CA Inter Law - Volume 1

Question 1
Small Company u/s 2(85) has to fulfil which of the following thresholds:
(a) PUSC ≤ ` 50 lacs
(b) Turnover ≤ ` 2 crores
(c) Both (a) and (b)
(d) Either (a) or (b)

Question 2
Subsidiary company is a company in which > 50 % of the __________ is held by the holding Company u/s 2(87)
(a) Total Voting power
(b) Equity Share Capital
(c) Equity Share Capital plus Preference Share Capital
(d) Share in dividends

Question 3
Government company is one in which _______ of the PUSC is held by CG or SG or both u/s 2(45)
(a) > 50%
(b) ≥ 50%
(c) > 51%
(d) ≥ 51%

Question 4
The minimum number of members in a private company and public company are
(a) Three and Seven respectively (3,7)
(b) Two and seven respectively (2,7)
(c) Two and nine respectively (2,9)
(d) None of the above

Question 5
Only a natural person who is an Indian citizen and who has stayed in India for a period of at least _____ days during
the immediately preceding one calendar year shall be eligible to incorporate a OPC.
(a) 180 days
(b) 181 days
(c) 182 days
(d) 183 days

Question 6
Swastik Pvt Ltd passed a special resolution to change its name to Swastik Darshan Pvt Limited on 30th May, 2017.
Relevant MCA filing was done on due time and then Company got its new stationery printed on 1st, July, 2017.
However, there was a delay in issue of certificate and Company received new certificate on 20th August, 2017 which

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was issued on 10th August, 2017. Company wants to enter into a lease agreement for new premise. When they can
do such agreement in new name of the Company?
(a) 30th May, 2017
(b) 1st, July, 2017
(c) 20th August, 2017
(d) 10th August, 2017

Question 7
Angel Infrastructures Pvt. Ltd. with a paid up capital of ` 45 Lacs and annual turnover of ` 175 Lacs, is a wholly owned
subsidiary of Almightly Infrasturcture Development Ltd. a listed company. Can Angel Infrastructures be called a small
company?
(a) Yes. The paid up capital and annual turnover of Angel Infrastructure Pvt. Ltd. is not exceeding the limit as specified
under the definition of Small company.
(b) No. Because Angel Infrastructure Pvt. Ltd. is a wholly owned subsidiary company.
(c) No. Because Angel Infrastracture Pvt. Ltd. is not a subsidiary of a listed company.
(d) No. Because the paid up capital is ` 45 lacs less than prescribed limit of ` 50 Lacs but its turnover is exceeding `
100 Lacs.

Question 8
Sapan and Sanjay made a name reservation application accompanied by requisite fee to the Registrar for forming a
new private company. The Registrar accorded its approval for reservation of most preferred name Sapanjay Softwares
Private Ltd. on 6th July, 2018. In how many days, necessary documents for incorporation of the company must be
submitted to the Registrar so that the reserved name does not get lapsed.
(a) Within 10 days from the date of approval
(b) Within 20 days from the date of approval
(c) Within 45 days from the date of approval
(d) Within 60 days from the date of approval

Question 9
Seema Bulbs Ltd. is desirous of having significant influence in Shaukeen LED Bulbs and Tubes Ltd. so that the latter
becomes its ‘associate company’. For exercising ‘significant influence’ one of the options available to Seema Bulbs is
to control at least twenty per cent of total voting power of Shaukeen LED Bulbs and Tubes. What is the other option
available?
(a) To control or participate in the recruitment decisions relating to appointment of middle management personnel
of Shaukeen LED Bulbs and Tubes under an agreement.
(b) To control or participate in the dividend decisions of Shaukeen LED Bulbs and Tubes under an agreement.
(c) To control or participate in the business decisions of Shaukeen LED Bulbs and Tubes under an agreement.
(d) To control or participate in the export decisions of Shaukeen LED Bulbs and Tubes under an agreement.

Question 10
Rukmani, a fresh science graduate, wants to make available the farmers good quality seeds and manure. For her
business she is contemplating to form a company and is weighing various options. Sometimes before, she came to
know that a ‘one person company’ has minimum one member and one director whereas a private company has
minimum two members and two directors. As regards a public company, she has vague idea that there should be
minimum three directors but she does not know about the minimum members required in this case. Advise.
(a) When there is requirement of minimum three directors, the public company can be formed by minimum three
persons.
(b) There should be minimum five persons for formation of a public company though requirement of minimum
directors shall remain three.

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(c) There should be minimum seven persons for formation of a public company though requirement of minimum
directors shall remain three.
(d) There should be minimum nine persons for formation of a public company though requirement of minimum
directors shall remain three.

Question 11
Ravi is the owner of a grocery store. In March 2018, he got the idea of forming a ‘One Person Company’ and convinced
his sister Ruchika, an Indian citizen who resides in London but visits India from time to time, to become nominee in his
OPC. In the year 2017, Ruchika first came to India on 10th January and left for London on 26th February. Thereafter, she
again visited India on 7th June and remained here till 10th October and boarded an evening flight for London on the
same day. From then onward she did not visit India in the year 2017 but on 2 nd January 2018 she came to India for a
short duration and left for London on 14th February, 2018. Is it possible for Ravi to appoint Ruchika as nominee?
(a) Ruchika can be appointed as nominee by Ravi because she is a natural person, an Indian citizen and resided in
India for more than 90 days during the year 2017.
(b) Ruchika can be appointed as nominee by Ravi because she is a natural person, an Indian citizen and resided in
India for more than 182 days during the years 2017 and 2018 i.e. prior to March 2018 when Ravi contemplated to
form his OPC.
(c) Ravi cannot appoint Ruchika as nominee in his OPC because she did not reside in India for 182 days or more during
the year 2017 though she is a natural person and also an Indian citizen.
(d) Since Ravi is the sole member of his OPC who will look after all its affairs and the appointment of nominee is just
a formality, a visit to India during 2017 for any number of days would make Ruchika eligible to be appointed as
nominee.

Question 12
Ruchir Marcons Ltd. which provides marketing and consultancy services is keen to have a ‘significant influence’ in
Ruchika Marketing Ltd. so that it becomes its ‘associate company’. For having ‘significant influence’ Ruchir Marcons
Ltd. needs to control certain percentage of total voting power of Ruchika Marketing Ltd. What is that?
(a) For creating ‘significant influence’ Ruchir Marcons Ltd. must control at least five per cent of total voting power of
Ruchika Marketing Ltd.
(b) For creating ‘significant influence’ Ruchir Marcons Ltd. must control at least ten per cent of total voting power of
Ruchika Marketing Ltd.
(c) For creating ‘significant influence’ Ruchir Marcons Ltd. must control at least fifteen per cent of total voting power
of Ruchika Marketing Ltd.
(d) For creating ‘significant influence’ Ruchir Marcons Ltd. must control at least twenty per cent of total voting power
of Ruchika Marketing Ltd.

Question 13
Jatin is desirous of forming a ‘One Person Company (OPC)’ for which he wants to nominate his wife Jasmin who in the
event of his death shall become the member of OPC. However, he is not aware of as to which document should contain
the name of the nominee. Advise him in the matter.
(a) Name of the nominee should be mentioned in the Articles of Association after the names of the directors.
(b) Name of the nominee should be mentioned in the Memorandum of Association
(c) Either Articles of Association or Memorandum of Association may contain the name of the nominee.
(d) There is no need to mention the name of the nominee in either Articles of Association or Memorandum of
Association; a simple consent letter obtained from the nominee and kept in the records is sufficient.

Question 14
Rajesh has formed a ‘One Person Company (OPC)’ with his wife Roopali as nominee. For the last two years his wife
Roopali is suffering from terminal illness and due to this hard fact he wants to change her as nominee. He has a trusted

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and experienced friend Ramnivas who could be made nominee or his (Rajesh) son Rakshak who is of seventeen years
of age. Whom should he nominate as nominee in place of his wife?
(a) Since blood relation can only be appointed as nominee in case of OPC, Rajesh needs to appoint his son Rakshak.
(b) Rajesh can appoint his friend Ramnivas as nominee in his OPC.
(c) Roopali is not agreeable to the proposal of Rajesh and hence, Rajesh cannot change her as the nominee
(d) Either Rakshak or Mr. Ramnivas can be appointed as nominee
Question 15
Abha formed a ‘One Person Company (OPC)’ on 15-10-2017 with her husband Akhil as nominee and ` 10 lacs as
Authorised and paid-up share capital. In the month of April 2018 she got in touch with a foreigner and is expecting to
receive a substantial export order by May 2018 whose final delivery must be completed by December 2018. She is
contemplating to convert her OPC into a private limited company before she receives the export order in May 2018.
(a) Since Abha is the sole member of OPC she is having full discretion to voluntarily convert it into a private limited
company any time after 15-10-2017.
(b) Abha can voluntarily convert her OPC into a private limited company only after the expiry of first financial year by
which the accounts are closed (i.e. after 31 -3-2018 without any restriction.)
(c) Abha can voluntarily convert her OPC into a private limited company only afte r she delivers duly audited first
financial statements and Annual Return to the concerned Registrar of Companies by due date and without making
payment of any additional fee.
(d) Abha can voluntarily convert her OPC into a private limited company only after expiry of two years from 15-10-
2017 (i.e. on 15-10-2019 or thereafter).

Question 16
Arun along with his wife Arunima is running successfully a trading business. His friend Akash has suggested him to form
a ‘One Person Company (OPC)’ whose striking feature is ‘limited liability’. Arun is all convinced to get incorporated
OPC but he is in a dilemma as to how to depict the name of such OPC in the Memorandum. Select the best option for
him.
(a) Aru-&-Aru (One Person Company) Trading Private Limited
(b) One Person Company - Aru-&-Aru Trading & Co.
(c) Aru-&-Aru Trading (One Person Company)
(d) Aru-&-Aru Trading Private Limited (One Person Company)

Question 17
Anupam got incorporated ‘One Person Company’ with his sister Alpana as the nominee and about three years have
passed satisfactorily. From time to time Anupam does a number of charitable works and is attached with three NGOs
undertaking such assignments. In the meantime his business under his OPC has also flourished. Now he is
contemplating to convert the OPC either as a Section 8 company (i.e. formation of companies with charitable objects)
or as a private or public company. Select the best option for him.
(a) Since OPC belongs to Anupam, he has full discretion to convert the OPC either as a Section 8 company or as a
private or public company
(b) Since OPC was formed as a private company, the only option available with Anupam is to get it converted into a
private limited company. Moreover, there is specific prohibition on converting OPC into a public limited
company
(c) There is specific prohibition on converting OPC into a Section 8 company; otherwise it can be converted into a
private or public company without any hindrance.
(d) Since Anupam does a lot of charitable works there is no prohibition if he converts his OPC into a Section 8
company (companies formed with charitable objects).

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Question 18
Arshi, is the sole member of his OPC and he has appointed Vishal (his dear friend) as his nominee. Now, Vishal is leaving
India permanently and has set up his own business in Italy. Due, to this fact, he has withdrawing his consent to
continue as nominee in the said OPC.
(a) Vishal cannot withdraw his consent to act as a nominee of the OPC
(b) Only Arshi has a right to remove Vishal as a nominee
(c) Vishal can withdraw his consent to act as a nominee of the OPC by giving proper notice
(d) Vishal cannot withdraw his consent only when he is disabled but not due to the reason that he has set up his
own business.
Question 19
Vivek is in trading business whereby he supplies handmade gloves and socks to many charitable trusts who supports
the elderly people. Vivek now wants to expand his business and wants to reap the benefits of company form of
oragnisation by opening his business as an OPC registered under section 8 of the Companies Act, 2013. Advise Vivek:
(a) Vivek cannot form an OPC as he is in trading business
(b) Vivek cannot form an OPC to be registered under section 8 of the Companies Act, 2013
(c) Vivek can form an OPC to be registered under section 8 of the Companies Act, 2013
(d) Vivek can form an OPC as a private company and then convert it into a section 8 company

Question 20
Savita and her husband Sukesh have got incorporated Savi Trading Company Private Limited with authorised and paid
up share capital of ` 40 lacs. As per its last profit and loss account relating to the FY 2017-18, the turnover was ` 170
lacs. Accordingly, their company is considered as a ‘small company’ in the FY 2018-19. They think that the status of
‘small company’, once bestowed, will continue till next 10 financial years. Advise.
(a) Their contention that the status of ‘small company’, once bestowed, will continue till next 10 financial years is
absolutely correct.
(b) The status of ‘small company’, once bestowed, can continue till next 7 financial years only.
(c) The status of ‘small company’ will keep on changing from time to time, for it is not permanent for any particular
period.
(d) If ROC permits, the status of ‘small company’ can continue maximum for three years including the year in which
it is attained.

Question 21
Roma along with her six friends has got incorporated Roma Trading Ltd. in May 2017. She kept the paid-up share
capital at ` 30 lacs. Further, in April 2018, she noticed that in the last financial year, the turnover of the company was
well below ` 2 crores. Advise whether the company can be treated as a ‘small company’.
(a) Roma Trading Ltd. is definitely a ‘small company’ since its paid -up capital is much below ` 50 lacs and also its
turnover has not exceeded the threshold limit of ` 2 crores.
(b) The concept of ‘small company’ is applicable only in case of a private limited company/OPC and therefore, despite
meeting the criteria of ‘small company’ it being a public limited company cannot enjoy benefits of ‘small
company’.
(c) Unlike a private limited company/OPC which automatically becomes a ‘small company’ as soon as it meets the
criteria of ‘small company’, Roma Trading Ltd. being a public limited company has to maintain the norms
applicable to a ‘small company’ continuously for two years so that, thereafter, it is treated as a ‘small company’.
(d) If all the shareholders of Roma Trading Ltd. give an undertaking to the ROC stating that they will not let the paid
share capital and also turnover exceed the limits applicable to a ‘small company’ in the next two years, then it can
be treated as a ‘small company’.

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Question 22
H Ltd. is the holding company of S Pvt. Ltd. As per the last profit and loss account for the year ending 31st March, 2018
of S Ltd. its turnover was to the extent of ` 1.50 crores; and paid up share capital was ` 40 lacs. Since S Pvt. Ltd., as per
the turnover and paid up share capital norms, qualifies for the status of a ‘small company’ it wants to be categorized
as ‘small company’. Advise.
(a) If H Ltd. converts itself into a private limited company, S Pvt Ltd. being its subsidiary can be categorized as a ‘small
company’ since it meets turnover and paid up share capital norms applicable to a ‘small company’.
(b) So long as S Pvt. Ltd. meets the turnover and paid up share capital norms applicable to a ‘small company’ (which
at present is the case), it shall be categorized as a ‘small company’.
(c) S Pvt. Ltd. cannot be categorized as a ‘small company’ because it is the subsidiary of another company.
(d) Categorisation of S Pvt. Ltd. is possible only if H Ltd., the holding company, also meets the turnover and paid up
share capital norms applicable to a ‘small company’.
Question 23
Abhilasha and Amrita have incorporated a ‘not for profit’ private limited company which is registered under Section 8
of the Companies Act, 2013. One of their friends has informed them that their company can be categorized as a ‘small
company’ because as per the last profit and loss account for the year ending 31st March, 2018, its turnover was less
than ` 2.00 crores and its paid-up share capital was less than ` fifty lacs. Advise.
(a) A section 8 company, which meets the criteria of ‘turnover’ and ‘paid-up share capital’ in the last financial year,
can avail the status of ‘small company’ only if it acquires at least 5% stake in another ‘small company’ within the
ensuing financial year.
(b) If the acquisition of minimum 5% stake in another ‘small company’ materializes in the second financial year (and
not in the ensuing financial year) after meeting the criteria of ‘turnover’ and ‘paid-up share capital’ then with the
written permission of concerned ROC, it can acquire the status of ‘small company’.
(c) The status of ‘small company’ cannot be bestowed upon a ‘not for profit’ company which is registered under
Section 8 of the Companies Act, 2013.
(d) A section 8 company, if incorporated as a private limited company (and not as public limited company) can avail
the status of ‘small company’ with the permission of concerned ROC, after it meets the criteria of ‘turnover’ and
‘paid-up share capital’.

Question 24
A, B, C, D, E, F, G want to incorporate a public limited company. However, G wants his private limited company to be
its member instead of himself. Following this proposition of G, D also wants his registered partnership firm to be its
member instead of himself.
(a) Both G and D are required to sign the Memorandum of newly formed company in their individual capacity and
not through their concerns.
(b) Private Limited company of G can be the subscriber to the Memorandum of newly formed company but D has to
sign the Memorandum in his individual capacity.
(c) Both G and D have to obtain the consent of other five persons in writing before their private limited company and
partnership firm subscribe to the Memorandum.
(d) Private Limited company of G cannot be the subscriber to the Memorandum of newly formed company but
registered partnership firm of D can be the subscriber to the Memorandum.

Question 25
Sukant and Sukriti, architects by profession and residents of Janakpuri, Delhi, have formed a company by the name
Suk Architects and Consultants Private Limited, whose registered office is situated in a somewhat less inhibited market
area of Gurugram, Haryana. They do not consider it to be a safe place. Therefore, to be on safer side they have kept
all the documents and information relating to incorporation of their company (that were originally filed with Registrar
for registration of Company) at Sukant’s residence. Is their action justified?
(a) It is their prerogative to keep all the documents and information relating to incorporation of their company at a
place which they think is quite safe – even if it is Janakpuri, Delhi.

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(b) Considering registered office to be unsafe, they can keep all the documents and information relating to
incorporation of their company at any place in Haryana only where Gurugram is situated but for this purpose they
must seek permission of the ROC.
(c) If they do not want to seek permission of ROC, considering registered office to be unsafe, they can keep all the
documents and information relating to incorporation of their company at any place which should be within three
kms. of their registered office but in Gurugram only.
(d) They have to keep all the documents and information relating to incorporation of their company at the registered
office, only.

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Question 1
Mr. Pushkar wishes to start his own venture with an idea of recycling of plastic waste. He approaches you for your
advice so as to decide on which type of entity he should incorporate mainly based on the aspects of taxation, capital
funding and other monetary benefits to the promoters. Kindly suggest a suitable form of entity from the following –
(a) Limited Liability Partnership;
(b) Private Limited Company;
(c) Section 8 Company;
(d) Producer Company.

Question 2
Ravi and Ragini have formed a Section 8 company; date of incorporation being 18.02.2018 and they being the directors
and also the shareholders. During June, 2 018 it transpired that two unsuitable articles were required to be altered for
smooth functioning of the company. Advise.
(a) Since articles regulate the internal management of the company, both Ravi and Ragini being directors and
shareholders are themselves capable of altering the articles.
(b) In case of Section 8 company, articles can be altered only if the company shows profits consecutively for two
years.
(c) In case of Section 8 company, prior approval of the Central Government is required to be obtained before its
articles are altered.
(d) In case of Section 8 company, at least one year must elapse from the date of its incorporation before its articles
are altered but there is no need to obtain prior permission of the Central Government.

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Question 1
Which one of the following is not the content of the Memorandum of Association? (NSOLCA)
(a) Name clause
(b) Registered office clause
(c) Objects clause
(d) Board of Directors clause

Question 2
The Registrar shall register any alteration of the memorandum with respect to the objects of the company and
certify the registration within a period of ______ from the date of filing of the special resolution.
(a) 30 days
(b) 60 days
(c) 90 days
(d) 6 months

Question 3
An Indian Company decided to shift its registered office within the jurisdiction of same Registrar in a Board meeting
held on 25th May, 2017. Within how many days Company shall intimate such change to Registrar of Companies?
(a) Within 15days from the date of such change;
(b) Within 30days from the date of such change;
(c) Within 15days from the date of Board meeting;
(d) Within 30days from the date of Board meeting;

Question 4
Seven Hospitality Limited (“Company”) was incorporated in 2013. Company run resorts and hotels nearby Mumbai. In
2018, Central government received an application from Mr. X (“proprietor”) who has registered trademark for word
“Seven”. In ideal situation, what will be the Central Government’s stand?
(a) CG will ask to take permission from Registrar, as he have approved this name in first place;
(b) CG will ask them to mutually agree to use the word “Seven”;
(c) CG will direct the Company to change its name;
(d) CG will deny his application;

Question 5
SNDT Ltd decided to shift its registered office from jurisdiction of one Registrar to the jurisdiction of another Registrar.
SNDT Ltd complied with the provisions of Companies Act, 2013 and did all relevant filing within due period of time.
Confirmation on such shifting was received by Regional Director on 26th June, 2017. By when SNDT Ltd has to file that
confirmation with the Registrar?
(a) 11th July, 2017
(b) 25th July, 2017
(c) 11th August, 2017
(d) 25th August, 2017

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Question 6
The Registrar shall register any alteration of the memorandum with respect to the objects of the company
and certify the registration within a period of ______________ from the date of filing of the
special resolution.
(a) 30 days
(b) 60 days
(c) 90 days
(d) 6 months

Question 7
Priyank and Priyanka, got reserved a name and thereafter a private limited company was formed using the
reserved name on 1st June, 2018. Later on, a registered proprietor of a trade mark noted that the name of
this private limited company was identical to the trade mark he had earlier got registered under the Trade
Marks Act, 1999. Advise as to latest by which date, the proprietor of the registered trade mark can move
an application to the Central Government against this anomaly.
(a) Latest by 30th November, 2018, the registered proprietor of trade mark should move an application to
the Central Government for rectification of this anomaly.
(b) Latest by 30th May, 2019, the registered proprietor of trade mark should move an application to the
Central Government for rectification of this anomaly.
(c) Latest by 30th May, 2020, the registered proprietor of trade mark should move an application to the
Central Government for rectification of this anomaly.
(d) Latest by 30th May, 2021, the registered proprietor of trade mark should move an application to the
Central Government for rectification of this anomaly.

Question 8
High Aim Pvt. Ltd. wants to change its object clause of the Memorandum of Association of the Company.
The needs:
(a) Shareholders approval by way of Ordinary Resolution
(b) Shareholders approval is not required for change of object clause of the company.
(c) Shareholders approval by way of Special Resolution
(d) The approval from Tribunal for changing object clause of the company.

Question 9
Amar made an application, his wife Abhilasha being other proposed subscriber and got reserved a name for
incorporation of a private limited company but the Registrar of Companies, Delhi and Haryana, much before
the incorporation, found that the name was applied by furnishing wrong information.
(a) The reserved name shall be cancelled by the ROC because the name was applied by furnishing wrong
information and Amar who made the application shall be liable to a penalty up to Rs. 1 lac.
(b) The reserved name, after seeking explanation from Amar and after he pays a penalty of Rs. one lac shall
be allotted by the ROC and the company shall be incorporated by this name.
(c) The reserved name shall be cancelled by the ROC but Amar shall not be liable to pay any penalty because
cancellation of name in itself is a penalty.
(d) Besides cancellation of the reserved name Amar and Abhilasha shall be debarred from making an
application for reservation of name for one year from the date on which cancellation letter was issued
by the ROC.

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Question 1
DEF Private Limited altered its Articles of Association on its conversion into public Company. A copy of order of the
competent authority approving the alteration, is required to be filed with Registrar. How many days Company have to
file such order?
(a) 15 days
(b) 30 days
(c) 45 days
(d) 60 days

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Question 1
A private company may issue securities through the way of, except –
(a) Public offer
(b) Rights issue
(c) Bonus issue
(d) Private placement

Question 2
Registrar of companies shall refuse to register a prospectus:
(a) If it is not dated
(b) Contains statement of an expert who has not signed it
(c) Contains information which is six month old (See Note below)
(d) In all the above cases
Note: This point of 6 months was contained in Rules 4 & 5 which has been omitted on 7th May 2018 but still used here.

Question 3
A prospectus issued in the form of advertisement must state:
(a) The objects for which the company has been formed
(b) The liability of members
(c) The amount of share capital of company
(d) All of the above

Question 4
Shelf prospectus remains valid upto –
(a) 6 months
(b) 1 year
(c) 2 years
(d) 5 years

Question 5
Morgan Limited decided to make an offer for purchase of securities. Application Forms for the purchase were issued
to public. However, it was not accompanied by an abridged prospectus. For this default Company is liable for penalty.
How much penalty Company has to bear?
(a) Rs. 25,000
(b) Rs. 50,000
(c) Rs. 100,000
(d) Rs. 500,000

Question 6
Extra Limited is a growing Company and requires additional funds for expansion from time to time. They are following
the same process for making an offer to public and then issue those shares. This is very time and energy consuming
for them. Kindly advise them if there is any way out.
(a) During first offer they shall file prospectus with a validity on one year, so subsequent offer issued during the period
of validity of that prospectus, no further prospectus is required;

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(b) During first offer they shall file prospectus with a validity on two years, so subsequent offer issued during the
period of validity of that prospectus, no further prospectus is required;
(c) During first offer they shall file shelf prospectus with a validity on one year, so subsequent offer issued during the
period of validity of that prospectus, no further prospectus is required;
(d) During first offer they shall file shelf prospectus with a validity on two years, so subsequent offer issued during
the period of validity of that prospectus, no further prospectus is required;

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Question 1
Offer of securities or invitation to subscribe securities under private placement shall be made to maximum number of
person in the aggregate in a financial year.
(a) 50
(b) 100
(c) 150
(d) 200

Question 2
Ajo Private Limited made private placement offer to identified people. It was clearly stated that such people have no
right of renunciation. Company received share application money within given period of time however could not allot
shares within 60 days from receipt. Now it is duty of Ajo Private Limited to repay the share application money.
Company will be liable to pay interest if they fail to do so. Within how many days Company has to repay the share
application money to avoid interest payment?
(a) 15 days
(b) 30 days
(c) 60 days
(d) 90 days

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Question 1
The subscribed capital of a company is:
(a) never more than the issued capital
(b) never less than the issued capital
(c) always equal to the issued capital
(d) prescribed percentage of the issued capital

Question 2
Part of the capital for which application have been received from the public and shares allotted to them:
(a) Nominal capital
(b) Issued capital
(c) Subscribed capital
(d) Called up capital

Question 3
Shares which are issued by a company to its directors or employees at a discount or for an intellectual consideration:
(a) Equity Shares
(b) Preference Shares
(c) Sweat Equity Shares
(d) Redeemable preference shares

Question 4
ABC Ltd. wants to issue redeemable preference shares for a period of 35 years. Advise whether it can do so.
(a) Yes, ABC Ltd. can issue redeemable preference shares
(b) Yes, ABC Ltd. can issue redeemable preference shares but for only 30 years
(c) Instead of issuing of shares for 35 years, ABC Ltd. should issue irredeemable preference shares.
(d) Yes, ABC Ltd. can issue redeemable preference shares for a period not extending 20 years.

Question 5
A Company limited by shares can issue equity shares with differential voting rights. Which of the following is not a
necessary condition to be fulfilled before issue of such shares:
(a) The articles of association of the company shall authorize issue of shares with differential rights;
(b) The issue of shares shall be authorized by an ordinary resolution passed at a general meeting of the shareholders;
(c) The issue of shares shall be authorized by special resolution passed at a general meeting of the shareholders;
(d) The company shall have consistent track record of distributable profits for the last three years;

Question 6
When an unlisted public company issues shares at a premium, amount of the premium received on those shares is
transferred to a "securities premium account". For which purpose amount lying in securities premium account shall
be used?
(a) In writing off preliminary expenses of the company;
(b) In writing off pre-incorporation expenses of the company;
(c) For purchase of immovable assets;
(d) For paying managerial remuneration;

15
Question 7
A Private Company can issue preference shares which are liable to be redeemed within particular period, only if articles
authorizes such issue. Within how much such preference shares have to be redeemed?
(a) Within a period not exceeding 10 years;
(b) Within a period not exceeding 15 years;
(c) Within a period not exceeding 20 years;
(d) Within a period not exceeding 25 years;

16
Question 1
A company may convert all or any of its fully paid up shares into stock:
(a) by passing a special resolution
(b) by passing a ordinary resolution
(c) with the approval of the Tribunal
(d) All of the above
Hint: Refer Section 61 read with Regulation 35, 36 of Table F – Discussed in class

17
Question 1
An eligible company as per section 76, which is accepting deposits within the limits specified under section 180 (1) (c)
may accept deposits by means of _____________
(a) ordinary resolution
(b) unanimous resolution
(c) Special resolution
(d) Special resolution and approval of Central Government
Hint : Rule 2 says "Eligible Company" means a public company u/s 76, having a net worth of ≥ ` 100 crores or a turnover
of ≥ ` 500 crore and which has passed Special Resolution before making any invitation to the Public for acceptance of
deposits:
Provided that an eligible company, which is accepting deposits within the limits specified u/s 180(1) (c), may accept
deposits by means of an Ordinary Resolution;

Question 2
Every company shall pay a penal rate of interest for the overdue period in case of deposits, whether
secured or unsecured, matured and claimed but remaining unpaid.
(a) 9% p.a.
(b) 10% p.a.
(c) 12% p.a.
(d) 18% p.a.
Hint: Rule 17 says Every company shall pay a penal rate of interest of 18% per annum for the overdue period in case
of deposits, whether secured or unsecured, matured and claimed but remaining unpaid.

Question 3
A reserve account that shall NOT be used by the company for any purpose other than repayment of DEPOSITS is
called:
(a) debenture redemption reserve
(b) deposit repayment reserve
(c) capital redemption reserve
(d) free reserve

Question 4
Where depositors so desire, deposits may be accepted in joint names not exceeding ____
(a) 2
(b) 3
(c) 5
(d) 7
Hint: Rule 3 - Where depositors so desire, deposits may be accepted in joint names not exceeding three, with or
without any of the clauses, namely, "Jointly", "Either or Survivor", "First named or Survivor", "Anyone or Survivor".

Question 5
No deposits are repayable earlier than ______________ from the date of such deposits or renewal thereof
(a) 3 months
(b) 6 months

18
(c) 12 months
(d) 1 year
Hint: Generally Deposits are accepted between 6 months to 36 months but it can be accepted for 3 months to 6
months if it is ≤ 10% of {PUSC + FR + SP}

Question 6
XYZ Private Limited, has passed a resolution in general meeting to accept deposit from its members. Terms and
conditions are finalized in consultation with Reserve Bank of India. Company accepted deposits of INR 30 Lakhs in year
2016. Company wants more deposits in the next quarter. Board of Directors are aware that as per the Act, they have
a Ceiling limit, beyond which they cannot accept deposits. What percentage of aggregate of paid-up share capital, free
Reserves and securities premium account, they cannot cross?
(a) 15%
(b) 25%
(c) 35%
(d) 45%

Question 7
On 30th June 2017, the liability side of Balance Sheet of X Ltd. showed balance of paid up share capital of Rs. 65 lacs,
free reserve of Rs. 10 lacs, share premium account of Rs. 20 lacs, deposits of Rs. 25 lacs, repayable in the current
financial year, during the month of September 2017.In July 2017, the company was in need of some short term funds
to the tune of Rs. 20 lacs for a period of 6 months. The maximum amount which the company may hold as deposit
together with existing deposits will be—
(a) Rs. 33.25 Lacs
(b) Rs. 11.25 lacs
(c) Rs. 95 lacs
(d) Rs. 9.5 lacs.

19
Question 1
The company’s instrument creating a charge or modification thereon shall be preserved for a period of years
from the date of satisfaction of charge by the company.
(a) 5
(b) 7
(c) 8
(d) permanently
Hint: Sec 85 Register of Charges permanently but copy of instrument for 8 years only.

Question 2
On receipt of intimation of satisfaction of charge, the registrar issues a notice to the holder calling a show cause within
such time not exceeding _______________days as to why payment or satisfaction in full should not be regarded as
intimated to the Registrar (Section 82):
(a) 14
(b) 21
(c) 30
(d) 300

Question 3
The register of charges and instrument of charges, shall be open for inspection during (Section 85)
(a) Working Hours
(b) Business Hours
(c) At all times
(d) 9 am to 5 pm

Question 4
Any person acquiring property (on which charge is registered under section 77) shall be deemed to have notice of
the charge from: (Section 80)
(a) end of 30 days
(b) date of application for charge
(c) date acquiring the property
(d) date of such registration

Question 5
An interest or lien created on the property or assets of a company or any of its undertakings or both as security is
known as:
(a) Debt
(b) Charge
(c) Liability
(d) Hypothecation

20
Question 6
A charge was created on assets of Pram Limited. Such charge is registered on 12th November, 2018. Any person
acquiring such assets shall be deemed to have notice of the charge: (Give your answer as per the provisions of the
Companies Act, 2013)
(a) from 12th November, 2018;
(b) from 13th November, 2018;
(c) from 12th December, 2018;
(d) from 12th January, 2019;

21
Question 1
(Section 94) Register of members, debenture holders, other security holders or copies of return may also be kept at
any other place in India in which more than ___________ of the total number of members entered in the register of
members reside, if approved by a special resolution passed at a general meeting of the company and the Registrar has
been given a copy of the proposed special resolution in advance (Amendment).
(a) one-half
(b) one-eight
(c) one-tenth
(d) one-third

Question 2
JX Limited, an unlisted public Company has its registered office in Mumbai. Due to a shortage of storage space, the
Board of Directors of JX Limited has decided not to preserve the books of accounts and other related records of
accounts. The Board has approached you, to seek an advice on this matter. Give suitable advice to the Board of JX
Limited:
(a) The Company is not mandatorily required to maintain the Statutory Registers and Records at the Registered Office.
(b) The Company can make space by destroying all Statutory Registers and Records which are older than 8 years.
(c) Company can shift the Statutory Registers and Records at JX Limited’s branch office situated at Pune, where more
than one-tenth of the total number of members entered in the register of members reside.
(d) Company can digitize all the Statutory Registers and Records.

Question 3
ABC Infrastructures Limited is a listed company quoted at National Stock Exchange. The company closed its Register of
Members in June and August, 2017 for 12 and 21 days respectively. The CFO of company has informed the company
secretary to consider closing of register in December for another 15 days for some strategic reasons. Referring to the
provisions of Companies Act, 2013, examine the validity of above action of the company.
(a) Valid, as the closure of register of members by company each time is not exceeding 30 days.
(b) Invalid, as company cannot go for closure of Register of members more than twice in a year.
(c) Invalid, as the period of closing register of members exceeding 30 days in a year.
(d) Invalid, as the period of closing the Register of members by the company is exceeding 45 days in a year.

22
Question 1
The Registrar may grant an extension by ________, for holding the Annual General Meeting to any company
for special reasons (except in the case of first AGM of the company).
(a) 1 Month
(b) 2 Month
(c) 3 Month
(d) 6 Month

Question 2
Which one of the following requires ordinary resolution?
a. to change the name of the company
b. to alter the articles of association
c. to reduce the share capital
d. to declare dividends.

Question 3
A section 8 company can call its general meeting by giving a clear at least _________ notice.
(a) 7 days
(b) 14 days
(c) 21 days
(d) 27 days

Question 4
Soya Limited was incorporated in 2014 and has its registered office in Noida. Company wants to call its 4th Annual
General Meeting in Mumbai. Whether it is possible?
(a) It is not possible as Annual General Meeting has to be held in Noida;
(b) It is possible with consent of 50% members is received;
(c) It is possible if consent of 75% members is received;
(d) It is possible if consent of 100% members is received;

Question 5
Mr. N is a Company Secretary of Mayo Private Limited. For calling Company’s Annual General meeting, Mr. N has to
issue notice of that meeting before stipulated period of time. Draft notice is ready with him. However, he is confused
on agenda items for which he has to attach explanatory statement to the notice. Please help him to understand which
agenda item needs explanatory Statement?
(a) Consideration of Auditors Report;
(b) Fixing remuneration of Auditor;
(c) Fixing remuneration of Manager;
(d) Declaration of any dividend;

Question 6
The Board of Directors of Gama Ltd. did not call the Extra Ordinary General meeting within 21 days from the date of
receipt of requisition from members, then the requisitionists may themselves call a meeting within a period of from
the date of requisition.

23
(a) 15 days
(b) 30 days
(c) 1 month
(d) 3 month

Question 7
Swiss Commodities Private Limited was incorporated in 2015. Company was not running its business properly due to
unexpected ups and downs. It could not hold its first annual general meeting in the year 2016. The company is planning
to apply for extension of time for holding the AGM from the Registrar of Companies. On which grounds Company can
get an extension?
(a) They will not get any extension.
(b) It Company proves that their financial statements are confiscated.
(c) If they prove that directors have fell below numbers.
(d) If they prove that members are not available.

Question 8
Annual general meeting needs to be called by giving 21 days’ clear notice. However, it can be called on a shorter notice
if members entitled to vote in that meeting give their consent in writing or by electronic mode. In such case, how
many members have to give their consents?
(a) 75% of members entitled;
(b) 90% of members entitled;
(c) 91% of members entitled;
(d) 95% of members entitled;

Question 9
In Annual General Meeting, which one of the follow will be treated as special business?
(a) declaration of any dividend;
(b) fixing of the remuneration of the auditors;
(c) appointment of directors in place of those retiring;
(d) regularization of Director’s Appointment;

24
Question 1
Wide Infra Limited is a Company with 1350 members. Extra General Meeting of Wide Infra Limited was scheduled on
15th November, 2018 at 11 am. On the day of meeting, 3 members were present at 10.45 am. What number of
members is required to fulfil quorum requirement?
(a) Additional 4 members before 11.30 am;
(b) Additional 4 members before 11.15 am;
(c) Additional 12 members before 11.30 am;
(d) Additional 12 members before 11.15 am;

Question 2
The members of Matrix Limited requisitioned for calling Extra Ordinary General Meeting to consider some urgent
matters. The same was called by the company. Meeting was scheduled on 31st August, 2018. However, required
quorum was not present at the meeting. In this case, what Matrix Limited shall do?
(a) Matrix Limited shall adjourn the meeting to the same day in the next week at the same time and place;
(b) Matrix Limited shall adjourn the meeting to such other day at such other time and place;
(c) The meeting shall be cancelled;
(d) Matrix Limited shall proceed ahead with the available quorum;

Question 3
The Annual General meeting of Tirupati Limited was scheduled for 28 th December, 2017. Mr. Ananat, shareholder of
Tirupati Limited has desired to inspect inspection of proxies lodged with the company. The notice for inspection should
be given at least before the meeting:
(a) 24 hours
(b) 1 day
(c) 2 days
(d) 3 days

25
Question 1
A resolution shall be a special resolution when the votes cast in favour of the resolution by members are not less
___________ than the number of votes, if any, cast against the resolution.
(a) Twice
(b) Three times
(c) One third
(d) One fourth

26
Question 1
Every listed company shall file with the Registrar a copy of the report on each annual general meeting (MGT-15,
Section 121) within ______ of the conclusion of the annual general meeting.
(a) 7 days
(b) 30 days
(c) 3 months
(d) 90 days

27
Question 1
A contract of indemnity is a
(a) Contingent Contract
(b) Wagering contract
(c) Quasi Contract
(d) Void agreement

Question 2
A contracts to save B against the consequences of any proceedings, which C may take against B in respect of a certain
sum of 500 rupees. This is a:
(a) Contract of guarantee
(b) Quasi contract
(c) Contract of indemnity
(d) Void contract

Question 3
ln a Contract of Guarantee there is/are:
(a) One contract
(b) Two contracts
(c) Three contracts
(d) Four contracts.

Question 4
S and P go into a shop. S says to the shopkeeper, C, “Let P have the goods, and if he does not pay you, I will. “This is a
(a) Contract of Guarantee
(b) Contract of Indemnity
(c) Wagering agreement
(d) Quasi-contract

Question 5
A guarantee obtained by a creditor by keeping silence as to material circumstances is:
(a) Valid
(b) Voidable
(c) Unenforceable
(d) Invalid

Question 6
A contract of indemnity is a
(a) Contingent contract
(b) Wagering contract
(c) Quasi contract
(d) Void contract

28
Question 7
A, B and C, as sureties for D, enter into three bonds, each in a different penalty, namely, A in the penalty of ` 1,00,000,
B in that of ` 2,00,000, C in that of ` 4,00,000, conditioned for D’s duly accounting to E. D makes default to the extent
of 3,00,000 rupees. According to the Indian Contract Act, 1872:
(a) Only A is liable
(b) A and B are each liable to pay 1,00,000 and 2,00,000 rupees respectively.
(c) A and B are each liable to pay 1,00,000 rupees.
(d) A, B and C are each liable to pay 1,00,000 rupees.

Question 8
Mr. A puts ‘M’ as the cashier under Mr. B and agrees to stand as surety provided ‘B’ checks the cash every month. ‘M’
embezzles cash. According to the Indian Contract Act, 1872:
(a) A and B shall equally share the loss.
(b) No one is liable to pay penalty.
(c) ‘A’ is not responsible, if B failed to verify the cash every month.
(d) ‘A’ is responsible, even if B failed to verify the cash every month

Question 9
A guarantees to C, to the extent of ` 2,00,000, payment for rice to be supplied by C to B. C supplies to B rice to a less
amount than ` 2,00,000, but obtains from A payment of the sum of ` 2,00,000 in respect of the rice supplied. As per
the provisions of the Indian Contract Act, 1872:
(a) A can recover from B more than the price of the rice actually supplied.
(b) A cannot recover from B more than the price of the rice actually supplied.
(c) A can recover from C the price of the rice actually supplied.
(d) C can recover from A the price of the rice actually supplied

Question 10
A contracts with B for a fixed price to construct a house for B within a stipulated time. B would supply the necessary
material to be used in the construction. C guarantees A’s performance of the contract. B does not supply the material
as per the agreement. As per the provisions of the Indian Contract Act, 1872:
(a) C is liable to A
(b) C is liable to B
(c) C is liable to A for the cost material not supplied.
(d) C is discharged from his liability

Question 11
S and P go into a shop. S says to the shopkeeper, C, “Let P have the goods, and if he does not pay you, I will. This is a
(a) Contract of Guarantee
(b) Contract of Indemnity
(c) Wagering agreement
(d) Quasi-contract

Question 12
A guarantee obtained by a creditor by keeping silence as to material circumstances is:
(a) Valid
(b) Voidable
(c) Unenforceable
(d) Invalid

29
Question 1
A bailee has
(a) a right of particular lien over the goods bailed
(b) a right of generation
(c) a right of both particular and general lien
(d) no lien at all over the goods bailed.

Question 2
The delivery of goods by one person to another as security for the payment of a debt is called
(a) Bailment
(b) Pledge
(c) Mortgage
(d) Hypothecation

Question 3
The position of a finder of lost goods is that of a
(a) Bailor
(b) bailee
(c) surety
(d) principal debtor

Question 4
The delivery of goods by one person to another for some specific purpose and time is known as:
(a) Mortgage
(b) Pledge
(c) Bailment
(d) Charge

Question 5
Prince delivers his car to Manoj, a garage owner for repair. Who is the bailor in this case?
(a) Manoj
(b) Prince
(c) None of the above
(d) Both Manoj and Prince

Question 6
A had to travel to a different town for 5 days. He left his cow in the custody of B so that she can be taken care of.
After two days the cow delivers a calf. Now, B has to return to A:
(a) Only the cow
(b) Only the calf
(c) Both the cow and the calf
(d) Either the cow or the calf

30
Question 1
is one who represents to be an agent of another when in reality he has no such authority from the other
agent at all.
(a) Substituted agent
(b) Subordinate agent
(c) Pretended agent
(d) Both (a) & (b)

Question 2
Out of the following, who can appoint an Agent?
(a) Minor
(b) Person of sound mind
(c) Person of unsound mind
(d) None of the above

Question 3
When an authority of agent is said to be implied:
(a) given by words
(b) spoken
(c) inferred from the circumstances of the case
(d) written

Question 4
Substituted Agent is agent of the :
(a) Agent
(b) Principal
(c) Sub-agent
(d) Third party

Question 5
L made an offer to MD of a company. MD accepted the offer though he had no authority to do so. Subsequently L
withdrew the offer but the company ratified the MD’s acceptance. State which of the statement given hereunder is
correct:
(a) L was bound with the offer
(b) An offer once accepted cannot be withdrawn
(c) Both option (a) & (b) is correct
(d) L is not bound to an offer.

Question 6
A is residing in Delhi and has a house in Mumbai. A appoints B by a power of attorney to take care of his house. State
the nature of agency created between A and B:
(a) Implied agency
(b) Agency by ratification
(c) Agency by necessity
(d) Express agency

31
Question 1
Person named in the instrument to whom money is directed to be paid—
(e) Drawer
(f) Acceptor
(g) Maker
(h) Payee

Question 2
Maker of a bill of exchange is called as —
(a) Drawer
(b) Drawee
(c) Acceptor
(d) Payee

Question 3
Days of grace provided to the Instruments at maturity is —
(a) 1 day
(b) 2 days
(c) 3 days
(d) 5 days

Question 4
Parties to a negotiable instrument can be discharged from liability by —
(a) Cancellation
(b) Payment
(c) Release
(d) All of the above

Question 5
Validity period for the presentment of cheque in bank is —
(a) 3 months
(b) 6 months
(c) 1 year
(d) 2 years

Question 6
Offences committed under the Negotiable Instruments Act can be —
(a) Compoundable
(b) Non-compoundable
(c) Non-compoundable and non-bailable
(d) Bailable

32
Question 7
A bill of exchange is payable 180 days after sight. As per the provisions of the Negotiable Instruments Act, 1881, how
many days of grace shall be provided in such a case:
(a) 1 day
(b) 2 days
(c) 3 days
(d) 5 days

Question 8
As per the Negotiable Instruments Act, 1881, when the day on which a promissory note or bill of exchange is at
maturity is a public holiday, the instrument shall be deemed to be due on the………
(a) said public holiday
(b) 5 days succeeding public holiday
(c) next succeeding business day
(d) next preceding business day

Question 9
Person named in the instrument to whom money is directed to be paid:
(a) Drawer
(b) Acceptor
(c) Maker
(d) Payee

Question 10
A draw a cheque in favour of M, a minor. M endorses the same in favour of X. The cheque is dishonoured by the
bank on grounds of inadequate funds. As per the provisions of Negotiable Instruments Act, 1881:
(a) M is liable to X
(b) X can proceed against A
(c) No one is liable in this case
(d) M can proceed against A

33
 CA Inter Law - Volume 2

Question 1
After Declaration of dividend it should be paid within
(a) 14 days
(b) 21 days
(c) 30 days
(d) 45 days

Question 2
Which of the following amount is not credited to IEPF Account
(a) Unpaid dividend account of company
(b) Matured deposit with company
(c) Profit on sale of asset
(d) Matured debentures with companies.

Question 3
In how many days from the date of declaration of interim dividend, it shall be deposited in a separate bank
account
a. 5 days
b. 7 days
c. 15 days
d. 21 days

Question 4
In how many years the amount of unpaid dividend account should be transferred to Investor Education and
Protection Fund
(a) 3 years
(b) 5 years
(c) 7 years
(d) 10 years

Question 5
If declared dividend has not been paid or the warrant in respect thereof has not been posted within 30 days
from the date of declaration to any shareholder entitled to the payment of the dividend, the company shall
also be liable to pay simple interest at the rate of ______________________ p.a. during the period for
which such default continues.
(a) 5%
(b) 6%
(c) 15%

34
(d) 18%

Question 6
Mr. X is a shareholder of Mark Pvt Ltd. He transferred his shares to his daughter Ms. D, in the month of
February. Registration of such instrument of transfer is still pending by the Company. In this scenario,
Companies Act, 2013 state certain provisions which have to be kept in mind by the Company. Which
provision mentioned below in this regard is correct?
(a) Company has to transfer the dividend in relation to such shares to the Unpaid Dividend Account;
(b) Company has to transfer the dividend in relation to such shares in the name of transferee;
(c) Company has to issue fully paid-up bonus shares in the name of transformer;
(d) Company has to issue fully paid-up bonus shares in the name of transferee;

Question 7
XP Ltd declared 12% dividend to its Equity Shareholders. However, Company missed to transfer unpaid
dividend to bank account even after 40 days from declaration of Dividend. In such case how much interest
will be payable?
(a) 8% p.a.
(b) 16% p.a.
(c) 10% p.a.
(d) 12% p.a.

35
Question 1
The books of accounts of every company shall be maintained in order for:
(a) 3 years
(b) 5 years
(c) 8 years
(d) 10 years

Question 2
A company can re-open/recast its book of accounts on an application to Tribunal made by
_________________:
(a) Registrar
(b) Member
(c) Board of Directors
(d) Income –tax authorities
Hint: (CISRA – CG, Income Tax, SEBI, Regulatory Authorities, Any other person)

Question 3
CSR Committees of the Board shall consists of:
(a) Directors forming 1/3rd of the total no. directors.
(b) At least 2 directors
(c) 3 or more directors
(d) 3 or more directors, out of which at least 1 director shall be an independent.

Question 4
Provisions of CSR are applicable to:
a. Companies with net worth of ` 500 Cores or more
b. Companies with turnover of ` 1,000 Cores or more
c. Companies with net profit of ` 5 Cores or more in any financial year
d. All of the above

Question 5
OPC shall file a copy of the duly adopted financial statements to registrar in:
(a) 30 days of the date of meeting in which it was adopted
(b) 90 days of the date of meeting in which it was adopted
(c) 90 days from the closure of the financial statement
(d) 180 days from the closure of the financial statement

Question 6
Who can be appointed as an internal auditor?

36
(a) Chartered Accountants
(b) Cost accountants
(c) Any other professional
(d) All of the above

Question 7
From the following information in respect of company ABC Ltd. Compute the amount the company is
required to spend on account of Corporate Social Responsibility:
Financial Year Net Profit (In Cr.)
2014 – 15 30
2015 – 16 22
.
2016 – 17 27
(a) 26 crore
(b) 52 Lacs
(c) 55 Lacs
(d) 26 Lacs

37
Question 1
Section 144 of the Companies Act, 2013 does not excludes the statutory auditor of the company to render
the services of -
(a) Investment advisory
(b) Investment banking
(c) Branch auditor
(d) Actuarial

Question 2
Bhishm Limited decided to appoint Mr. Rajvir, chartered accountants as the branch auditor for the audit of
its Lucknow branch accounts for the year 2017-18. The decision to appoint branch auditor was taken by way
of Board Resolution in the meeting of Board of Directors of the company, held in April 2017, subject to
shareholders’ approval in AGM of the company scheduled to be held in June 2017. Meanwhile, the Principal
Auditor of the company raised an objection that the branch auditor cannot be appointed without his
consent. Whether the objection raised by company auditor is valid?
(a) The objection raised by company auditor is not valid as per section 143(8) of the companies Act, 2013
and the Board has authority to appoint branch auditor but should be approved by shareholders in
General Meeting.
(b) The objection raised by company auditor is valid as it is necessary to consult/obtain the consent of
Principal Auditor before appointing Branch Auditor.
(c) The Board of Directors has no authority to appoint Branch Auditor so the objection raised by Principal
Auditor is valid.
(d) The objection raised by company auditor is not valid as it is compulsory to appoint branch auditor as
per Sec.139 of the Companies Act, 2013.

Question 3
M/s ABC & Co LLP has been appointed as the statutory auditors of WEF Ltd. Previous auditor of WEF Ltd
was M/s LMN & Co LLP. For the purpose of accepting position as the statutory auditors of WEF Ltd, M/s
ABC & Co LLP has sent a written communication to M/s LMN & Co LLP to obtain no objection letter.
In the given case, which one of the following options is correct?
(a) M/s ABC & Co LLP needs to ensure that his appointment has been made by WEF Ltd as per the
provisions of the Companies Act 2013. Once that is done, ABC & Co LLP need not make any
communication with LMN & Co LLP.
(b) M/s ABC & Co LLP needs to make a communication with LMN & Co LLP and obtain his no objection
letter for accepting the position of statutory auditors of WEF Ltd. Once this is done, M/s ABC & Co
LLP can be appointed by WEF Ltd. However, in that case it will not be mandatory to follow the
provisions of the Companies Act 2013.
(c) M/s ABC & Co LLP needs to ensure that his appointment has been made by WEF Ltd as per the
provisions of the Companies Act 2013. ABC & Co LLP also needs to make a communication with M/s
LMN & Co LLP to obtain his no objection letter.

38
(d) M/s ABC & Co LLP need not ensure that his appointment has been made by WEF Ltd as per the
provisions of the Companies Act 2013. Also, ABC & Co LLP need not make any communication with
LMN & Co LLP.

Question 4
The auditor is required to audit a complete set of annual financial statements for the year ended 31 March
2018 prepared under Ind AS by the management solely for preparation of consolidated financial statements
of the holding company. Is the auditor required to include 'Other Legal and Regulatory Requirements' to
comment on matters such as maintenance of proper books of accounts, compliance with accounting
standards etc. in the audit report?
(a) Since the auditor is required to audit complete set of annual financial statements for the year ended
31 March 2018 prepared under Ind AS, it will be mandatory for the auditor to include 'Other Legal
and Regulatory Requirements' in his audit report.
(b) The audit report is not issued pursuant to requirement of section 143 and hence 'Other Legal and
Regulatory Requirements' is not required to be included in the audit report.
(c) The audit report is issued pursuant to requirement of section 143 and hence some of the requirements
related to 'Other Legal and Regulatory Requirements' may be included in the audit report as per
the discretion of the management of the Company.
(d) The auditor may include 'Other Legal and Regulatory Requirements' in the audit report but he would
need approval of the Board of Directors for doing so.

Question 5
WCO Private Ltd is a joint venture of WCO Gmbh and MSON Ltd. WCO Gmbh is a company based out of
Germany and is also listed in Germany. WCO Gmbh prepares its financial statements as per IFRS. MSON
Ltd is a company based out of India and is also listed in India. MSON Ltd prepares its financial statements
as per Ind AS. For the purpose of reporting of financial information to WCO Gmbh and MSON Ltd for
consolidation purposes, WCO Private Ltd uses reporting package (which comprises of balance sheet, profit
and loss and other notes to accounts). WCO Private Ltd prepares its financial statements as per Ind AS.
WCO Private Ltd has taken useful life of some fixed assets in its Ind AS financial statements based on their
useful lives which is different from the useful lives of similar nature fixed assets taken by WCO Gmbh (in
line with their accounting policies). The reporting package of WCO Private Ltd is audited before reporting
to WCO Gmbh. The auditor audits the reporting package which is prepared in line with the Group
accounting policies of WCO Gmbh and mentions in his report that the reporting package has been prepared
as per the Group accounting policies of WCO Gmbh.
WCO Private Ltd makes an adjustment for changes in useful lives in the reporting package on the basis of
Group accounting policies of WCO Gmbh. The auditor has asked the management to take same useful
lives of fixed assets in the reporting package which have also been taken by them in its Ind AS financial
statements. Management has not agreed with the view of the auditor. Please suggest the right course of
action.
(a) Position taken by the management is correct.
(b) Position suggested by the auditor is correct and if the management does not agree then auditor may
have to modify his report on the basis of materiality.
(c) The matter relates to an estimate (i.e. useful life) which may be subject to changes under different
GAAPs and hence auditor should ignore this point.
(d) The report would be for special purpose which should always be a clean report.

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Question 6
ABC Pvt Ltd had turnover of ` 39 crores as at 31 March 2018. The Company had taken a loan of ` 39 crores
from various banks and financial institutions during the year ended 31 March 2018. These loans were paid
by the Company before 31 March 2018. The Company is of the view that the auditors’ reporting on
adequacy and operating effectiveness of internal financial controls (IFC) under Section 143(3)(i) of the
Companies Act, 2013 would not be required. The auditors of the Company have a different view. What
should be correct option?
(a) The turnover of ABC Pvt Ltd is below required threshold and hence IFC will not be applicable.
(b) The turnover of ABC Pvt Ltd is below required threshold and loan amount was fully paid before year
end i.e. 31 March 2018. Hence IFC will not be applicable.
(c) The turnover of ABC Pvt Ltd is below required threshold but loan amount was above required threshold.
Irrespective of the fact that loan was outstanding as at 31 March 2018 or not, IFC would be applicable.
(d) In the given case because of the repayment of the loan before year end i.e. 31 March 2018, applicability
of IFC becomes optional.

Question 7
Ambuja Cement Limited appointed CA Ram as statutory auditor of the company at the AGM held on 30th
September, 2010. The next AGM was held on 30th Sept, 2011 but it was adjourned to 30th Nov, 2011 for
consideration of the accounts for the year ended 31st March, 2011. CA Ram continued to function as
statutory auditor of the company even though a new auditor was appointed in his place at the AGM held
on 30th September, 2011. Whether his contention is right or wrong?
(a) CA Ram (original auditor) is right in continuing to function as statutory auditor of the Ambuja Cement
Limited even though a new auditor was appointed at his place at the AGM held on 30th September,
2011. He will continue to hold office till the conclusion of the adjourned meeting held on 30th
November, 2011. Also, the new auditor can function as a statutory auditor only from the conclusion of
the adjourned meeting held on 30th November, 2011.
(b) CA Ram (original auditor) is wrong in continuing to function as statutory auditor of the Ambuja Cement
Limited even though a new auditor was appointed at his place at the AGM held on 30th September,
2011. He will not continue to hold office till the conclusion of the adjourned meeting held on 30th
November, 2011. Also, the new auditor can function as a statutory auditor only from the conclusion of
the adjourned meeting held on 30th November, 2011.
(c) CA Ram (original auditor) is right in continuing to function as statutory auditor of the Ambuja Cement
Limited even though a new auditor was appointed at his place at the AGM held on 30th September,
2011. New auditor will function as a statutory auditor from the adjourned meeting to be held on 30th
September, 2011.
(d) None of the Above.

Question 8
Mr. P, a CA in full time practice was appointed as the auditor of LMN Ltd., a company which is a subsidiary
of RST Ltd. and RST Ltd. has another subsidiary called PQR Ltd. Mr. P had taken a loan of ` 25,00,000 from
PQR Ltd. and the loan is outstanding as on the date of his appointment as auditor of LMN Ltd. Can P be
appointed as the auditor of LMN Ltd or RST Ltd?
(a) As per Section 141(3)(d)(ii) of the Companies Act 2013, P can be appointed as the auditor of LMN Ltd
or RST Ltd.

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(b) As per Section 141(3)(d)(ii) of the Companies Act 2013, P cannot be appointed as the auditor of LMN
Ltd or RST Ltd.
(c) Either (a) or (b)
(d) None of the above.

Question 9
CA Vimal was indebted to XYZ (P) Ltd. for a sum of ` 6,00,000 as on 01.04.2015. However, CA Vimal having
come to know that he might be appointed as auditor of the company, he squared up the amount on
10.7.2015. Later on, he was appointed as an auditor of the company for the year ended 31.3.2016 at the
AGM held on 16.07.2015. Subsequently, one of the shareholders complains that the appointment of CA
Vimal as an auditor is invalid because he incurred disqualification under section 141 of the Companies Act,
2013.
(a) The appointment of CA Vimal as an auditor is not valid and the shareholder’s complaint is acceptable.
(b) The appointment of CA Vimal as an auditor is valid and the shareholder’s complaint is not acceptable.
(c) The appointment of CA Vimal as an auditor is valid and the shareholder’s complaint is acceptable.
(d) The appointment of CA Vimal as an auditor is not valid and the shareholder’s complaint is not
acceptable.

Question 10
X Ltd. paid ` 25 lakhs as advance to Y Ltd. towards the purchase of a printing machinery on 15.1.19 with
delivery instructions to deliver the same in the last week of June, 2019. Further on 2.2.19 X Ltd. purchased
two diesel generator sets from Y Ltd. for ` 30 lakhs on 90 days Credit term. In the accounts for 2018-19, X
Ltd. intends to adjust the advance paid against Credit purchase and show the net amount of ` 5 lakhs as
due from them. As the statutory auditor, how would you deal with this?
(a) The auditor should advise X Ltd. to show these two items separately. If X Ltd. does not accept the
advice, the auditor should qualify his report with suitable quantification of amount involved.
(b) The auditor’s advice to X Ltd. to show these two items separately is not Valid.
(c) The auditor’s advice to X Ltd. to show these two items together is Valid.
(d) The auditor should advise X Ltd. to show these two items jointly. If X Ltd. does not accept the advice,
the auditor should qualify his report with suitable quantification of amount involved.

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Question 1
Formal legal document which creates or confirms a right or record a fact is a —
(a) Document
(b) Deed
(c) Statute
(d) Instrument

Question 2
Which among the following is the cardinal rule of construction of statutes—
(a) Harmonious Rule of construction
(b) Beneficial Rule of construction
(c) Literal Rule of construction
(d) Reasonable Rule of construction

Question 3
Rule of Reasonable Construction is based on the maxim —
(a) Absolut asthenia expositor non indigent { An absolute judgment or sentence needs no expositor (an
expositor is a person or thing that explains a complicated idea or a theory)}
(b) Ut res magis valeat quam pareat (It is better for a thing to have effect than to be made void)
(c) Quo facit per alium facit per se (He who acts through another does the act himself.)
(d) Contemporanea exposition (The meaning of words in a document are to be understood in the sense
which they bore at the time of the document)

Question 4
Rule of Beneficial construction is also known as —
(a) Purposive construction
(b) Mischieve Rule
(c) Heydons’s Rule
(d) All of the Above

Question 5
Pick the odd one out of the following aids to interpretation —
(a) Preamble
(b) Marginal Notes
(c) Usage
(d) Proviso

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Question 6
Which rule of construction is applicable where there is a real and not merely apparent conflict between
the provisions of an Act, and one of them has not been made subject to the other —
(a) Rule of Beneficial construction
(b) Rule of Literal construction
(c) Rule of Harmonious construction
(d) Rule of Exceptional construction

Question 7
An internal aid that may be added to include something within the section or to exclude something from
it, is —
(a) Proviso
(b) Explanation
(c) Schedule
(d) Illustrations

Question 8
An aid that expresses the scope, object and purpose of the Act —
(a) Title of the Act
(b) Heading of the Chapter
(c) Preamble
(d) Definitional sections

Question 9
Which among the following is the cardinal rule of construction of statutes—
(a) Harmonious Rule of construction
(b) Beneficial Rule of construction
(c) Literal Rule of construction
(d) Reasonable Rule of construction

Question 10
An internal aid that may be added to include something within the section or to exclude something from
it, is—
(a) Proviso
(b) Explanation
(c) Schedule
(d) Illustrations

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Question 1
The General Clauses Act, 1897 intends to:
(a) Provide general definitions.
(b) Applicable to all Central Acts and Regulations.
(c) Applicable where there is no definition, unless there is anything repugnant in the subject or context.
(d) All of the above.

Question 2
The General Clauses Act is one of the oldest Acts, came into force on:
(a) 1st April, 1897
(b) 11th March, 1897
(c) 11th March, 1887
(d) 1st April, 1868

Question 3
The preamble is most important in any legislation, it:
(a) Provides definitions in the Act.
(b) Expresses scope, object and purpose of the Act.
(c) Provides summary of the entire Act.
(d) None of the above.

Question 4
As per a Rule of an Educational Institution, every student may come on weekends for extra classes but every
student shall appear on a weekly test conducted in the institute, which means:
(a) Attending weekend classes is optional but appearing in weekly test is compulsory
(b) Attending weekend classes is compulsory but appearing in weekly test is optional
(c) Attending weekend classes and appearing in weekly test, both are compulsory for students
(d) Attending weekend classes and appearing in weekly test both are optional for students.

Question 5
Which of the following is not an Immovable Property:
(a) Land
(b) Building
(c) Timber
(d) Machinery permanently attached to the land

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