________ days of such rejection for reconsideration of its decision. Additionally, an
applicant whose requisition for registration has been rejected may approach the authority
with a fresh request for registration application after a

period of __________ from the date of rejection, with a new set of promoters and for a
class of insurance business different thereon originally applied for. 16. Default, breaches,
violations, failures, contraventions or non-compliances under the Companies Act are called
________ which give rise to ___________. 17. In various provisions, the term used for
fixing liability of offence is ________________. 18. Winding-up of a company is a process
of ___________________________. 19. Section 5 of the Act defines the term
“__________________________”. 20. U/S 621A of the Act, the offences, the penalty for
which is fine only may be compounded by the __________________.

F. S. I. 1. A _______ is defined as a share in the share capital of a company, including stock

except where a distinction between stock and shares is expressed or implied. 2. A
______________ capital is that part of share capital which carries a preferential right with
respect to dividend and capital both. 3. __________________ means all share capital which
is not preference share capital. 4. __________________ means equity shares issued by a
company to its employees or directors at a discount for consideration other than cash for
providing know-how or making available right in the nature of intellectual right or value
additions, by whatever name called. 5. A company may issue _________________ when it
is able to sell them at a price above par or above nominal value. 6. A company may issue
________ of price less than the nominal value of shares at ___________. 7. A company can
issue further shares to persons other than __________________ in accordance with
relevant provisions provided under Companies Act.

F. S. II. 1. A company limited by shares or guarantee and having a share capital may alter
its share capital in any of the ways provided under the ______________. 2. The companies
act allows a company to convert its fully paid up shares into _______. 3. A ____________
has the same rights as to dividends as a shareholder. 4. Reduction of capital means
reduction of ___________________________ of the company. 5. Where the directors are
required to hold qualification shares, care must be taken that the effect of _________ does
not disqualify any director. 6. The ________ having a debt or claim admissible in winding
up are entitled to object in reduction. 7. In certain cases ____________________ capital is
not to be treated as reduction of the capital. 8. A public company or its subsidiary must not
finance the purchase (of) by any other person of its own shares or those of its
_____________.

F. S. III 1. All public companies either issue a prospectus or file a statement in

_____________________. 2. Companies Act provides provisions for dating and
registration of _______________.

3. _________________ means a prospectus issued by any financial institution or bank for

one or more issues of securities or class of securities specified in the prospectus. 4.
_________________ means a prospectus which does not have complete particulars on the
price of the securities offered and the quantum of securities offered. 5. It is the duty of those
who issue the prospectus to be _____________ in all respects. 6. An _______________ is a
prospectus, within the meaning of the Act, and it is deemed to have been issued by the
company. 7. ________________ is also leviable under the Act for fraudulently inducing to
invest money. 8. _______________ for the acquisition of shares has been made offence
under the Companies Act, punishable with imprisonment.

F. S. IV 1. All companies are given power to borrow by their articles which fix the
_________ limit of borrowings. 2. A public company cannot borrow money until it is
entitled to ___________________. 3. The power to borrow money and to issue debentures
can only be exercised by the _____________ at a duly convened meeting. 4.
_______________ borrowing cannot be ratified by a resolution passed by the company in
general meeting. 5. A company may charge its uncalled capital if its ______________
authorize it to change it. 6. A ______________ is a borrowed capital consolidated into one
mass for the sake of convenience. 7. A _______ creates a right in the creditor to demand
repayment and the substance of a _______ is a liability upon the debtor to repay the money.
8. A _________________ is one of the several instruments, required to be executed to
secure redemption of debentures and payment of interest on due dates. 9. SEBI has issued
guidelines pertaining to issue of ___________. 10. ________________ is a document of
title to a time deposit. 11. _____________ is the amount paid to a middleman (called
broker) who brings about a bargain between the seller and a purchaser of shares or
debentures in the case of a company.

F. S. V 1. The power of a company to borrow includes the power to give __________ also.
2. A charge is a security given for securing loans or debentures by way of a ___________
on assets of the company. 3. When floating charge crystallizes, it becomes __________. 4.
The floating charge gives wide powers to the company to deal with its property subject to
floating charge until such charge ______________. 5. A _____________________ is
allotted at the time of registration of charge. 6. In e-governance , there is a facility for
public inspection by electronic means using ________. 7. Every company is required to
keep at its registered office _____________________ as well as a copy of it.

8. ____________ is created by the act of parties where as ____________ may be created

wither through the act of parties or by operation of law.
F. S. VI 1. Every share certificate shall be issued under the _____________ of the company
affixed in presence of _________ directors and the __________. 2. A ______________ is a
bearer document of title to the specified shares. 3. _______________ by a company may
either be cancelled or re-issued to another person at the discretion of the __________. 4. If
a member fails to pay a valid call within the stipulated time, the company may exercise the
power to _____________________ . 5. _____________ means the act of appropriation by
the Board of Directors of the company of a certain number of shares to persons who have
made applications for shares.

F. S. VII 1. A company is composed of ________ , though it has its own identity distinct
from members. 2. Insolvents and bankrupts may be members of a company as long as they
are on the _____________. 3. Pawnee and receiver can’t be treated as ___________. 4.
Partnership firm, minor cannot become a ___________ of a company. 5. Person ceases to
be a member when his name is removed from ______________ of company.

Deposits 1. A minor, non-resident can be nominated by _____________________ . 2. The

_________ shall not be trust, society, body corporate, partnership firm, karta of HUF or a
power of attorney holder. 3. Foreign Exchange Management (Deposit) Regulations, 2000
regulate acceptance of ___________ from __________. 4. _______ may direct the
company to make repayment of deposits or part thereof subject to such conditions as may
be prescribed in the order. 5. Deposits are ____ repayable before _________. 6. The word
‘__________’ also amounts to acquire again. 7. Depositor includes any person who has
given a _______ to a company. 8. Any amount received by a private company from its
shareholders is not regarded as __________. 9. The invitation and acceptance of deposits
by the last two categories of companies is still regulated by the ___________________
under its direction.

Divisible Profits and Dividends 1. __________ is the share of the company’s profit
distributed among the members. 2. ______________ is recommended by the ___________
in its report to the shareholders. 3. The interim dividend is paid between ___________ of
the company.

4. Both interim and final dividend when declared become ______ and are payable within
_______ of declaration. 5. A preference share carries a ________________ as to dividend
in accordance with term of issue subject to availability of distributable profits. 6. Dividend
must be paid only out _______ and after ____________________ as provided u/s 205 of
companies act, 1956. 7. ______________ is empowered to allow any company to declare
or pay dividend for any financial year out of profits for that year without providing for
declaration. 8. U/S 173(1), declaration of dividend is a/an ___________ business at
_____________________. 9. ____________ can be paid only in _________, not in kind.
10. A dividend in respect of a _________ has to be paid to the ______________ of the
share or to his order or to his banker. 11. ______________ is for seeking approval of
central government for not providing depreciation. 12. “_____________” is an order by the
company to its banker to pay the amount specified therein to the shareholders whose name
is written therein. 13. U/s. 250 A, if a dividend declared by a company has not been paid or
claimed within _________ of the declaration, the same shall be within _____ days
thereafter i.e. 7 days after the expiry of the 30 days from the date of declaration. 14. Once a
dividend is declared a __________ has the right to claim dividend against the company. 15.
A dividend including interim dividend once declared becomes a _______ and cannot be
__________, except with the consent of the ___________. 16. A newly incorporated
company is prohibited from transferring not more than ___________ of its profits to its
____________. 17. ‘___________________’ means the profits which the law allows the
company to distribute to the shareholders by way of dividend. 18. The profits of a business
mean the _______________ of the concerns after deducing the ________________ without
which those proceeds could not be earned. 19. _____________ is a charge on profits while
______________ is an appropriation of profits. 20. When the amounts in the unpaid
dividend accounts remain unclaimed and unpaid for a period of _____________ from
becoming due, it shall be credited to ____________.

Accounts & Audit 1. Every company is required to keep books of account at its
_______________ in respect of specified transactions. However, all or any of the books of
accounts may be kept at such other place in India as the __________________ may decide.
2. The books of account should be kept on _______________ and according to
___________ system of accounting. 3. As per the Act, _______________ and other books
and papers should be available for inspection by any director on working days during
______________ . 4. The I.C.A, 1956 specifically requires certain other books to be kept
by a company for maintaining a record of its different activities in order to safeguard the
interest of the shareholders and creditors. Those books are known as ____________ books.

5. In addition to the books of accounts and statutory books, a company usually maintains a
number of _________________ in order to keep complete records of the numerous details
connected with the business operations. 6. The expression ‘_______________’ embraces
both balance sheet and profit and loss account. In a wider sense it also covers
_________________ statements. 7. ____________ is the accounting which the directors
disclose to the shareholders of the company the result of the actual working of the company
8. The __________ and ___________ must be approved by _______ and signed by
____________ before they are submitted to the ____________ for their report. 9. The Act
also requires a company to file such annual accounts with the ________ . 10.
_____________ is a combination of performance audit and efficiency audit. 11. By and
large the notes on accounts are ______________ and are intended to clarify and elucidate
the __________________ of a company as disclosed in its balance sheet and P/L a/c. 12.
The Act empowers the ________ to direct, whenever it is necessary to do so that as audit of
cost accounts of the company should be conducted in such manner as may be specified. 13.
The Act empowers the _______ to appoint either any chartered accountant or the
company’s own auditor to conduct a special audit in certain circumstances. 14. The Act
provides that the auditor of a Government company shall be appointed or re-appointed by
the __________________________________ within the limits specified. 15. The main
object of the audit is to ensure that the ______________ of the relevant financial year truly
and fairly reflect the state of affairs of the company.

Shareholder’s democracy: majority powers and minority rights And prevention of

oppression and mismanagement. 1. A member can complain of oppression only in his
capacity as a member and not in his capacity as ______________________. 2. C.L.B and
C.G. have been empowered under the Act to prevent _______________________. 3. The
directors exercise their powers through meetings of _________ and shareholders exercise
their power through ____________________. 4. The company law provides for adequate
protection for the ___________ shareholders when their rights are ___________ by the
__________. 5. ‘____________’ is a very broad term involving the welfare not only of the
individual shareholders, but also of the country according to the economic and social
policies of the state.

Introduction 1. In the case of unincorporated associations like partnership firms, the

liability of the partners for the debts of the business is ________________. 2. An
incorporated company never ______ except when it is __________ as per law. 3. A member
does not even have an _______________ in the property of the company. 4. A company
cannot go beyond the power stated in the ________. 5. A member may sell his shares in the
___________ and _________ the money invested by him. 6. A company, as a person
separate from its members, may even sue one of its members for __________.
7. A company is a ________________ for _______. 8. An unincorporated company,
association or partnership consisting of large number of persons has been declared
_________. 9. An illegal association is liable to be _________. 10. Company law in India
has been modeled on the ____________. 11. A _____________ can be distinguished from a
partnership firm, a JHFB and a registered society.

Types of Companies

1. A ______________ is a company limited by shares or by guarantee. An __________

company is a company not having any limit on the liability of its members. 2.
_________________ with limited liability are permitted to be registered under a licence
granted by the C.G. without using the words “limited” or “private limited”. 3. Section
______ defines Government company. 4. Auditor of a government company shall be
appointed or reappointed by __________________________. 5. An _____________
company is a company, the principal business of which consist in acquiring, holding and
dealing in shares and securities. 6. A company formed under the act of the parliament or
state legislature is called a ___________________. 7. Not less than _______ of the paid-up
share capital of Public Financial Institutions (PFI) is held by or controlled by the C. G. 8.
The membership of ________________ is open to such people who themselves are the
primary producers, which is an activity by which same agricultural produce is produced by
such primary producers. 9. If a company is engaged in any other business to an appreciable
extent, it will not be treated as an _____________________. 10. If the ______________
holds more than half in nominal value of subsidiary’s equity share capital, the relationship
of holding company and subsidiary subsists between them. 11. A ___________ company is
a company which is incorporated in a country outside India under the law of that other
country and has place of business in India. 12. The employees of Government Company are
not the employees of ____________. 13. ________________ are permitted to delete the
word “__________” from their name. 14. An ___________ company may or may not have
share capital. 15. Members of ______________ are not liable directly to the creditors of the
company as in the case of partners of the firm. 16. The memorandum of a
_____________________ must state the amount of guarantee; it may be in different
denominations. 17. The voting power of ________________ having share capital is
determined by the shareholding and not by guarantee. 18. A member of a private company
cannot appoint more than ____________ to attend and vote at the meeting of the company.

19. A private company means which has minimum paid up capital of Rs.
_________________ and higher as may be prescribed by AOA. A public company means
which has minimum paid up capital of Rs. ______________. 20. A company created by
grant or a charter by the crown is called a ____________ and is regulated by that charter.

Promoter and Formation of companies 1. ___________ are generally the persons who
assume the primary responsibility of matters relating to promotion of company. 2. A
___________ is not forbidden from making profit, but from making secret profit. 3.
Disclosure by promoters to the company should be through the medium of the __________.
4. A ___________ is not allowed to derive a profit from the sale of his own property to the
company unless all material facts are disclosed. 5. In addition to disclosing secret profits, a
___________ has the duty to disclose to the company any interest he has in transaction
entered into by him. 6. _________ may be suspended by the court for taking part in the
management of the company for a period of _________ in circumstances specified U/S
203. 7. A __________ is criminally liable U/S 63. He may be made liable to public
examination if the court so orders. 8. A __________ has no legal right to claim promotional
expenses for his services unless there is a valid contract. 9. Whatever be the nature of
remuneration or benefit, it must be disclosed in the prospectus, if paid, within _______
preceding the date of the prospectus. 10. The persons who assume the primary
responsibility of matters relating to promotion of a company are called ___________. A
promoter may be a natural person as a company. A person who may have so acted in the
formation of a company may well be termed as a _________. 11. A __________ is neither
an agent of, nor a trustee for, the company because it is not in existence. The promoter
undoubtedly stands in a _____________ position. 12. The other important document is
________ which contains the rules and regulation relating to the internal management of
the company. 13. A scanned copy of duly stamped and executed MOA & AOA is also
required to be attached with _________ and submitted _____________. 14. When / where
the articles of a public company having share capital appoint a person as a director, he must
file his consent as an attachment to ____________. 15. Where the location of a company is
not finalized ____________ can be filed later but within _________ from the date of
incorporation. 16. _____________ can also be filed within _________ of the registration of
the company or appointment of first directors.

Contracts and Conversions 1. A company being an artificial person can contract only
through its __________. 2. Contracts made on behalf of the company before its
incorporation - ______________________.

3. Contracts made after incorporation but before obtaining the certificate to commence the
business - ____________________. 4. _____________ contracts are contracts purported to
be made on behalf of company before its incorporation. 5. A public company can be
converted into a private company only after the approval of the _________________. 6. A
private company or a company having no share capital may commence business and
exercise its various powers immediately after it is _________________. 7. A
______________, on the other hand, must obtain a certificate to ___________________
from the ___________ before it can commence business or exercise its borrowing powers.
8. The certificate of commencement of business is a __________________ that a company
is entitled to commence business. 9. The _______________________ business entitles the
company to commence business given in the _____________ clause of the ____________.
10. No business given in the “__________________________” can be commenced without
obtaining prior approval of the shareholders by way of ___________________. 11.
Pursuant to section 147(1)(b), every company shall have its name engraved in legible
characters on its _________. 12. Conversion of a private company into a public company
can be grasped as conversion by _____________________. 13. Only those contracts which
are ____________ or within the powers of the company will be valid and binding where a
contract is intra vires the company but _______________ the ___________, the company
may be liable and may even notify it.

MOA & AOA 1. The first step in the formation of a company is to prepare a document
called the __________. 2. The _________ of a company contains the fundamental
provisions of the company’s constitution. 3. The purpose of the _________ clause in the
memorandum is __________. 4. Where a company is a subscriber to the M.O.A, it must be
signed by a duly ______________. 5. ________ witness can attest all the signatures
provided be is not himself a subscriber (of) to the memorandum. 6. Pursuant to MCA-21
project, the soft copies of the MOA & AOA should be filed along with
___________________. 7. The ___________ must make __________________ to ensure
that the name allowed by him is not misleading or intended to deceive with reference to its
objects clause. 8. The MCA has also clarified that a ______________ is not an official
publication of a company within the meaning of section 147 of the act. 9. The
___________ clause is of great importance because it determines the purpose and the
capacity of the company. 10. It is ______________ for a company to act beyond the limits
of its ____________. 11. The general rule is that act which is ultra vires the company is
incapable of ____________. 12. An ultra vires borrowing does not create a relationship a
___________________.

13. An ultra vires contract is null and void as that of contract with a __________. 14. A
shareholder can get back the money paid by him to the company under an
_______________________________________. 15. Ultra vires contracts are
______________ and hence cannot become intra vires by reason of
___________________________. 16. The members can get an _______________ to
restrain the company wherein ultra vires act has been or is about to be under taken. 17. The
shares into which the capital is divided must be of fixed value, which is commonly known
as _______________ value of shares. 18. The amount actually paid by the shareholders is
called the ______________. 19. Out of the issued capital, the total amount actually
subscribed or agreed to be subscribed is known as __________________. 20. The
rectification of the name must also be carried out if the Central Government so directs
within a period of ______________ from the date of registration of the company. 21. The
direction of the CG is required to be compiled within a period of __________ from the date
thereof. 22. A notice of the change is required to be given to the registrar in __________
within __________ of such change. 23. U/S 637 B (b), the __________ has been
empowered to condone delay in filing any document with the registrar. 24. The
___________ of a company are its by-laws or rules and regulations that govern the
management of its internal affairs and the conduct of its business. 25. The articles regulate
the _________________ of the affairs of the company by way of defining the powers of its
officers and establishing a contract between the company and the members and between the
members inter se. 26. In the case of a company _________________ the articles shall state
the number(s) of members with which it is to be registered. 27. A company has a statutory
right to alter its ___________. 28. Utmost caution must be exercised in the preparation of
the ___________. 29. The alteration of ___________ must not constitute a fraud on the
minority by the majority. 30. _____________ binds the members in the same way as
original articles. 31. The term “__________” signifies a person who is not a member of the
company, even if he is a director of or solicitor to the company. 32. The ____________ do
not confer any _____________ even upon a member in a capacity other than that of a
member. 33. Every person dealing the company is deemed to have a
“__________________” (to) of the contents of its memorandum and articles. 34. The
doctrine of ____________ protects third parties who are entitled to an assurance that all
procedural aspects of a transaction are carried out. 35. While the doctrine of
“_______________________” seeks to protect the company against the outsiders, the
principal of “__________________” operates to protect the outsiders against the company.

Board’s Report and Disclosure 1. Attaching _______________ to every Balance sheet is

mandatory. 2. The matter to be included in __________________ should be under the
provisions of Companies Act, listing agreement, SEBI guidelines and RBI directions. 3. As
per _____________ directions, certain disclosures are required to be made by non-banking
companies receiving deposits. 4. Board’s report should be signed by the ____________ of
the Board, if so authorized and if not so authorized then by
______________________________ of the company, one of whom shall be the
__________, where there is one. 5. The ____________ shall be collectively responsible for
any statement in its report which is false in any material particular or for any omission of a
material fact. 6. _____________________ would comprise of certification of the
compliance of various requirements under the Companies Act and the rules thereunder. 7.
In accordance with the proviso to sub-section (1) of section 383A of the Companies Act,
1956, a company is required to file with registrar a compliance certificate in
________________ within ____________ from date on which AGM is held.
Registers and Returns 1. _______________ books are required to be maintained for smooth
and efficient functioning of the company.

Inspection and Investigation 1. The _________ has been empowered to conduct

investigation into the affairs of the company in circumstances as specified under the Act. 2.
Only an individual or individuals may be appointed as ____________ to conduct the
investigation into the affairs of the company and to report thereon in the prescribed manner.

Compromise and Arrangements 1. A _____________ means settlement or adjustment of

claims in dispute by mutual concessions.

Producer Companies 1. A ‘___________’ shall mean any person engaged in any activity
connected with or relatable to any primary produce. 2. A full time ________________ shall
be appointed by the Board by whatever name called who shall not be member of the
company 3. Every producer company having as average annual turnover as prescribed shall
appoint a ______________ of the company. 4. Provisions for conducting an _________
along with notice contents have also been provided under the Companies Act. 5. Every
___________________ shall keep proper books of accounts with respect to matters
specified in the Act and shall have interval audit of its accounts as may be specified in its
articles, by a chartered accountant.

6. Any __________________ may make an application for its reconversion into inter-state
cooperative society, following the procedure laid down in the Act.

Management & Control of Company – IV Company secretary 1. Every company having a

paid up share capital of Rs. _____________ or more is compulsorily required to have a
company secretary u/s. 383A. 2. Every company having a paid up share capital of Rs.
____________ or more but less than Rs. __________ is required to file a compliance
certificate from CS in __________________ in such form and within such time as may be
prescribed. 3. Every ________ is expected to adhere not only to the letter of the law but
also ensure that the spirit of the law is upheld. 4. Appointment of CS is made by means of a
resolution passed at (the) meeting of __________. 5. Dismissal of a CS can be done by the
__________ or by the ______________ (if authorized by the board) 6. Role of a CS is
______________. 7. One of the most important roles of practicing CS is to provide
_______________ to the Board of Directors. 8. A CS in practice is entitled to issue and / or
sign compliance certificate and / or annual return for not more than ___________
companies in aggregate in a calendar year.

Management & Control of Company – III MD – WTD – Manager 1. On appointment of a

person as a MD or WTD or manager, a return in _____________ within __________ from
the date of such appointment is required to be filed with ROC and application to CG shall
be made in _______________. 2. To remove a person from MD ship, approval of
__________ is not required. 3. The substance provisions with regard to appointment and
reappointment of WTD are similar to that of ___________. 4. The ____________ is a
necessary element of company meeting and is usually appointed by articles. 5. The
____________ may adjourn meeting at his discretion when he feels that peaceful conduct
of the meeting is not possible 6. A _____________ may or may not be __________ of the
company. 7. Unlike the MD of a company, as executive director or a WTD is not entrusted
by a company with _______________________ of management of the business and affairs
of the company. 8. An __________________ may also be called _________. 9. A
____________________ of a company also appointed as a director of the company is in the
position of a WTD. 10. It is a general view that a MD combines two capacities, namely
_____________________.

11. An additional director can be appointed by the BOD of a company ______________.

12. No company can appoint a MD for term exceeding ___________ at a time. 13. A MD
for a limited company may have _______________. 14. A _____ must hold and continue to
hold the office of director. 15. A director entrusted with managerial functions will be a MD
even though he may be called as ‘_______________________’ or
‘______________________’.

Management & Control of companies – II Power & Duties of directors 1. The liabilities of
______________ are numerous as per the ICA, 1956 2. Certain powers are exercisable only
at __________________ and certain powers are exercisable with the approval of company
in _________________. 3. In some exceptional cases, the general body of shareholders is
competent to act even in matters _____________________________. 4. The position of
directors in respect of company’s properties and the rights conferred upon them to be
exercised as directors is that of a ______________. 5. Application for giving loans,
providing security or guarantee in connection with a loan shall be made to the
______________ in __________________. 6. The _____________ acting together are the
authority in conducting the affairs of the company.

Management & Control of companies 1. Every public company shall have at least
___________ directors and every other company shall have at least _____________
directors. 2. Directors are ___________ of the company. 3. ____________ of qualification
shares in a company in which are is a director is not statutorily required. 4. ____________
approval is required for increasing the number of directors in certain circumstances
specified U/S 259 of the act. 5. A director may resign his office in manner provided by
_____________. 6. Provisions related to ______________________ shall not apply to
private company unless it is a subsidiary of a public company. 7. No person shall hold
office at the same time as small shareholders’ director in more than __________
companies. 8. U/S 314 regarding ______________________ applies to public as well as
private companies. 9. When a company is registered under Companies Act, it becomes a
______________. 10. Prior to __________________, the average size of business and trade
agency was very small. 11. The ___________________ get only sitting fees for the Board
Meetings attended by them, as they wield very (low) little or no powers. 12. The supreme
executive authority in the control of a company and its affairs resides is persons known as
“________________________”. 13. Directors are __________ of the money of the
company, but not the debts due to the company. 14. There is no statutory requirement for a
director to hold ___________________ in the company in which he is a director. U/S 270 –
the qualification shares must be obtained within _______

months after his appointment as a director and nominal value shall not exceed Rs.
_________ and a director who obtains his qualification shares as a ___________ from
promoters of a company is guilty of a gross breach of trust and he is liable to give up the
shares. 15. A director appointed by _______ need not hold ________. 16. Where an
increase in number of directors involves an alteration of the articles, a/an _____________
would be necessary for the purpose. 17. Section 275 of ICA, 1956 prohibits the
appointment of a person holding office of a director of the same time in more than
_________________. 18. First director means the director of the company who assumes
office from the date of ___________________ of the company. 19. Those directors who
have been biggest in office once their appointment shall ______________. 20. When there
are no validly appointed directors functioning, the shareholders have the right to appoint
directors at the ________. 21. The reappointment of directors shall be effective from the
day of the ______________ meeting. 22. The directors are usually (appointed) elected by
shareholders at general meeting by a/an _______________________ passed by
_______majority of votes. 23. Two or more directors should not be elected __________ or
by ______________. 24. The directors appointed by principle of
___________________________ hold office for _____________ and cannot be removed
by the company in general meeting U/S 284. 25. It is the _________________ of the BOD
to appoint an alternate director. 26. ___________________ can be appointed only if
provision to that effect exists in the MOA or AOA of the company, unless where a statute
provides for such nomination. 27. As per U/S 255 of the Act, it should be ensured the total
number of non-rotational directors does not exceed ______________ of the total strength of
the board. 28. _________________ are in the same position and they owe same duties to
the company as any other director. 29. ____________________ means a shareholder
holding shares of nominal value of 20,000 rupees or less in a public company to which this
section applies. 30. Pursuant to section 284(1) of the Act the shareholders of a company
may by passing a/an ___________ resolution at _____________ remove director before the
expiry of his period. 31. The shareholders cannot be restrained from calling ________ to
remove existing directors and appoint new directors. 32. Tenure of small shareholders’
directors is a maximum period of __________. At expiry the same person if so desires
maybe elected for another period of _________.

ANSWERS

Limited liability Partnership Act, 2008 1. Two, one 2. 7th January, 2009, 9th January, 2009

An Introduction to e-governance 1. e-form

2. on-line payment, safe 3. (SRN) Service Request Number 4. (MCA) www.mca.gov.in 5.

e-governance mode (MCA-21) Ministry of corporate affairs of 21st century

Sole Selling and Sole Buying Agents 1. principal and an agent, I.C.A, 1872 2. re-
appointment 3. substantial interest, approved, central government

Investments and Loans 1. money or capital 2. shares, stock, debentures or other securities 3.
prerogative 4. Rs. 50,000/-

Striking Off Names of Companies (U/S 560) 1. office of the Registrar of companies 2.
Certificate of Incorporation 3. Corporate Identification Number (CIN) 4. Removal 5.
defunct company 6. e-form 21 7. high court 8. striking off, 20 yrs

Application of company law to different sectors And Offences and penalties – an overview
And Winding up of companies 1. banking 2. Indian financial system 3. Reserve Bank of
India (RBI) 4. Mandatory, RBI 5. Banking, 200 crores, 300 crores, 3 years 6. 40%, 5 yrs 7.
Certificate of registration, IRDA 8. Twelve months 9. Five whole time members, four part
time members 10. Twenty six percent 11. Promoter, 26 percent 12. IndusInd Bank

13. IDBI, tenth 14. Maximum, 10 percent 15. Thirty days, two years 16. Offences, penal
liability 17. Officers in default 18. Putting an end to the life of a company 19. Officer who
is in default 20. Central government

F. S. I. 1. Share 2. Preference share 3. Equity share capital 4. Sweat equity shares 5.

Securities at premium 6. Shares, a discount 7. Existing shareholders

F.S. II 1. Companies Act 2. Stock 3. A stockholder 4. issued, subscribed or paid-up capital

5. Reduction 6. Creditors 7. Diminution of share capital 8. Holding company
F. S. III 1. Lieu of prospectus 2. Prospectus 3. Shelf prospectus 4. red-herring prospectus 5.
Truthful 6. Offer for sale 7. Additional penalty 8. Impersonation

F. S. IV 1. Maximum 2. Commence business 3. Directors 4. Ultra vires

5. Articles or memorandum 6. Debenture stock 7. loan, debt 8 debenture trust deed 9.

Debentures 10. Certificate of deposit 11. Brokerage

F. S. V 1. Security 2. A charge 3. Fixed 4. Crystallizes 5. Charge identification number 6.

Internet 7. Register of all charges 8. Mortgage, a charge

F. S. VI 1. common seal, two, secretary 2. A share warrant 3. Shares forfeited, board 4.

Forfeit the shares 5. Allotment

F. S. VII 1. Members 2. Register of members 3. Members 4. Member 5. Register of

members

Deposits 1. Holder of deposits 2. Nominee 3. Acceptance of deposits, Non Resident

Persons 4. CLB 5. Not, maturity 6. ‘renew’ 7. Loan 8. ‘deposit’ 9. Reserve Bank of India

Divisible Profits & Dividends 1. Dividend 2. Final dividend, B. O. D 3. Two AGMs 4.

Debt, 30 days 5. A preferential right 6. Profits, providing for depreciation 7. CG 8.
Ordinary, AGM 9. Dividend, cash 10. A share, registered shareholder 11. E-form 23AAC
12. “Dividend warrant” 13. 30 days, 7 days 14. Shareholder 15. Debt, revalued,
shareholders 16. Ten percent reserves 17. ‘Divisible profits’ 18. Net proceeds, necessary
expenses 19. Interest, dividend 20. Seven years, IEPF (Investors’ Education and Protection
Fund)

Accounts & Audit 1. Registered office, Board of directors 2. Accrual basis, double entry 3.
Books of account, business hours 4. Statutory books 5. Statistical books 6. ‘Annual
accounts’, financial 7. P/L A/c 8. Balance Sheet & P/L, BOD, directors, auditors 9. ROC
10. Social audit 11. Self-explanatory, financial position 12. CG 13. CG 14. Comptroller and
auditor general of India 15. Statement of accounts

Shareholder’s democracy: majority powers and minority rights And prevention of

oppression and mismanagement. 1. Director or creditor 2. Oppression and mismanagement

3. B.O.D, AGM / general meeting 4. Minority, trampled, majority 5. Public interest

Introduction 1. Unlimited 2. Dies, wound up 3. Insurable interest 4. M.O.A 5. Open

market, realize 6. Libel 7. Voluntary association, profit 8. Illegal 9. Taxed 10. English acts
11. A limited company

Types of Companies 1. A limited company, unlimited 2. Associations not for profit 3.

Section 617 4. Comptroller and Auditor General of India (C & AG) 5. Investment 6.
Statutory company / corporation 7. 51% 8. Producer companies 9. Investment company 10.
Holding company 11. Foreign company 12. CG & SG 13. Government companies,
“private” 14. Unlimited 15. Unlimited company 16. Company limited by guarantee 17.
Guarantee company 18. One proxy 19. Rs. 1 lakh, Rs. 5 lakh 20. Chartered company

Promoter and Formation of companies 1. Promoters 2. Promoter 3. B.O.D

4. Promoter 5. Promoter 6. Promoter, 5 yrs. 7. Promoter 8. Promoter 9. 2 yrs 10. Promoters,
promoter 11. Promoter, fiduciary 12. A.O.A 13. E form 1, electronically 14. E-form 32 15.
E-form 18, 30 days 16. E-form No. 32, 30 days

Contracts and Conversions 1. Agents 2. Preliminary or pre-incorporation contracts 3.

Provisional contracts 4. Preliminary 5. Central government 6. Incorporation 7. Public
company, commence business, Registrar 8. Conclusive evidence 9. Certificate to
commence business, main objects, MOA 10. “other objects clause”, special resolution 11.
Seal 12. By choice or volition and by default 13. Ultra vires, ultra vires, directors

MOA & AOA 1. MOA 2. MOA 3. The objects, two fold 4. Authorized agent 5. One 6. E-
form No. 1 7. Registrar, preliminary enquiries 8. Share certificate 9. Objects 10. Ultra vires,
memorandum 11. Ratification 12. Debtor and creditor 13. Minor

14. Ultra vires allotment of shares 15. Void ab initio, estoppel or ratification 16. Injunction
17. Nominal 18. Paid-up capital 19. Subscribed capital 20. 12 months 21. 3 months 22. E-
form 18, 30 days 23. CG 24. AOA 25. Internal management 26. Limited by guarantee 27.
AOA 28. AOA 29. AOA 30. Alteration in Articles 31. “outsider” 32. Articles, contractual
rights 33. “constructive notice” 34. Indoor management 35. “Constructive notice” , “indoor
management”

Boards Report and Disclosure 1. Board’s report 2. Board’s report 3. RBI’s 4. Chairman, not
less than two directors, M.D 5. The Board 6. Compliance certificate 7. E-form 66 within 30
days

Registers and Returns 1. Non-statutory books

Inspection and Investigation 1. CG 2. Inspector(s)

Compromise and Arrangements 1. compromise

Producer Companies

1. ‘producer’ 2. Chief executive 3. Whole-time secretary 4. AGM 5. Producer company 6.

Producer company

Management & Control of Company – IV Company secretary 1. Rs. 5 crores 2. Rs. 10

lakhs, Rs. 5 crores, whole time practice 3. CS 4. BOD 5. BOD, MD 6. Three fold 7.
Advisory services 8. Eighty

Management & Control of Company – III MD – WTD – Manager 1. E-form 25C, 90 days,
e-form 25A 2. CG 3. MD 4. Chairman 5. Chairman 6. Manager, director 7. Substantial
powers 8. Executive director, WTD 9. Whole time employee 10. Manager and director 11.
U/S 260 12. Five years 13. Dual capacity 14. MD 15. “technical director”, “technical
advisor”

Management & Control of companies – II Power & Duties of directors 1. Directors 2.

Board meetings, general meeting 3. Delegated to the board 4. Trustee 5. CG, e-form 24AB

6. directors

Management & Control of companies 1. three, two 2. trustees 3. holding 4. CG 5. Articles

6. Managerial remuneration 7. Two 8. Office or place of profit 9. Legal entity 10. Second
world war 11. Part-time directors 12. “Board of Directors” 13. Trustees, debts due to the
company 14. Qualification shares, 2 months, Rs. 5000, secret gift 15. CG, qualification
shares 16. Special resolution 17. Fifteen (public ) companies 18. Incorporation 19. Retire
first 20. AGM 21. Adjourned meeting 22. Ordinary resolution, simple 23. Enbloc or by
single resolution 24. Proportional representation, three years 25. Prerogative (power) 26.
Nominee directors 27. One third 28. Nominee directors 29. Small shareholders 30.
Ordinary resolution, G.M. 31. AGM 32. Three years, 3 yrs