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Question Paper

CS Executive- Company Law & Practice Duration: 40

Details: Test-8 (Ch- 8) Marks: 40

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Q-1: What are divisible profits?

a) Profits that can be legally distributed to the shareholders

b) Profits earned by the company during a given period

c) Profits after deducting expenses and taxes

d) Profits that maximize shareholders' wealth

Q-2: Who determines the amount of dividend payable to shareholders?

a) Shareholders
b) Board of Directors
c) Auditors
d) Company Secretary

Q-3: When is the final dividend declared by a company?

a) During the annual general meeting

b) At the end of the financial year
c) After the board of directors' approval
d) Whenever the shareholders demand it

Q-4: Under what circumstances can interim dividends be declared?

a) Only when the company has generated profits till the quarter preceding the declaration
b) Only when the board of directors recommends it
c) Only during the period from the closure of the financial year till the annual general meeting
d) Only when the directors are satisfied that profits are available for distribution

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Q-5: Who determines the amount of dividend payable to shareholders?

a) Shareholders
b) Board of Directors
c) Auditors
d) Company Secretary

Q-6: When is the final dividend declared by a company?

a) During the annual general meeting

b) At the end of the financial year
c) After the board of directors' approval
d) Whenever the shareholders demand it

Q-7: Under what circumstances can interim dividends be declared?

a) Only when the company has generated profits till the quarter preceding the declaration
b) Only when the board of directors recommends it
c) Only during the period from the closure of the financial year till the annual general meeting
d) Only when the directors are satisfied that profits are available for distribution

Q-8: What is one of the determinants of the dividend policy of a company?

a) Shareholder demands
b) Legal and contractual restrictions
c) Board of Directors' preferences
d) External market conditions

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Q-9: Why is the cash position and liquidity of a company important in paying dividends?

a) It indicates the financial needs of the company

b) It determines the tax burden on dividends
c) It affects the ability to pay dividends
d) It reflects the earnings of the company

Q-10: Can dividend declaration be subject to the approval of financial institutions or banks?

a) Yes, if the company has outstanding loans from these institutions.

b) No, dividend declaration should not be subject to any condition or approval.
c) Yes, only if the financial institutions or banks are major shareholders of the company.
d) Yes, but only for interim dividends and not for final dividends.

Q-11: When does the legal liability for the payment of dividend arise?

a) When the directors recommend the payment of dividend

b) When the shareholders accept the directors' recommendation
c) When the annual general meeting is held
d) When the dividend is declared by the shareholders

Q-12: Can the directors modify or withdraw their recommendation for the payment of
dividend?

a) Yes, but only before the annual general meeting is held.

b) No, once the directors make a recommendation, it cannot be changed.
c) Yes, the directors have the power to modify or withdraw their recommendation at any time.
d) Yes, but only if the shareholders approve the modification or withdrawal.

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Q-13: What is the procedure followed for transferring shares to the Investor Education and
Protection Fund (IEPF) Authority?

a) The shares are physically transferred to the IEPF Authority's DEMAT Account.
b) The shares are transferred to the IEPF Authority as per the process of transmission of shares.
c) The shares are sold and the proceeds are transferred to the IEPF Authority.
d) The shares are transferred to the IEPF Authority, and an application can be filed to claim
them back.

Q-14: What is the significant difference between shares transferred to the IEPF Authority under
sub-section (9) and shares transferred under Section 124?

a) Shares transferred under sub-section (9) cannot be claimed back, while shares transferred
under Section 124 can be claimed back.
b) Shares transferred under sub-section (9) can be claimed back, while shares transferred
under Section 124 cannot be claimed back.
c) Both shares transferred under sub-section (9) and shares transferred under Section 124
cannot be claimed back.
d) Both shares transferred under sub-section (9) and shares transferred under Section 124 can
be claimed back.

Q-15: What is the consequence of a company failing to transfer unpaid/unclaimed dividend

amount to the Unpaid Dividend Account within the specified timeframe?

a) The company will be fined for non-compliance.

b) The company will lose ownership of the unpaid/unclaimed dividend amount.
c) The company will be required to pay interest on the unpaid/unclaimed dividend amount.
d) The company will face legal action by the shareholders.

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Q-16: What is the role of a company after the declaration of dividend regarding the unpaid or
unclaimed dividend?

a) The company becomes the beneficial owner of the unpaid or unclaimed dividend amount.
b) The company must transfer the unpaid or unclaimed dividend amount to a special account.
c) The company should distribute the unpaid or unclaimed dividend to its employees.
d) The company must declare the unpaid or unclaimed dividend as its profit.

Q-17: What should a company do after declaring dividend out of reserves due to inadequacy or
absence of profits?

a) Notify the stock exchange within 30 minutes of the Board meeting.

b) Credit the dividend payment to a separate bank account within five days.
c) Issue dividend warrants within 21 days from the date of the Annual General Meeting.
d) All of the above.

Q-18: How many days in advance should a company issue written notices for the Annual
General Meeting where the dividend will be declared?

a) 5 days
b) 21 days
c) 30 days
d) 45 days

Q-19: What is the effective date of the Secretarial Standard on Dividend (SS-3)?

a) 1st January 2013

b) 1st January 2016
c) 1st January 2018

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d) 1st January 2021

Q-20: Which of the following is NOT applicable to listed companies in relation to the provisions
of SS-3?

a) Companies Act, 2013

b) Securities Contracts (Regulation) Act, 1956
c) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
d) Income Tax Act, 1961

Q-21: What is the meaning of the term "dividend"?

a) A portion of a company's earnings distributed pro rata to its shareholders

b) An allocation of profits to the company's management team
c) A fund set apart by a company for future investments
d) A payment made by shareholders to the company

Q-22: Which of the following is NOT considered as a dividend?

a) Cash payment to shareholders out of distributable profits

b) Allotment of bonus shares to existing shareholders
c) Reduction of share capital
d) Distribution of assets on winding up

Q-23: How is the term "distribution" defined in the UK Companies Act, 2006?

a) The payment of dividends to members in cash or other forms

b) The release of company assets to shareholders in the event of winding up

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c) The allotment of bonus shares to existing shareholders
d) The redemption or purchase of shares by the company

Q-24: What is the term used for dividend in producer companies?

a) Limited Return
b) Patronage Bonus
c) Surplus Income
d) Dividend

Q-25: What is the usual treatment of dividend distribution in companies limited by guarantee?

a) Dividends are distributed to members in proportion to their shareholdings

b) Dividends are reinvested for non-profit activities
c) Dividends are distributed as patronage bonus
d) Dividends are prohibited in such companies

Q-26: Which of the following sources can be used by a company to declare dividend?

a) Profits of the current financial year

b) Profits of any previous financial year remaining undistributed
c) Both profits of the current financial year and undistributed profits of previous financial years
d) Money provided by the Central Government or a State Government

Q-27: Under what circumstances can a company not declare dividend?

a) Default in redemption of debentures or payment of interest thereon

b) Default in redemption of preference shares or creation of capital redemption reserve

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c) Default in repayment of term loan to a bank or financial institution
d) All of the above

Q-28: What is the requirement for disclosure of dividend by listed entities?

a) Dividend must be disclosed on a per share basis only

b) Dividend must be disclosed in the financial results as per Regulation 33(1) (e) of SEBI (LODR)
Regulations, 2015
c) Dividend must be disclosed in the annual report
d) Dividend must be disclosed in the notes to the financial statements

Q-29: How is the entitlement to receive dividend determined for shareholders?

a) Based on the date of declaration of dividend

b) Based on the date of closure of registers or record date
c) Based on the date of payment of dividend
d) Based on the date of annual general meeting

Q-30: Who has the primary entitlement to receive dividend according to the Companies Act,
2013?

a) Beneficial owner
b) Registered shareholder
c) Company
d) Income Tax Department

Q-31: Can payments made directly to a beneficial owner be considered as "deemed dividend"
under the Income Tax Act, 1961?

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a) Yes, in all cases
b) Yes, if the beneficial owner's name appears in the register of shareholders
c) No, payments made to beneficial owners cannot be deemed as dividend
d) No, only registered shareholders can receive deemed dividend

Q-32: What is the requirement for remittance of dividend to non-resident members?

a) Approval from the Income Tax Department

b) Permission from the Reserve Bank of India (RBI)
c) Authorization from the company's board of directors
d) Consent from the non-resident members

Q-33: Which of the following modes of payment is NOT allowed for the payment of dividend?

a) Payable at par cheque

b) Dividend warrant
c) Electronic mode of payment approved by the Reserve Bank of India
d) Demand draft issued by the company

Q-34: What is the initial validity period of a dividend cheque or warrant?

a) One month
b) Three months
c) Six months
d) One year

Q-35: Which of the following is NOT a source of funds credited to the Investor Education and
Protection Fund (IEPF) under Section 125 of the Companies Act, 2013?

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a) Donations given by State Governments
b) Amount transferred from the general revenue account of the Central Government
c) Interest received from investments made from the Fund
d) Sale proceeds of fractional shares arising out of the issuance of bonus shares

Q-36: Which of the following is NOT a purpose of the Investor Education and Protection Fund
Authority?

a) Administration of the IEPF

b) Making refunds of shares and unclaimed dividends to investors
c) Promoting awareness among investors
d) Granting loans to companies in financial distress

Q-37: Which of the following statements about the transfer of shares to the Investor Education
and Protection Fund (IEPF) is NOT true?

a) Shares in respect of which dividend has not been paid or claimed for seven consecutive years
shall be transferred to the IEPF.
b) The shares transferred to the IEPF will be credited to a DEMAT Account opened by the
Authority within 30 days.
c) If the beneficial owner has encashed any dividend warrant or had dividend amount credited
to their bank account during the last seven years, the shares will not be required to be
transferred to the Fund.
d) The transfer of shares by companies to the Fund is considered as transmission of shares, and
the procedure for transmission of shares shall be followed.

Q-38: What is the significant difference between shares transferred to the Investor Education

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and Protection Fund (IEPF) under Section 124 and shares transferred under sub-section (9) of
Section 90?

a) Shares transferred under Section 124 can be claimed back from the IEPF Authority, while
shares transferred under sub-section (9) cannot be claimed back.
b) Shares transferred under Section 124 have their voting rights frozen, while shares
transferred under sub-section (9) do not have any impact on voting rights.
c) Shares transferred under Section 124 are credited to a DEMAT Account of the IEPF
Authority, while shares transferred under sub-section (9) are not held in DEMAT form.
d) Shares transferred under Section 124 are subject to the SEBI (SAST) Regulations, 2011, while
shares transferred under sub-section (9) are exempt from such regulations.

Q-39: How long should a company preserve dividend cheques or warrants returned by banks,
including those that are defaced, torn, or decrepit?

a) The preservation period should be eight years from the date of the instrument.
b) The preservation period should be the specified period mentioned in the undertaking given
to the Bank.
c) The preservation period should be the longer of the specified period or eight years from the
date of the instrument.
d) The preservation period should be determined by the policy approved by the Board.

Q-40: How are dividends allocated among shareholders?

a) Dividends are allocated equally to all shareholders, regardless of the type and class of shares
held.
b) Dividends are allocated on a pro-rata basis according to the type and class of shares held.
c) Dividends are allocated first to preference shareholders and then to other shareholders.
d) Dividends are allocated based on the terms and conditions of the issue of each share.

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 (40 X 1 = 40 = Marks)

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