Ch # 10.

Investments & Disclosure of interest Page 258

1. Under the provisions of Companies Act 2017, power to make investments in a company rests with
(a) CEO of the company
(b) Directors of the company
(c) Members of the company
(d) Chairman of the company

2. Investment in associated company cannot be made by the directors themselves. They will have to
get its approval from
(a) Members in a class meeting through special resolution
(b) Members in a general meeting through ordinary resolution
(c) Members in a general meeting through special resolution
(d) Members in a BOD meeting through ordinary resolution

3. Being a separate legal person, a company can make investments in any other company or security.
But all the investments of the company must be made and held
(a) In the name of controlling shareholders
(b) In the name of Sponsors of the company
(c) In the name of chairman of the company
(d) In the name of Company itself

4. The company shall not make an increase in amount or any variation in the nature and terms of any
investment without passing
(a) An ordinary resolution in the general meeting.
(b) A special resolution in the general meeting
(c) A resolution in the Board meeting
(d) A resolution in creditors meeting

5. The register for investments of company not held in its own name is open to inspection for the
members of the company,
(a) Free of cost for at least two hours daily
(b) Free of cost for at least five hours daily
(c) At a payment of charge for at least two hours daily
(d) At a payment of charge for at least five hours daily

6. Any member may require a certified copy of register, on fee fixed by the company. Certified copies
requested shall be issued
(a) After 7 days
(b) Within 7 days
(c) After 14 days
(d) Within 14 days

7. The term “investment” shall include

(a) Loans
(b) Advances
(c) Equity
(d) All of the above
Ch # 10. Investments & Disclosure of interest Page 259

8. Seema bulbs Limited Is desirous of having significant influence in shaukeen led bulbs and tubes
Limited 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 make that company its subsidiary
(d) To control or participate in the export decisions of shaukeen led bulbs and tubes under an
agreement.

9. Any loan made by holding company to its subsidiary company is allowed if special resolution is
passed.
(a) Correct
(b) Incorrect

10. For making a company as an associated company, minimum no of shares which should be directly
or indirectly controlled by a person:
(a) 15%
(b) 10%
(c) 20%
(d) 50%

11. If a company or undertaking is subsidairy of another then it is also:

(a) Private company
(b) Public company
(c) Associated company
(d) All of the above

12. The Chairman of PCB is also director is Beta Limited, a listed company. Beta limited want to give
loan to PCB fo Rs. 45 million for PSL. As per the Companies Act 2017:
(a) Beta Limited Requires to pass special resolution
(b) Board of Directors can approve this loan
(c) Permission of SECP is required
(d) None of the above

13. Power to make investment in other companies can be made, generally?

(a) By approval of members
(b) By approval of board
(c) By approval of Registrar
(d) By approval of finance manager

14. For making investment in Associated Company ___________ is required

(a) Special Resolution
(b) Ordinary Resolution
(c) Board approval
(d) None of the above

15. If the investment made in the form of loan, the Return of investment should not be less than the
borrowing cost of the company.
(a) True
(b) False
Ch # 10. Investments & Disclosure of interest Page 260

16. ABC Limited give Rs 100 million loan to GFH Limited, which is an associated company, with the
approval of members through special resolution. As per the agreement of contract, loan shall be
paid with 10 equal installments. During the year, GFH Limited discontinue its one product and also
suffer huge losses from operations. GFH Limited want extensions in installments period. As per the
Companies Act 2017, this change cane be passed by ____________
(a) Board of directors
(b) Members in general meeting through Resolution
(c) Special Resolution is required
(d) Commission Approval is required

17. All the investment of the company should be held in the name of.
(a) Company
(b) Directors
(c) CEO
(d) Account manger

18. It is the policy of the Z limited that any member of the company having 17% shareholding, is eligible
to be appointed as a director of the company through fresh election. X Limited, a company having
bakeries business, has purchased 19.5% shares of Z Limited. As per the Companies Act 2017,
Director should be a natural person, now, how can X Limited become director of Z Limited:
(a) By disposing of share
(b) By approval of Commission
(c) By transfer its share to any natural person
(d) By transferring of shares in the name of any employee/director of the company

19. Central Depositary company Hold 35% share of F Limited and 32% shares of G Limited. As per the
Companies Act 2017, whether these companies are associated company?
(a) Yes
(b) No
(c) Partly Yes
(d) Partly No

20. Company is required to hold Register, which have included the descriptions of investment
(a) Held by Company’s name
(b) Not held By Company’s name
(c) Investment in associated only
(d) Both I & II

21. If any member want to inspect register, of investments not in the name of the company, then he
have to pay…..
(a) Rs. 50
(b) Rs. 100
(c) Rs. 1,000
(d) Free of Cost

22. Register of investmemts (not in name of company) is open to inspection for at least ___________
(a) Business hours (9-5)
(b) 2 business hours
(c) 5 business hours
(d) 24/7 hour
Ch # 10. Investments & Disclosure of interest Page 261

23. Copy of register of investments (not in name of the company) will be sent to the members within
_____________ Days of request
(a) 7
(b) 14
(c) 21 days
(d) Immediately

24. Ruchir Marcons Limited. which provides marketing and consultancy services is keen to have a
‘significant influence’ in Ruchika Marketing Limited so that it becomes its ‘associate company’. For
having ‘significant influence’ Ruchir Marcons Limited needs to control certain percentage of total
voting power of Ruchika Marketing Limited What is that?
(a) For creating ‘significant influence’ Ruchir Marcons Limited must control at least 5% of total
voting power of Ruchika Marketing Limited.
(b) For creating ‘significant influence’ Ruchir Marcons Limited must control at least 10% of total
voting power of Ruchika Marketing Limited.
(c) For creating ‘significant influence’ Ruchir Marcons Limited must control at least 15% of total
voting power of Ruchika Marketing Limited.
(d) For creating ‘significant influence’ Ruchir Marcons Limited must control at least 20% of total
voting power of Ruchika Marketing Limited.

25. ABC Private limited, having 5.0 million share capital, wants to enter in a contract with P Limited, a
public company, for purchasing of raw material. One of the Director, Mr. Sham of ABC Private
Limited is also hold 7% share of P Limited. What would be the course of action in the First Board
Meeting of ABC Private Limited for this Contract:
(a) Mr. Sham can Attend and vote in this meeting
(b) Mr. Sham cannot vote only, but can attend this Meeting
(c) Notice of the meeting shall notice sent to Mr. sham
(d) Both I & ii

26. Anas, Asadullah, Ameen and Arqam are founder partners of Fast Movers Forwarders (FMF) .
In January 2020, all partners had purchased shares of Quality Tiles Limited (QTL) , a listed
company. In June 2020, they contested the election of directors of QTL and got elected as directors
out of seven positions. Being majority directors of QTL, they cancelled the contract of existing
logistics service provider and awarded the contract to FMF.
Whether the aforesaid contract is valid?
(a) Yes, because it is approved by the majority of the directors and the board is fully empowered
to manage the affairs of the company
(b) No, the contract need to be approved by majority of such directors who are not interested in
the said contract
(c) No, the contract must be laid before the general meeting for approval
(d) No, the contract must be approved by the general meeting as well as by the Commission

27. Under which of the following situations a person may, as a director, take part in the discussion of
any contract to be entered into on behalf of the company, even if he is in anyway concerned or
interested in the contract?
If he is the director of a private company which is:
(a) subsidiary of a public company.
(b) holding company of a public company.
(c) associated undertaking of a public company.
(d) neither a subsidiary nor a holding company of a public company.
Ch # 10. Investments & Disclosure of interest Page 262

28. KLM Limited in considering a related party transaction in which majority of directors are
interested. Which of the following is correct?
(a) If the transaction is in accordance with policy approved by the board of KLM Limited, it need
not be approved in a general meeting.
(b) The matter must be placed before the general meeting for approval as special resolution.
(c) The matter must be placed before the general meeting for approval as ordinary resolution.
(d) Such transactions are absolutely prohibited under the Companies Act and all interested
directors shall be liable to penalty in case such transaction is carried out whether with or
without approval.

29. Akram is the chief financial officer of Snapper House Limited (SHL). As part of its expansion plan,
SHL is in the process of acquiring an office building, owned by Najma who is Akram’s wife, on rent
in a commercial area. SHL asked Najma to provide terms and conditions of the rent agreement for
consideration and necessary approval.
Which of the following statements is correct?
(a) Akram will have to disclose his interest and obtain prior approval of SHL’s board before
signing the rent agreement
(b) SHL can sign the rent agreement and Akram will give an update to SHL’s board in the
immediately next board meeting
(c) SHL can sign rent agreement with prior approval of the chief executive
(d) No approval is needed; however, Akram cannot be involved in the transaction

30. Kingfish Limited (KL) holds 5 million shares in Moonfish Limited (ML) and wants to acquire further
3 million shares in ML. The issued, subscribed and paid-up share capital of ML as at 9 September
2021 is 50 million shares. There is no common director on the boards of both companies.
In this regard, which of the following statements is correct?
(a) KL needs to obtain approval of its members in general meeting before making further
investment in ML
(b) KL needs to obtain approval of its members in general meeting through special resolution
before making further investment in ML
(c) KL can make further investment in ML if board’s approval is in place
(d) KL does not require any approval before making further investment in ML

31. Purple Limited (PL) is wholly owned subsidiary of Byzantium Limited (BL). BL has transferred ten
shares of PL each in the name of its directors Kashif and Zahid, in order to ensure that:
(a) they could attend PL’s general meeting
(b) they could look after PL’s affairs to protect BL’s interest
(c) the number of PL’s members shall be in accordance with the statutory limit
(d) both (a) and (b)

32. Where a director has entered into a contract with the company for supply of raw material without
obtaining the required approval, the contract shall be voidable at the option of the board, unless
within 90 days from the date at which such contract was entered into, it is ratified:
(a) by the directors and shareholders in their respective meetings
(b) either by the directors in their meeting or by the shareholders in their meeting
(c) by the directors only, in their meeting
(d) by the shareholders only, in their meeting
Ch # 10. Investments & Disclosure of interest Page 263

Sr. No. Answer Sr. No. Answer Sr. No. Answer

1 B 16 C 31 C
2 C 17 A 32 B
3 D 18 D
4 B 19 B
5 A 20 B
6 B 21 D
7 D 22 B
8 C 23 A
9 A 24 D
10 C 25 B
11 C 26 C
12 B 27 D
13 B 28 B
14 A 29 A
15 A 30 C