1. A private company cannot issue shares through ______________.

a) Right issue
b) Bonus issue
c) Public offer
d) Private Placement

Answer:- C
 EXPLANATION
Section 23 --> Public Offer

Public Offer

A Public company may issue Private Placement

securities through

Right Issue & Bonus issue

Right Issue & Bonus Issue

A Private company may issue

securities through
Private Placement

www.edutap.co.in
2. For _________________ companies, matters relating to issue & transfer of securities shall be administered by SEBI.

a) Listed companies
b) Companies intended to get themselves listed
c) Unlisted companies with net worth >500 crores
d) Both a and b
e) Both a and c
f) All A,b,c

Answer:- D
 EXPLANATION
Section 24 --> Power of SEBI to regulate issue and transfer of securities

Listed companies/ Company intending to get

Other companies
themselves listed

Matters relating to Other matters All matters

• Issue & Transfer of
securities
• Non payment of dividend

Administered by SEBI Administered by Central Government/ Registrar/ Tribunal

Note :- If the Act specifically provides for certain provisions in case of listed companies to be governed otherwise, in that
cases the Act shall prevail.
3. When company is issuing securities through issuing house, the document issued by issuing house shall be
deemed to be a prospectus of the company only if issuing house allots or offers to allot securities within
________________ of the agreement with the main company.

a) 15 days
b) 30 days
c) 2 months
d) 6 months
e) 1 year

Answer:- d
 EXPLANATION
Section 25 --> Document containing Offer of Securities for sale to be deemed prospectus

Issuing house company or firm

These will be the security holder of the company.

Main company Public

www.edutap.co.in
 EXPLANATION
Section 25 --> Document containing Offer of Securities for sale to be deemed prospectus

Conditions for a document to be called deemed prospectus

1. Issuing house allots or offers within 6 months of the agreement with the main company. OR
2. Whole Consideration is not received by the company before offer is made by issuing house to the public.

Effect of deemed prospectus

All rules and provisions of prospectus now applicable to the deemed prospectus.

Motive

As issuing company is the face of the transaction and the main company is behind the curtain so as to make prospectus
provisions applicable to the main company.
4. No prospectus shall be valid if it is issued more than __________ after the date on which a copy thereof is delivered
to the Registrar.

a) 30 days
b) 60 days
c) 90 days
d) 120 days
e) 6 months

Answer:- C
 EXPLANATION
Section 26 --> Matters to be stated in prospectus

The date indicated in the prospectus shall be deemed to be the date of its publication.

Before issuing prospectus to the public or before its publication, a copy of the prospectus must be filed to the ROC and
the copy shall be signed by every director/ proposed director of the company or their authorised attorney.

No prospectus shall be valid if it is issued more than ninety days after the date on which a copy thereof is delivered to
the Registrar.

Every prospectus issued shall, on the face of it,—

(a) state that a copy has been delivered to the Registrar and
(b) specify any documents required by this section to be attached to the copy so delivered or refer to statements
included in the prospectus which specify these documents.

www.edutap.co.in
5. The grievances related to dematerialisation of securities by unlisted public company shall be submitted to
______________.

a) ROC
b) Tribunal
c) SEBI
d) Investor Education & Protection Fund Authority

Answer:- D
6. Every unlisted public company shall submit Form PAS-6 to the Registrar within __________________duly certified by a
company secretary in practice or chartered accountant in practice

a) thirty days from the conclusion of each half year

b) sixty days from the conclusion of each half year
c) thirty days from the conclusion of each year
d) sixty days from the conclusion of each year

Answer:- B
 EXPLANATION
Section 29 --> Public Offer of Securities to be in Dematerialised form

Form PAS - 6
 PAS – 6 is the reconciliation of share capital audit report.

 Every unlisted public company shall submit Form PAS-6 to the Registrar within sixty days from the conclusion of
each half year duly certified by a company secretary in practice or chartered accountant in practice.

 The company shall immediately bring to the notice of the depositories any difference observed in its issued capital
and the capital held in dematerialised form

 The grievances of security holders of unlisted public companies under this rule shall be filed before the Investor
Education and protection Fund Authority.

This rule shall not apply to an unlisted public company which is:-
 (a) a Nidhi
 (b) a Government company or
 (c) a wholly owned subsidiary.

www.edutap.co.in
7. Which prospectus is an incomplete prospectus?

a) Deemed prospectus
b) Abridged prospectus
c) Shelf prospectus
d) Red Herring prospectus

Answer:- D
 EXPLANATION
Section 32 --> Red Herring Prospectus

Definition :- A prospectus which does not include complete particulars of the

i. Quantum of securities
ii. Price of securities

It shall be filed with ROC and SEBI at least 3

It is issued prior to issue of main days prior to opening of subscription list & the
prospectus offer.

Any variation
between RHP and Shall be highlighted in
prospectus the prospectus

www.edutap.co.in
8. Shelf Prospectus shall be valid for maximum ____________.

a) 6 months
b) 9 months
c) Next open issue of same kind of shares
d) 1 year

Answer:- D
 EXPLANATION
Section 31 --> Shelf Prospectus

File shelf prospectus at the time of first offer of securities

File information memorandum at the time of subsequent offer

• Shelf Prospectus shall be valid for maximum one year.

• The validity shall be counted from the date of opening of first offer of securities.
• No need to issue any other prospectus during the validity period.
• During the validity period , ONE MONTH prior to the subsequent offer, the company shall file an INFORMATION
MEMORANDUM in Form PAS – 2 containing all material facts relating to
o new charges created,
o changes in the financial position of the company as have occurred
between the previous offer of securities and the succeeding offer of securities
9. The amount payable on application on every security shall not be less than ____________ per cent of the nominal
amount of the security.

a) 2.5
b) 5
c) 7.5
d) 10

Answer:- B
 EXPLANATION
Section 39 --> Allotment of Securities by Company

The minimum subscription has been

made
If the company has made a public offer of securities,
it shall not make allotment of securities unless

Application money has been received by

the company by cheque or other
instrument

The amount payable on

application on every
security shall not be less
than five per cent of the
nominal amount of the
security.

Note :- The minimum subscription in case of equity share capital (as per SEBI) shall be not
less than 90% of the issue size.
www.edutap.co.in
10. Whenever a company makes any allotment of securities, it shall file with the Registrar a return of allotment
within thirty days in Form _____________,

a) PAS 1
b) PAS 2
c) PAS 3
d) PAS 4

Answer:- C
 EXPLANATION
Section 39 --> Allotment of Securities by Company

Whenever a company makes any allotment of securities, it shall file with the Registrar a return of allotment within
thirty days in Form PAS-3,

Penalty on the company and its officer in default

In case of any default
For each default,
under this section
One thousand rupees for each day during which
such default continues or one lakh rupees,
whichever is less.

www.edutap.co.in
11. Maximum underwriting commission that can be paid by the company for issue of debentures is _______________ of
the issue price of debentures.

a) 1%
b) 2%
c) 2.5%
d) 3.5%
e) 5%

Answer:- C
 EXPLANATION
Section 40 --> Securities to be dealt with in Stock Exchanges

A company may pay commission to any person in connection with the subscription to its securities.

In case of shares, In case of debentures

the commission may be paid out of proceeds of the issue or the profit of the company or both
• Five percent of the Issue price or • Two and a half per cent of the Issue price or
• A rate authorised by the articles • A rate authorised by the company’s articles

whichever is less whichever is less

The commission may be paid out of proceeds of the issue or the profit of the company or both.

www.edutap.co.in
12. If company fails to refund application money within 60 Days from receipt of application money (IF ALLOTMENT
NOT MADE), it shall pay money with interest @___________. starting from expiry of the 60th day.

a) 9%
b) 10%
c) 12%
d) 15%
e) 18%

Answer:- C
 EXPLANATION
Section 42 --> Private Placement

If allotment not done,

Allot its securities within Refund application money

Receipt of 60 Days 15 Days

application from from expiry
money receipt of of 60th Day
application
money

• If company refunds application money within this

period, it’s okay.

• If company fails to refund application money within this

period, it shall pay money with interest @12 % p.a.
starting from expiry of the 60th day.
13. Voting Power in respect of shares with differential voting rights of the company shall not exceed ________% of
total voting power including voting power in respect of equity shares with differential rights issued at any point of
time.

a) 24%
b) 26%
c) 74%
d) 76%

Answer:- C
 EXPLANATION
Conditions for issuing equity shares with Differential Voting Rights

 Authorization in AOA

 Ordinary Resolution at General Meeting of shareholders.(In case of listed company, approval through postal ballot is
sufficient).

 Voting Power in respect of shares with differential voting rights of the company shall not exceed 74% of total voting
power including voting power in respect of equity shares with differential rights issued at any point of time.

 No default in filing financial statements and annual returns for three financial years immediately preceding the
financial year in which it is decided to issue such shares.

The company having consistent track record of distributable profits for the last three years

This condition is omitted by The

Companies(Share Capital and
Debentures) Amendment Rules, 2019
14. To issue shares with DVR, a company should not be penalized under RBI Act, FEMA Act etc. during the last
_______ years

a) 3
b) 4
c) 5
d) 6

Answer:- A
 EXPLANATION
Conditions for issuing equity shares with Differential Voting Rights
 Company has no subsisting default in the
 payment of a declared dividend to its shareholders or
 repayment of its matured deposits or
 redemption of its preference shares or debentures that have become due for redemption or
 payment of interest on such deposits or debentures or payment of dividend
 payment of the dividend on preference shares or
 repayment of any term loan from a public financial institution or Bank or interest payable thereon or
 dues with respect to statutory payments relating to its employees to any authority or default in crediting the
amount in Investor Education and Protection Fund.
(A company may issue equity shares with differential rights upon expiry of five years from the end of the financial
Year in which such default was made good.)

 The company has not been penalized by Court or Tribunal during the last three years of any offence under the RBI
Act, the SEBI Act, the SCRA, the FEMA or any other special Act.

 The company shall not convert its existing equity share capital with voting rights into equity share capital carrying
differential voting rights and vice–versa.

 Where a company issues equity shares with differential rights, the Register of Members maintained in Form No.
MGT 1 shall contain all the relevant particulars of the shares so issued along with details of the shareholders.
15. In disputed cases, for how many years be the records related to share certificates be maintained?

a) 5 years
b) 8 years
c) 10 years
d) None of the above

Answer:- D
 EXPLANATION

The certificates surrendered shall be immediately defaced

The books and documents related to issue of
by stamping ‘cancelled’ in bold letters
shares shall be preserved for
AND
• 30 years
Be destroyed after expiry of 3 years from date of
• Permanently, in case of disputed cases
surrender.

www.edutap.co.in
16. Preference shareholders shall have a right to vote on ALL resolutions of the company if their dividend is not
paid for the last _______ years or more.

a) 2
b) 3
c) 4
d) 5

Answer:- A
 EXPLANATION
Preference shareholders (of the particular
Preference shareholders have right to vote.
class) have right to vote.

only on resolutions
a) which directly affect the rights attached to his
preference shares
b) any resolution for the winding up of the company
c) for the repayment or reduction of its equity or
preference share capital.
On ALL resolutions of the company
where the dividend in respect of a class of preference
shares has not been paid for a period of two years or
more

The proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders shall be in the
same proportion as the paid-up capital in respect of the equity shares bears to the paid-up capital in respect of the
preference shares.

www.edutap.co.in
17. The special resolution authorising the issue of sweat equity shares shall be valid for making the allotment
within a period of not more than __________ from the date of passing of the special resolution.

a) 6 months
b) 12 months
c) 2 years
d) 2.5 years

Answer:- B
 EXPLANATION
Validity of SR-->The special resolution authorising the issue of sweat equity shares shall be valid for making the
allotment within a period of not more than twelve months from the date of passing of the special resolution.

The company shall not issue sweat equity shares for more than

Higher of
• 15% of paid up equity
25% of paid up equity
capital
capital
OR
• Rs. 5 crores

In a Financial Year At any time

18. The new debenture certificates in case of transfer shall be delivered within_____________ of receipt of transfer
deed.

a) 15 days
b) 1 month
c) 3 months
d) 6 months

Answer:- B
 EXPLANATION
Every company shall deliver the certificates of all securities allotted, transferred or transmitted as follows.

In the case of subscribers In the case of any In the case of a transfer or

allotment of any of its
to the memorandum-->
shares-->
Within a period of two
Within a period of two
months from the date of
months from the date of
incorporation.
allotment.
transmission of securities-->
Within a period of one month
from the date of receipt by
the company of the
instrument of transfer or
intimation of transmission.
In the case of any
allotment of debenture-->
Within a period of six
months from the date of
allotment.

Where the securities are dealt with in a depository, the company shall intimate the details of allotment of
securities to depository immediately on allotment of such securities.
19. In case the company has incurred loss during the current financial year up to the end of the quarter immediately
preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher
than the average dividends declared by the company during the immediately preceding _____________ financial years

a) Two
b) Three
c) Four
d) Five

Answer:- B
 EXPLANATION
Section 123 --> Declaration of Dividend

In case the company has incurred loss during the current financial year up to the end of the quarter immediately
preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than
the average dividends declared by the company during the immediately preceding three financial years.

www.edutap.co.in
20. In the event of inadequacy or absence of profits in any year, a company may declare dividend out of free
reserves subject to the fulfilment of the following conditions.
The total amount to be drawn from such accumulated profits shall not exceed ___________ of the sum of its paid-up
share capital and free reserves as appearing in the latest audited financial statement.

a) Half
b) One fourth
c) One fifth
d) One tenth

Answer:- D
 EXPLANATION
Declaration of Dividend out of reserves

In the event of inadequacy or absence of profits in any year, a company may declare dividend out of free reserves
subject to the fulfilment of the following conditions

1. The rate of dividend declared shall not exceed the average rate of dividend for the immediately preceding three years

(This sub-rule shall not apply to a company, which has not declared any dividend in each of the three preceding financial
year.)

Example 1 - Dividends for last three years is 10%,15%,11% respectively. If in current year, company wants to pay
dividend out of free reserves owing to inadequacy of profits, maximum rate of dividend can be
(10+15+11)/3=12%.

Example 2 - Dividends for last three years is 10%,0%,12% respectively. In this case, the rule of average rate of
dividend of previous 3 years shall not apply.
 EXPLANATION
Declaration of Dividend out of reserves

2. The amount so drawn shall first be utilised to set off the losses incurred in the financial year in which dividend is
declared before any dividend in respect of equity shares is declared.
 EXPLANATION
Declaration of Dividend out of reserves

3. The total amount to be drawn from such accumulated profits shall not exceed one-tenth of the sum of its paid-up share
capital and free reserves as appearing in the latest audited financial statement.

4. The balance of reserves after such withdrawal shall not fall below fifteen per cent of its paid up share capital as
appearing in the latest audited financial statement.

Example 3 – Paid up capital of the company = 100 crores

Free reserves of the company = 20 crores

Point 3 – Maximum amount that can be withdrawn = 10% of (100+20) = 12 crores.

Point 4 – Maximum amount that can be withdrawn = 20 – (15% of 100)= 5 crores.

So the maximum amount that can be withdrawn from free reserves for dividend is least of the two i.e. Rs. 5 crores.
21. If Dividend not paid/ warrant not posted by company within 30 days of declaration, interest @ _________ per annum
shall be levied.

a) 10%
b) 12%
c) 15%
d) 18%

Answer:- D
 EXPLANATION
Section 123 & 124

If amount not transferred within 7

days to unpaid dividend account,
Interest @ 12% shall be levied.

Within 90 days of
Within 5 days of Within 30 days of Within 7 days from the transfer to unpaid
declaration declaration expiry of 30th day. Dividend account

Declaration of Deposit in a Dividend not Transfer Prepare

Dividend scheduled bank paid/ not amount to statement and
in a separate claimed Unpaid place on the
account Dividend website of
account company

If Dividend not paid/ warrant

not posted by company
Pay Dividend to within 30 days of declaration,
shareholders interest @ 18 % per annum
shall be levied.

www.edutap.co.in
22. Amount in the Unpaid Dividend account lying there for ____________ years must be transferred to IEPF.

a) 5
b) 7
c) 8
d) 10

Answer:- B
 EXPLANATION
Section 124 --> Unpaid Dividend Account

Any person claiming to be entitled to any money transferred to the Unpaid Dividend Account of the company may
apply to the company for payment of the money claimed.

Any money transferred to the Unpaid Dividend Account of a company which remains unpaid or unclaimed for a
period of seven years from the date of such transfer shall be transferred by the company along with interest accrued,
to the Investor Education and Protection Fund.

All shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall
be transferred by the company in the name of Investor Education and Protection Fund along with a statement.

Any claimant of shares transferred above shall be entitled to claim the transfer of shares from Investor Education and
Protection Fund on submission of required documents.

Clarification -: It is hereby clarified that in case any dividend is paid or claimed for any year during the said period of
seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund
23. The first auditor of a non-government company needs to appointed by the Board in how many days from the date
of registration of the company?

a) 15 days
b) 30 days
c) 90 days
d) 180 days

Answer:- B
EXPLANATION
Section 23 --> Public Offer

www.edutap.co.in
24. The non-government company except for IFSC Company shall file a notice of appointment of auditor in the annual
general meeting with the Registrar within ____ days of the meeting in which the auditor is appointed​

a) 10
b) 15
c) 20
d) 30

Answer:- B
EXPLANATION
Section 23 --> Public Offer

www.edutap.co.in
25. The Individual can be appointed as auditor for one term of ___ consecutive years and after that can be re-appointed
as an auditor after a cooling off period of ________years

a) 5,5
b) 10,5
c) 5,10
d) 10,5

Answer:- A
EXPLANATION
26. Under which of the following condition the person can be appointed as an Auditor?​

a) Person is an officer or employee of the company ​

b) Person is an auditor in 21 small companies​
c) Person has been convicted by court in last 5 years​
d) A person whose relative holds securities of 150,000 in the company​

Answer:- B
EXPLANATION
27. Frauds of value >= ____ are reported to Central government by Auditors.​

a) 50 lakh
b) 1 crore
c) 2 crores
d) 5 crores

Answer:- B
EXPLANATION
28. A company is dealing in category A products such as Pharma and Telecom, then for the company to come under the
ambit of conducting a mandatory cost audit, its overall annual turnover shall be ______ crore or more and aggregate
turnover of the individual product or products or services for which cost records are required to be maintained is
_______crore or more

a) 50,25
b) 100,50
c) 100,25
d) 50,50

Answer:- A
EXPLANATION
29. A company has 3 directors and company is public company with turnover of 150 crores. What shall be the number of
independent directors in company?​

a) 1
b) 2
c) 3
d) 4

Answer:- B
EXPLANATION
30. Which of the following component shall not be part of Independent director’s remuneration​

a) Fee​
b) Commission based in profits​
c) Stock Option​
d) Reimbursements for attending meetings​

Answer:- C
EXPLANATION
31. The independent directors of the company shall hold at least ___ meeting(s) in a financial year without
the attendance of non-independent directors and members of management​

a) 1
b) 2
c) 3
d) 4

Answer:- A
EXPLANATION
32. An Independent directors can hold office for a maximum of ___ consecutive terms and post the completion of these
maximum number of consecutive terms, the independent director needs to serve a cooling of period of ____ years
before he again become eligible for the post ​

a) 2,2
b) 2,3
c) 3,2
d) 3,5

Answer:- B
EXPLANATION
33. Small shareholders” means a shareholder holding shares of nominal value (face value) of not more
than ________rupees​

a) 10000
b) 20000
c) 50000
d) 100000

Answer:- B
EXPLANATION
34. If a company has 80,000 small shareholders in total then how many minimum number of small shareholder shall
be required to serve a notice to appoint small shareholder director?​

a) 10000
b) 8000
c) 5000
d) 1000

Answer:- D
EXPLANATION
35. The application for allotment of DIN needs to made to which entity?​

a) SEBI
b) Ministry of Finance
c) ROC
d) Ministry of Corporate Affairs

Answer:- D
EXPLANATION
36. The board of the company gets its powers through special resolution to appoint which of the following directors?​

a) Additional director
b) Alternate director
c) Nominee Director
d) Any of the above

Answer:- B
EXPLANATION
37. A person who has been imprisoned for 7 years or more cannot be appointed director till completion of ______years
from date of expiry of sentence​.

a) 5
b) 7
c) 10
d) None of the above

Answer:- D
EXPLANATION
38. In case of company what is the max number of days that can be there between two consecutive board meetings
assuming no exceptional cases?

a) 90
b) 120
c) 180
d) 240

Answer:- B
EXPLANATION
39. The draft minutes of the meeting which is done electronically shall be circulated among all the directors
within ________ days of the meeting either in writing or in electronic mode​

a) 10
b) 15
c) 30
d) 60

Answer:- B
 EXPLANATION
Section 23 --> Public Offer

Public Offer

A Public company may issue Private Placement

securities through

Right Issue & Bonus issue

Right Issue & Bonus Issue

A Private company may issue

securities through
Private Placement

www.edutap.co.in
40. In case of OPC, if more than one Director is there, they can comply with provisions of section 173 by just
having at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap
between the two meetings is not less than ___________ days​​

a) 90
b) 120
c) 150
d) 180

Answer:- A
EXPLANATION
41. A company is a section 8 company has 4 directors. What shall be the minimum number of directors' present in
meeting constitute a quorum in this case?

a) 1
b) 2
c) 3
d) 4

Answer:- B
EXPLANATION
42. A company being not a section 8 company has total 12 directors. Out of this 9 are interested directors. In this case
what shall be the minimum number of non-interested directors' present in the meeting to constitute a Quorum?​

a) 3 non interested directors

b) 8 interested directors
c) 2 non interested directors
d) 12 directors in total irrespective of whether they are interested or not

Answer:- C
EXPLANATION
43. If _______ or more of the total number of directors of the company think that any resolution under circulation must
be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board.​

a) 1/2
b) 1/3
c) 1/4
d) 1/5

Answer:- B
EXPLANATION
44. Who among the below shall mandatorily constitute an audit committee?​

a) Every unlisted company on the verge of getting listed

b) Every private company
c) Every unlisted company with a paid up capital of Rs.5 crores
d) Every unlisted company with a turnover of Rs.100 crores

Answer:- D
EXPLANATION
45. Permission to donate to charitable funds is required in general meeting when aggregate amount of donation in a
financial year which exceeds ______of its average net profits for the three immediately preceding financial years​

a) 3%
b) 5%
c) 8%
d) 10%

Answer:- B
EXPLANATION
46. The details of investment of company in shares in which company is beneficiary owner needs to be maintained in
register using FORM​__________

a) MBP 1
b) MBP 2
c) MBP 3
d) MBP 4

Answer:- C
EXPLANATION
47. NCLT was set up as result of which committee​?

a) Justice V. Balakrishna Eradi Committee

b) Injeti Srinivas Committee​
c) Tapan Ray Committee​
d) M. Ganguly Committee

Answer:- A
EXPLANATION
48. Which of the following is min qualification for a person to be appointed President of NCLT?

a) Judge of District court of 10 years

b) Judge of High court of 5 years
c) Judge of High court of 10 years
d) Either 1 or 2

Answer:- B
EXPLANATION
49. The Principal bench of NCLT is in ________

a) Mumbai
b) New Delhi
c) Kolkata
d) Chennai

Answer:- B
50. NCLT can amend its order with ______years from date of order provided appeal has not already been made to NCLAT​

a) 1
b) 2
c) 3
d) 4

Answer:- B
 EXPLANATION
Section 23 --> Public Offer

Public Offer

A Public company may issue Private Placement

securities through

Right Issue & Bonus issue

Right Issue & Bonus Issue

A Private company may issue

securities through
Private Placement

www.edutap.co.in
51. A person shall not be eligible to be an auditor of a company if he has been convicted by a court of an offence
involving fraud and a period of………………. Years has not elapsed from the date of such conviction

a) 5
b) 7
c) 10
d) 12

Answer:- C
 Explanation

Section 141 of The Companies Act

Disqualifications : Following shall not be appointed as auditors​
a) An officer or employee of the company or anyone who is further employee of any officer or employee
of company
b) A person who is partner in the company​
c) A person or a firm who has business relationship with the company
d) A person who's relative is director or key management personnel in the company
e) A person who in full time employment in some other company
f) If person or partner of firm is already holding appointment of more than twenty companies (These twenty
companies shall not include one person companies, small companies and private companies having paid-up
share capital less than one hundred crore rupee)
g) A person convicted by court for a fraud or any other offence till 10 years from date of conviction
h) A person who, directly or indirectly, renders any service referred to in section 144 to the company or its
holding company or its subsidiary company.​
i) A person who himself or his relative or partner is (holding securities of more than 1 lakh) or (Indebted/Owes
more than 5 lakh to the company ) or (has given a guarantee of more than 1 lakh for a third person who owes
money to the company or its subsidiary)​

www.edutap.co.in
52. In case of Government companies, CAG has the power to conduct supplementary audit. Within how many days
of the receipt of the audit report , the Supplementary audit be conducted by CAG?

a) 30
b) 45
c) 60
d) 90

Answer:- C
 Explanation

Section 143-->
​
a) CAG can direct the auditor regarding the manner which the accounts of the company are required to be
audited and auditor shall submit a report to CAG​

b) CAG with in 60 days from the date of receipt of the audit report can conduct a supplementary audit​

c) CAG can also conduct a test audit​

​
Test audit is like selecting some random samples from the overall accounts and not auditing the whole
accounts

www.edutap.co.in
53. Following is the list of some services.
I. Accounting and book keeping services
II. Internal audit
III. Actuarial services
IV. Investment advisory services

Which of the following services cannot be provided by the auditor of the company?

a) I & II only
b) I, II & III
c) II & III only
d) All (I,II,III & IV)

Answer:- D
 Explanation

Section 144-->Auditors shall not provide the following services directly or indirectly to the company or
its holding company or subsidiary company​
A. Accounting and bookkeeping services
B. Internal audit
C. Design and implementation of any financial information system
D. Actuarial services;
E. Investment advisory services, investment banking services and Outsourced Financial services;​
F. Management service

Memory Technique- ADMIN

www.edutap.co.in
54. Who can conduct the audit of a company?

a) Chartered Accountant
b) Company Secretary
c) Advocate
d) Cost Management Accountant
e) Any of the above

Answer:- A
 Explanation

Section 141-->
A person shall be eligible for appointment as an auditor of a company only if he is a chartered
accountant

 A firm whereof majority of partners practicing in India are chartered Accountants may be appointed
by its firm name to be auditor of a company​
​
 When a firm is appointed as an auditor of a company, only the partners who are chartered
accountants shall be authorized to act and sign on behalf of the firm.

www.edutap.co.in
55. A company is dealing in category A products such as Pharma and Telecom, then for the company to come under
the ambit of conducting a mandatory cost audit, its overall annual turnover shall be ______ crore or more and
aggregate turnover of the individual product or products or services for which cost records are required to be
maintained is _______crore or more during the preceding financial year.

a) 50,25​
b) 100,50​
c) 100,25​
d) 50,50

Answer:- A
 Explanation
The central government can also direct for cost audit of companies meeting below requirements shall be
conducted​
​
1.For the items under Category A need to conduct cost audit if​
 The overall annual turnover of the company from all its products and services during the immediately
preceding financial year is >= 50 crore And ​
 The aggregate turnover of the individual product or products or services for which cost records are required to
be maintained is >= 25 crore.
​
2.​For the items under category B, need to conduct cost audit if​
 The overall annual turnover of the company from all its products and services during the immediately
preceding financial year is >= 100 crore And
 The aggregate turnover of the individual product or products or service or services for which cost records
are required to be maintained is >= 35 crore .​

Category A -> Regulated Sectors such as Telecom, Pharma, Petroleum, Fertilizers, sugar​
​
Category B -> Non-Regulated Sectors such as Machinery, Turbo jets, Steel, Coffee, Tea, Minerals, Rubber, Roads and Railways,
Radars, Tanks, Arms and Ammunitions, Paper, Tyres, Milk Power, Glass etc.

www.edutap.co.in
56. Political contributions by the company cannot be made through which of the following means?

a) NEFT
b) Account payee cheque
c) Account payee Bank Draft
d) Bearer cheque

Answer:- D
 Explanation
A company, (except Government company and a company which has been in existence for less than three financial
years), may contribute any amount directly or indirectly to any political party only if a resolution authorizing the same is
passed at a meeting of the Board of Directors

Every company shall disclose in its profit and loss account the total amount contributed by it under this section during
the financial year

The contribution under this section shall not be made except by an account payee cheque drawn on a bank or an
account payee bank draft or use of electronic clearing system through a bank account:

www.edutap.co.in
57. If the contribution in the previous question is made by cash, then what is the maximum fine on the company?

a) 2* The amount contributed

b) 3* The amount contributed
c) 5* The amount contributed
d) 10* The amount contributed

Answer:- C
 Explanation

Penalty for Violation of Section 182​

​
1.The company shall be punishable with fine which may extend to five times the amount so contributed and ​

2.Every officer of the company who is in default shall be punishable with ​

I. imprisonment for a term which may extend to six months and ​
II. with fine which may extend to five times the amount so contributed

www.edutap.co.in
58. The Directors of a company shall disclose his interest in any company or association by giving a notice in Form
______.

a) MBP 1
b) MBP 2
c) MBP 3
d) MBP 4

Answer:- A
 Explanation

Director should disclose his interest in any company or association at the following times by giving a notice in FORM MBP1

I. In the first meeting of Board of directors after his appointment as director​

II. In first meeting of board of directors each financial year​
III. Whenever there is a change in disclosure already made like increase in shareholding from 3 %to 5%

www.edutap.co.in
59. The notice of disclosure of interest given by director shall be preserved by the company for __________ years.

a) 3
b) 5
c) 7
d) 8
e) 10

Answer:- D
 Explanation

Director should disclose his interest in any company or association at the following times by giving a notice in FORM MBP1

I. In the first meeting of Board of directors after his appointment as director​

II. In first meeting of board of directors each financial year​
III. Whenever there is a change in disclosure already made like increase in shareholding from 3 %to 5%

All Such notices given by directors disclosing his interest shall kept for a period of eight years from the end of the financial
year

www.edutap.co.in
60. The qualification of President of NCLT is that he should have been _________.

a) Judge of the High Court for atleast 5 years

b) Advocate of High Court for atleast 10 years
c) Judge of Session Court for 7 Years
d) Judge of the High Court for atleast 7 years

Answer:- A
61. Which of the following is not a qualification for the Judicial member of the NCLT?

a) A judge of a High Court at present or in the past

b) District Judge for at least five years at present or in the past
c) Advocate of a court for at least ten years
d) Public Prosecutor for atleast 7 years​

Answer:- D
 Explanation
Companies Act 2013--> Section 409-->NCLT & NCLAT

Qualification of Judicial member of NCLT

1.A judge of a High Court at present or in the past or​

2.District Judge for at least five years at present or in the past or​
​
3. Advocate of a court for at least ten years

www.edutap.co.in
62. NCLAT is appellate Tribunal for hearing orders passed by ________.

a) NCLT under company Law and section 61 of Insolvency and Bankruptcy Code​
b) Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC​
c) Competition Commission of India​
d) All the above​

Answer:- D
 Explanation

1.NCLAT is Appellate Tribunal for hearing appeals against orders of NCLT in matters related to Company law.

2.NCLAT is also the Appellate Tribunal for hearing appeals against the orders passed by Insolvency and
Bankruptcy Board of India under Section 202 and Section 211 of IBC​

3.NCLAT is also the Appellate Tribunal to hear and dispose of appeals against order passed by the Competition
Commission of India (CCI) under section 53N of competition Act​

4.NCLAT is also the Appellate Tribunal for Orders passed by NFRA (National Financing Reporting Authority)

www.edutap.co.in
63. A person shall not be eligible to be an auditor of a company if he has been convicted by a court of an offence
involving fraud and a period of………………. Years has not elapsed from the date of such conviction.

a) 5
b) 7
c) 10
d) 12

Answer:- C
 Explanation

Section 141 of The Companies Act

Disqualifications : Following shall not be appointed as auditors​
a) An officer or employee of the company or anyone who is further employee of any officer or employee
of company
b) A person who is partner in the company​
c) A person or a firm who has business relationship with the company
d) A person who's relative is director or key management personnel in the company
e) A person who in full time employment in some other company
f) If person or partner of firm is already holding appointment of more than twenty companies (These twenty
companies shall not include one person companies, small companies and private companies having paid-up
share capital less than one hundred crore rupee)
g) A person convicted by court for a fraud or any other offence till 10 years from date of conviction
h) A person who, directly or indirectly, renders any service referred to in section 144 to the company or its
holding company or its subsidiary company.​
i) A person who himself or his relative or partner is (holding securities of more than 1 lakh) or (Indebted/Owes
more than 5 lakh to the company ) or (has given a guarantee of more than 1 lakh for a third person who owes
money to the company or its subsidiary)​

www.edutap.co.in
64. The minimum number of independent directors in case of a public listed company are _______.

a) 1/4 of total directors

b) 1/3 of total directors
c) 1/2 of total directors
d) 2/3 of total directors

Answer:- B
 Explanation

Minimum number of Independent 1/3 of Total Number of

Directors in case of listed company Directors

Public companies as per last date of latest audited financial

statements​
​
1.Paid up share capital >= 10 crores or​ Shall have at least 2
2.Turnover >= 100 Crore or​ independent directors
3.outstanding loans, debentures and deposits >= 50 crore​

www.edutap.co.in
65. Who among the following shall be eligible to be an Independent Director of a company XYZ Ltd. with paid up share
capital of Rs. 100 crores?

a) Mr A, who is a promoter of the subsidiary company

b) Mr. B, whose relative is holding security of the shares of the company worth Rs. 25 Lacs
c) Mr. C, whose relative has held the position of Key Managerial personnel of its associate company in the last year
d) Mr. D, is a partner in the cost auditors firm of the company.

Answer:- B
 Explanation
Qualifications of Independent Director

 Independent directors is the one who must be different from managing director or a whole-time director or
a nominee director​
 Must posses Integrity and relevant experience and expertise
 He must not be now or in past promoter of the company or its holding, subsidiary or associate company​
 He must not be related to promoters or directors in the company, its holding, subsidiary or associate company.

holding any security (more than 50 lakh or 2% 0f paid up

capital which ever is higher)
during the two
indebted (more than 50 lakh) immediately preceding
financial years
None of his
Giving guarantee to any third person who is indebted (more or during the current
relatives shall be
than 50 lakh) financial year

Doing any transaction including holding of security, loans

and guarantee which is 2% or more of its income or gross
turnover
 Explanation
Qualifications of Independent Director

Independent Directors or his relatives

Should not have held Should not have been employee
any key position or should or partner or owner of/in any
not have been employee auditing firm or legal
consulting firm dealing
Should not hold 2% or more
voting
power either independently
or together with his relative
Shall not be CEO
or director of any Non-
Profit Organization
which receives 25% or
more of its receipts

Of company or with company or In company from the company, any of

its holding, subsidiary its holding, subsidiary
its promoters, directors or
or associate company or associate company
its holding, subsidiary or
associate company or anyone who
holds two per cent or more of the
in any of the three financial years immediately preceding total voting power of the company;
the financial year in which he is proposed to be appointed
66. No independent director shall hold office for more than two consecutive terms but such independent director shall
be eligible for appointment after the expiration of ………………..years of ceasing to become an independent director.

a) 2
b) 3
c) 4
d) 5

Answer:- B
 Explanation

An independent director shall hold Independent director shall be eligible

office for a term up to five consecutive for reappointment after first term
years on the Board of a company on passing of a special resolution by the
company and disclosure of such
appointment in the Board's report

After two consecutive terms he will again become eligible for

An Independent directors shall hold office appointment after a cooling of period of 3 years after his term
for a maximum of two consecutive terms ends provided that he is not associated with the company in
any capacity during these 3 years

www.edutap.co.in
67. Every company shall file a notice to Registrar stating the details about appointment of auditor within 15 days of
the meeting in which the auditor is appointed. The notice shall be in Form…………

a) ADT 1
b) ADT 2
c) ADT 3
d) ADT 4

Answer:- A
68. Which of the following are disqualified to be appointed as the auditor of a company?

a) Officer or employee of the company

b) Any body corporate
c) A person who is a partner or employee of the officer or employee of the company
d) All of the above

Answer:- D
 Explanation
Section 141 of The Companies Act
Disqualifications : Following shall not be appointed as auditors​
a) An officer or employee of the company or anyone who is further employee of any officer or employee of company
b) A person who is partner in the company​
c) A person or a firm who has business relationship with the company
d) A person who's relative is director or key management personnel in the company
e) A person who in full time employment in some other company
f) If person or partner of firm is already holding appointment of more than twenty companies (These twenty
companies shall not include one person companies, small companies and private companies having paid-up share
capital less than one hundred crore rupee)
g) A person convicted by court for a fraud or any other offence till 10 years from date of conviction
h) A person who, directly or indirectly, renders any service referred to in section 144 to the company or its holding
company or its subsidiary company.​
i) A person who himself or his relative or partner is (holding securities of more than 1 lakh) or (Indebted/Owes more
than 5 lakh to the company ) or (has given a guarantee of more than 1 lakh for a third person who owes money to
the company or its subsidiary)​

www.edutap.co.in
69. An auditor who has resigned shall file a statement within …………… days of his resignation to ROC.

a) 10
b) 15
c) 30
d) 45

Answer:- C
 Explanation

Resignation of Auditor
 In case of Govt. Companies and Non-Govt. Companies -> The auditor who has resigned from the company
shall file within a period of thirty days from the date of resignation, a statement (using Form ADT-3) with the
company and the Registrar indicating the reasons and other facts related to his resignation​
​
 In case of Govt. Companies -> In case of government company, the auditor shall additionally also file a
statement within a period of thirty days from the date of resignation with the Comptroller and Auditor-
General of India, indicating the reasons and other facts related to his resignation

www.edutap.co.in
70. _________ is the form in which auditor shall communicate frauds to the CG.

a) ADT 1
b) ADT 2
c) ADT 3
d) ADT 4

Answer:- D
 Explanation

ADT 1 ADT 2
Notice of appointment of Application for removalof
auditors by company to auditors before expiry of
ROC their term

FORMS IN CHAPTER AUDITORS

ADT 4 ADT 3
Report to CG suspect Notice of resignation by
offence involving fraud auditor

www.edutap.co.in
71. In case of Government company, Auditor other than first auditor, shall be appointed …………………………….

a) At the Annual General Meeting

b) Within 180 days from commencement of financial year
c) Within 90 days from closure of financial year
d) Any time before the Annual General Meeting

Answer:- B
 Explanation

Appointment of subsequent auditor(other than first auditor)

Other Than Govt.

Government Company
company

CAG will appoint

Appointment by within 180 days from
members in AGM commencement of
financial year

Hold office from 1st

Hold office till
AGM to 6th AGM
conclusion of AGM

www.edutap.co.in
72. In case of subsequent auditors appointed after the first auditors , remuneration is fixed by/in ________.

a) Board of directors
b) General Meeting
c) ROC
d) Managing Director

Answer:- B
 Explanation

• In case of first auditors of the company, remuneration is fixed by the Board of Directors.
• For any auditors appointed subsequent to the first auditors remuneration is fixed by the shareholders in the
General Meeting.

www.edutap.co.in
73. Which of the following is the disqualification of an auditor as per guidelines issued by ICAI?

a) a person has not attend the age of 21 years

b) a person of unsound mind
c) an undischarged insolvent and convicted by court for any offence of moral turpitude
d) All of the above

Answer:- D
74. The first Board Meeting of a company shall be held within______________ days of its incorporation.

a) 30
b) 60
c) 90
d) 120

Answer:- A
 Explanation
Section 173 --> Meetings of Board

Every company shall hold the
first meeting of the Board of
Directors within thirty days of the date
of its incorporation
After the first meeting Board of directors shall hold
a minimum number of four meetings every year in
such a manner that not more than one hundred
and twenty days shall intervene between two
consecutive meetings of the Board:

www.edutap.co.in
75. The minimum gap between two Board Meeting of an OPC shall be ___________ days.

a) 60
b) 90
c) 120
d) 180

Answer:- B
 Explanation
One Person Company

OPC shall hold at least one meeting within every six calendar months.

If one Director is there, then nothing mentioned in this section 173 shall apply to them and its logical because there is no
need of meeting in case of one-person company.

If more than one Director is there, they can comply with provisions of section 173 by just having at least one meeting of
the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not
less than ninety days

www.edutap.co.in
76. XYZ is a Section 8 company. State which of the following statement is correct in case of XYZ company.

a) It shall hold atleast one Board meeting in every six calendar months.
b) The maximum gap between two Board meetings shall not be more than 120 days.
c) The first meeting shall be held within 30 days of incorporation.
d) All of the above

Answer:- A
 Explanation
Section 8 Company

​Section 8 Companies shall hold at least one meeting within every six calendar months and there is no requirement to
conduct first meeting in certain number of days.

www.edutap.co.in
77. In normal cases, what is the minimum day notice that must be given for calling a Board meeting?

a) 7 days
b) 15 days
c) 21 days
d) 30 days

Answer:- A
 Explanation

The notice must be in writing and it must be

A meeting of the Board shall be called by sent to every director at his address
giving a notice minimum of 7 days registered by hand delivery or by post or by
before meeting electronic means.

Exception:
The meeting of the Board may be called with a notice lesser than 7 days to transact urgent business subject to
the condition that at least one independent director shall be present at the meeting​

www.edutap.co.in
78. Which of the following matters can be discussed through meeting held by audio visual conferencing, considering
quorum is not present in the physical meeting?

a) Approval of prospectus
b) Approval of Financial statements
c) Appointment of Alternate director
d) Approval of Amalgamation of the company with other company
e) All of the above

Answer:- E
79. If any default is made in transferring the amount to unpaid dividend A/c within the time specified, the company shall
pay interest at the rate of …………….. Percent per annum from the date of such default.

a) 10
b) 12
c) 15
d) 18

Answer:- B
 If amount not transferred
within 7 days to unpaid
dividend account, Interest
@ 12% shall be levied.

Within 90 days of
Within 5 days of Within 30 days of Within 7 days from the transfer to unpaid
declaration declaration expiry of 30th day. Dividend account

Declaration of Deposit in a Dividend not Transfer Prepare

Dividend scheduled bank paid/ not amount to statement and
in a separate claimed Unpaid place on the
account Dividend website of
account company

If Dividend not paid/ warrant

not posted by company
Pay Dividend to within 30 days of declaration,
shareholders interest @ 18 % per annum
shall be levied.

www.edutap.co.in
80. ABC Ltd. is a subsidiary of XYZ Ltd. State which of the following statements is not necessarily a condition in this
regard.

a) XYZ holds 60% voting power in ABC Ltd.

b) XYZ controls the composition of Board of Directors of ABC Ltd.
c) PQR, a 100 & subsidiary of XYZ, holds 75 % voting power of ABC Ltd.
d) All the directors of XYZ shall be directors in ABC Ltd.

Answer:- D
 Explanation

Company XYZ Controls the composition of the Board of

Company ABC would be Subsidiary Directors of company ABC i.e. Company XYZ can remove or
of​ Company XYZ appoint directors in Company ABC​

OR
Company XYZ Exercises or controls more than one-half of the
total voting power of company ABC either at its own or
together with one or more of its subsidiary company

www.edutap.co.in
81. As per Section 186 of The Companies Act, A company shall not make investment through more than _______ layers
of investment companies .

a) 1
b) 2
c) 3
d) 4

Answer:- B
 Explanation

A company shall not make investment through more than two layers of investment companies

www.edutap.co.in
82. A company wants to purchase shares of other body corporate. It has paid up share capital worth Rs. 10 crores,
Securities premium account of 2 crores and free reserves worth 3 crores. What is the maximum amount he can use for
such acquisition?

a) 5 crores
b) 9 crores
c) 8 crores
d) 10 crores

Answer:- B
 Explanation
1. Give any loan to any person except employees or other body
corporate or​

Company shall not 2. provide security in connection with a loan to any other give
any guarantee body corporate or person and​

3. Acquire or purchase the securities of any other body corporate

exceeding sixty per cent. of its paid-up share capital, free reserves
and securities premium account or ​
​
one hundred per cent. of its free reserves and securities premium
account, whichever is more.

• 60% of 15 cr = 9 cr
• 100% of 5 cr = 5 cr.
83. If the company wants to exceed the limits in the previous question, it needs to ___________.

a) Pass a Board resolution

b) Pass an Ordinary resolution
c) Pass a Special Resolution
d) Amend its Article of Association

Answer:- C
84. Investment company would have acquisition of shares, debentures or other securities has its principle business if
Assets in the form of investment in shares, debentures or other securities constitute not less than ____ of its total assets
or income derived from investment business constitutes not less than ____as a proportion of its gross income​

a) 50,50
b) 51,51
c) 75,50
d) 50,75

Answer:- A
 Explanation
Meaning of Investment Company

“Investment company” means a company whose principal business is the acquisition of shares, debentures or other
securities

Definition of Principal Business

Assets in the form of investment in shares, income derived from investment business
OR
debentures or other securities constitute not constitutes not less than fifty per cent. as a
less than fifty per cent. of its total assets​ proportion of its gross income
85. Every company giving loan or giving a guarantee or providing security or making an investment under this section
shall keep a register and the entries in the register shall be made chronologically and within ____ days of doing such
transactions.

a) 5
b) 7
c) 10
d) 15

Answer:- B
86. In the previous question, what is the Form of the Register?

a) MBP 1
b) MBP 2
c) MBP 3
d) MBP 4

Answer:- B
 Explanation to Q 85& Q 86

The company shall maintain a register using FORM MBP2 and enter in that the details of particulars of loans and
guarantees given, securities provided, and acquisitions made

The entries in the register shall be made chronologically and within 7 days of doing such transactions.
87. Which of the following shall not be a related party of the director of a company?

a) Step mother of the director

b) Brother in law of the director
c) Spouse of the daughter of the director
d) Step sister of the director

Answer:- B
 Explanation
Relatives of Directors or Employees

1. They are members of a Hindu Undivided Family

2. They are husband and wife;

3. Father including step father

4. Mother including step Mother

5. Son including step son and Son’s wife

6. Daughter and daughter’s husband

7. Brother including step brother

8. Sister including step sister

www.edutap.co.in
88. The transactions such as sale, purchase or supply of any goods or materials directly or through agent amounting
to 15% of the turnover of the company shall be approved by __________.

a) Resolution in meeting of BOD

b) Resolution in general meeting of the company
c) Authorisation in AOA
d) Consent of 100% shareholders

Answer:- B
89. For certain related party transaction, shareholders approval is required. For others, the approval of Board of
Directors is sufficient. If the company pays underwriting remuneration to a related party without the approval of
shareholders what is the maximum remuneration that can be paid?

a) 1% of the net worth of the company

b) 2% of the paid up capital of the company
c) 1% of the paid up capital of the company
d) 1% of the (paid up capital + free reserves) of the company

Answer:- A
90. In the previous question, if the amount is paid to wife of the director of the company who is employed in the
associate company, what shall be the maximum remuneration cap assuming shareholders approval is not taken?

a) 1 Lakh
b) 1.5 Lakh
c) 2 Lakh
d) 2.5 Lakh

Answer:- D
Explanation to Q 88,89,90
91. Voting Power in respect of shares with differential voting rights of the company shall not exceed ___________of
total voting power including voting power in respect of equity shares with differential voting rights issued at any
point of time.

a) 26%
b) 74%
c) 50%
d) 51%

Answer:- B
 Explanation
Conditions for issuing equity shares with Differential Voting Rights

 Authorization in AOA

 Ordinary Resolution at General Meeting of shareholders.(In case of listed company, approval through postal ballot is
sufficient).

 Voting Power in respect of shares with differential voting rights of the company shall not exceed 74% of total voting
power including voting power in respect of equity shares with differential rights issued at any point of time.

 No default in filing financial statements and annual returns for three financial years immediately preceding the
financial year in which it is decided to issue such shares.

The company having consistent track record of distributable profits for the last three years

This condition is omitted by

The Companies(Share Capital
and Debentures) Amendment
Rules, 2019
92. The amount transferred to DRR shall be _______________ of the value of outstanding debentures.

a) 10%
b) 15%
c) 20%
d) 25%

Answer:- A
 Explanation

Where debentures are issued by a company, the company shall create a debenture redemption reserve account out of
the profits of the company available for payment of dividend( free reserves)

And the amount credited to such account shall be utilised by the company only for the redemption of debentures

The adequacy of DRR shall be ten percent. of the value of the outstanding debentures.

www.edutap.co.in
93. Debentures in case of infrastructure companies can be issued for a maximum period of _____________ years.

a) 10
b) 15
c) 20
d) 30

Answer:- D
 Explanation

Section 71 --> Debentures

CONDITIONS FOR ISSUE OF SECURED DEBENTURES

• An issue of secured debentures may be made, provided the date of its redemption shall not exceed ten years
from the date of issue.

• For Infrastructure companies or companies allowed by Government or statutory authority may issue debentures
with redemption period more than 10 years but not more than 30 years.

• The company shall appoint the debenture trustee before the issue of prospectus or letter of offer for
subscription of its debentures and not later than sixty days after the allotment of the debentures, execute a
debenture trust deed to protect the interest thereon.

www.edutap.co.in
94. In case of a public company, if company refuses to register the transfer of securities within a periof of 30 days from
date of delivery of instrument of transfer to company, the transferee can make appeal to the Tribunal
within________________, if notice is sent by the company.

a) a period of 30 days from the date of receipt of the notice

b) a period of 60 days from the date of receipt of the notice
c) a period of 90 days from the date of receipt of the notice
d) a period of 120 days from the date of receipt of the notice

Answer:- B
 Explanation
Section 58 -->Refusal of Registration and Appeal Against Refusal

PUBLIC COMPANY

If a public company, without sufficient cause, refuses to register the transfer of securities within a period of thirty
days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, is
delivered to the company,

The transferee may appeal to the Tribunal against the refusal.

NOTICE SENT BY THE COMPANY NOTICE NOT SENT BY THE COMPANY

OR Within a period of ninety days from the date on
Within a period of sixty days from the date
of receipt of the notice which the instrument of transfer or the intimation
of transmission was delivered to the company.

The securities in a public company shall be freely transferable.

95. An offer or invitation to subscribe securities under private placement shall not be made to persons more than
_____________________in the aggregate in a financial year.

a) 50
b) 100
c) 150
d) 200

Answer:- D
 Section 42 --> Private Placement

A company may, subject to the provisions of this section, make a private placement of securities.

A private placement shall be made only to a select group of persons who have been identified by the Board whose
number shall not exceed fifty or such higher number as may be prescribed [excluding the qualified institutional buyers
and employees of the company being offered securities under a scheme of employees stock option] in a financial year.

For the purpose of this sub-section 42, an offer or invitation to subscribe

securities under private placement shall not be made to persons more than
two hundred in the aggregate in a financial year.

It is hereby clarified that the restrictions would be reckoned

individually for each kind of security that is equity share, preference
share or debenture.
96. Which of the following statement is false?

a) Private placement offer right can be renounced by the identified person in favour of someone else.
b) Subscription money cannot be paid in cash in case of private placement.
c) A company shall not utilise monies raised through private placement unless allotment is made and the return of
allotment is filed with the Registrar.
d) The company shall record the names and addresses of the persons to whom such private placement be made in
Form PAS -5

Answer:- A
 Section 42 --> Private Placement

1. The private placement offer and application shall not carry any right of renunciation.
2. The company shall record the names and addresses of the persons to whom such private placement be made in
Form PAS -5

Every identified person willing to subscribe to the private placement issue shall apply in the private placement and
application issued to such person alongwith subscription money paid either by cheque or demand draft or other
banking channel and not by cash.

A company shall not utilise monies
raised through private placement
unless allotment is made and the
return of allotment is filed with the
Registrar.
• Private placement offer cum application letter shall be in Form PAS-4
serially numbered and addressed specifically to the person to whom the
offer is made and
• Shall be sent to him, either in writing or in electronic mode, within
thirty days of recording the name of such person

www.edutap.co.in
97. The company shall allot its securities within_______________ of receipt of application money in case of private
placement.

a) 15
b) 30
c) 60
d) 90

Answer:- C
 Section 42 --> Private Placement

If allotment not done,

Allot its securities within Refund application money

Receipt of 60 Days 15 Days

application from from expiry
money receipt of of 60th Day
application
money

• If company refunds application money within this

period, it’s okay.

• If company fails to refund application money within this

period, it shall pay money with interest @12 % p.a.
starting from expiry of the 60th day.
98. If the company fails to refund the money within period specified, the interest @________________ shall be
applicable.

a) 10%
b) 12%
c) 15%
d) 18%

Answer:- B
 Section 42 --> Private Placement

If a company makes an offer or accepts monies in contravention of this section,

• the company,
• its promoters and
• directors
shall be liable for a penalty. Penalty shall be lower of

Amount raised through

the private placement
OR 2 Crore rupees

The company shall also refund all monies with interest @ 12% p.a. to subscribers within a period of thirty days of the
order imposing the penalty.

www.edutap.co.in
99. Return of allotment in case of private placement shall be in Form ________________.

a) PAS -1
b) PAS -2
c) PAS -3
d) PAS -4

Answer:- C
100. Return of allotment shall be filed within _____________ days of allotment..

a) 15
b) 30
c) 60
d) 90

Answer:- A
 Section 42 --> Private Placement

A company making any allotment of securities, shall file with the Registrar a return of allotment within fifteen days
from the date of the allotment in Form PAS - 3 including such relevant information as may be prescribed

If a company defaults in filing the return of allotment within the above period
• the company,
• its promoters and
• directors
shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues
but not exceeding twenty-five lakh rupees.

www.edutap.co.in