CORPORATE AND OTHER LAWS

Course: CA Inter
Marks: 100
Time Allowed: 3 Hours

Division A- Multiple Choice Questions

Total 30 Marks
1) Shruti, a common friend of Suchitra and Sukanya, got incorporated OPC sometime before and during a chit-
chat with her friends informed them that there is some limit on the maximum capital which her OPC can have
and she would have to convert her OPC either into a private or public limited company if such limit exceeded.
Suchitra and Sukanya who are desirous of forming a private limited company for carrying on textile trading
business, are unsure about the maximum capital which a private limited company can have. Advise.
(a) A private limited company can have maximum of Rs. One crore as share capital.
(b) A private limited company can have maximum of Rs. Two crores as share capital.
(c) A private limited company can have maximum of Rs. Five crores as share capital.
(d) A private limited company can have unlimited share capital. Marks 1

2) When there is a conflict between two or more statute or two or more parts of a statute and both of them
need to be honoured, then which rule of interpretation is to be applied
(a) Rule of Harmonious construction
(b) Rule of Literal construction
(c) Rule of Beneficial construction
(d) Rule of exceptional construction Marks 1

3) Which of the following is not an Immovable Property (as per the provisions of the General Clauses Act, 1897):
(a) Land
(b) Building
(c) Timber
(d) Machinery permanently attached to the land Marks 1

4) 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 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 Marks 1

5) 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; Marks 1
6) 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; Marks 1

7) 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 originall y 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.
(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. Marks 2

8) 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 Rs.
2.00 crores and its paid up share capital was less than Rs. 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’. Marks 2

9) Roma along with her six friends has got incorporated Roma Trading Ltd. in May 2017. She kept the paid-up
share capital at Rs. 30 lacs. Further, in April 2018, she noticed that in the last financial year, the turnover of the
company was well below Rs. 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 Rs. 50 lacs and
also its turnover has not exceeded the threshold li mit of Rs. 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’. Marks 2
10) Amex limited is a public company having a net- worth of Rs. 950 crores, turnover of 200 crores (the company
is just 5 years since the date of its incorporation) during the immediately preceding financial year, has to
constitute a Corporate Social Responsibility (CSR) Committee. It has 9 Directors (A, B, C, D, E, F, G, H and I).
Further, Mr. F, G, H and I are independent directors. Out of the following statements which statement is
correct:
(a) CSR committee may constitute of A, B and C
(b) CSR committee may constitute of A, B and D
(c) CSR committee may constitute of A, F and G
(d) There is no need to constitute a CSR committee as the turnover is just 200 crores during the immediately
preceding financial year Marks 2

11) Jackson Communications LLC, incorporated in Arizona, USA, has established a principal place of business at
Kolkata, West Bengal. It is required to deliver requisite documents to the specified authority. You are required
to select an appropriate option from the four given below which indicates the number of days within which
such documents shall be delivered:
(a) Jackson Communications LLC shall, within 10 days of the establishment of a principal place of business
in India, deliver the requisite documents to the specified authority.
(b) Jackson Communications LLC shall, within 15 days of the establishment of a principal place of business
in India, deliver the requisite documents to the specified authority.
(c) Jackson Communications LLC shall, within 30 days of the establishment of a principal place of business
in India, deliver the requisite documents to the specified authority.
(d) Jackson Communications LLC shall, within 45 days of the establishment of a principal place of business
in India, deliver the requisite documents to the specified authority. Marks 2

12) Mohita Periodicals and Mags Publications Limited, having registered office in Chennai, has obtained
consultancy services from an entity based in France for setting up a software programme to strengthen various
aspects relating to publications. The consideration for such consultancy services is required to be paid in
foreign currency. The compliance officer of Mohita Periodicals and Mags Publications Limited, Mrs. Ritika
requires your advice regarding the foreign exchange that can be remitted for the purpose of obtaining
consultancy services from abroad without prior approval of Reserve Bank of India. Out of the following four
options, choose the one which correctly portrays the amount of foreign exchange remittable for the given
purpose after considering the provisions of the Foreign Exchange Management Act, 1999 and regulations
made thereunder:
(a) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
Publications Limited for obtaining consultancy services from an entity based in France without prior approval
of RBI is US$ 50,000,000.
(b) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
Publications Limited for obtaining consultancy services from an entity based in France without prior approval
of RBI is US$ 10,000,000.
(c) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
Publications Limited for obtaining consultancy services from an entity based in France without prior approval
of RBI is US$ 5,000,000.
(d) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
Publications Limited for obtaining consultancy services from an entity based in France without prior approval
of RBI is US$ 1,000,000. Marks 2

13) The Authorised share capital clause of LMN & Co. ltd. consisted of Preference share capital and Equity share
capital both. With regard to equity share capital, the article of association of the company has given
authorisation to issue differential equity shares. Apart from authorisation by the Articles, from the following
strike out the condition, which is not mandatory to comply with—
(a) Such issue of shares must be authorised by an ordinary resolution passed at a general meeting of the
shareholders or by postal ballot, as the case may be
(b) The company must have consistent track record of distributable profit for the last five years.
(c) The companyhas no subsisting default in the payment of the declared dividend to its shareholders.
(d) The company has not defaulted 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 Marks 2
14) Mr. A died at the age of 72 leaving behind some movable and immovable properties to be distributed
between his two sons C& D, as per his registered will. His Will clearly mentioned that all the immovable
property should go to C and all the movable property should go to D.Both the brothers divided the property
as per will except below mentioned properties, because they could not establish which property should go to
whom. Kindly help them by ticking the property/ies which should go to D (as per the provisions of the general
Clause Act, 1897):
(a) Standing crop in the fields
(b) Cut crop, ready to sell
(c) Tube well in the agriculture land
(d) Sandal wood tree Marks 2

15) 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 Months
(c) 3 Months (d) 6 Months Marks 2

16) Abha formed a ‘One Person Company (OPC)’ on 15-10-2017 with her husband Akhil as nominee and Rs. 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). Marks 2

17) Which of the following cannot be converted into LLP?

(a) Partnership firm
(b) Private company
(c) Listed company
(d) Unlisted company Marks 1

18) 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; Marks 1

19) 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; Marks 1

20) 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; Marks 1

DIVISION B- DESCRIPTIVE QUESTIONS

QUESTION NO 1 IS COMPULSORY
ATTEMPT ANY THREE QUESTIONS FROM THE REST

Marks 70

Q1) Answer the following:

a) ishi Limited’s share capital is divided into different classes. Now, Rishi Limited intends to vary the rights
attached to a particular class of shares. Advice Rishi Limited as to obtaining consent from the shareholders in
relation to variation of rights. Marks 5

b) Param Ltd. issued and published its prospectus to invite the investors to purchase its shares. The said
prospectus contained a false statement.
Mr. Prakash purchased some partly paid shares of the company in good faith from the Stock Exchange.
Subsequently, the company was wound up and the name of Mr. Prakash was included in the list of
contributories. Decide:
(i) Whether Mr. Prakash is liable to pay the unpaid amount?
(ii) Can Mr. Prakash sue the directors of the company to recover damages? Marks 4

c) As per the provisions of the Companies Act, 2013, a whole time Key Managerial Personnel (KMP) shall not hold
office in more than one company except its subsidiary company at the same time. Referring to the Section 13
of the General Clauses Act, 1897, examine whether a whole time KMP can be appointed in more than one
subsidiary companies? Marks 4

d) (i) ABC Ltd., a foreign company having its Indian principal place of business at Kolkata, West Bengal is required
to deliver various documents to Registrar of Companies under the provisions of the Companies Act, 2013. You
are required to state, where the said company should deliver such documents.
(ii) In case, a foreign company does not deliver its documents to the Registrar of Companies as required under
section 380 of the Companies Act, 2013, state the penalty prescribed under the said Act, which can be levied.
Marks 6

Q2) Answer the following:

a) Define a Private Company. Explain the procedure for conversion of a Public Company into a Private Company.
Marks 8

b) The Memorandum of Association of a company was presented to the Registrar of Companies for registration
and the Registrar issued the certificate of incorporation. After complying with all the legal formalities a
company started a business according to the object clause, which was clearly an illegal business. The company
contends that the nature of the business cannot be gone into as the certificate of incorporation is conclusive.
Answer the question whether company’s contention is correct or not. Marks 5

c) Explain the meaning of ‘Good Faith’ wrt General Clauses Act. Marks 4
Q3) Answer the following:
a) Suresh resided in India during the Financial Year 2020-2021. He left India on 15th July 2021 for Switzerland for
pursuing higher studies in Biotechnology for 2 years. What would be his residential status under the Foreign
Exchange Management Act, 1999 during the Financial Years 2021-2022 and 2022-2023?
Mr. Suresh requires every year USD 25,000 towards tuition fees and USD 30,000 for incidental and stay
expenses for studying abroad. Is it possible for Mr. Suresh to get the required Foreign Exchange and, if so,
under what conditions? Marks 7

b) Explain how the auditor will be appointed in the following cases :

(i) A Government Company within the meaning of section 394 of the Companies Act, 2013.
(ii) The Auditor of the company (other than government company) has resigned on 31stDecember, 2016,
while the Financial year of the company ends on 31stMarch, 2017.
(iii) A company, whose shareholders include the following:
(a) Bank of Baroda (A Nationalized Bank) holding 12% of the subscribed capital in the company.
(b) National Insurance Company Limited (carrying on General Insurance Business) holding 10% of the
subscribed capital in the company.
(c) Maharashtra State Financial Corporation (A Public Financial Institution) holding 8% of the subscribed
capital in the company. Marks 6

c) State the procedure for the following, explaining the relevant provisions of the Companies Act, 2013 :
Appointment of First Auditor, when the Board of directors did not appoint the First Auditor within one month
from the date of registration of the company. Marks 4

Q4) Answer the following:

a)DJA Company Limited, incorporated under the provisions of the Companies Act, 2013, has two subsidiaries –
AJD Limited and AMR Limited. All the three companies have prepared their financial statements for the year
ended 31st March, 2015. Examining the provisions of the Companies Act, 2013, answer the following :
(i) In what manner the subsidiaries – AJD Limited and AMR Limited shall prepare their Balance Sheet and
Profit & Loss Account ?
(ii) What would be your answer in case the DJA Limited – the holding company, is not required to prepare
consolidated financial statements under the Indian Accounting Standards ?
(iii) What shall be your answer in case one of the subsidiary company’s financial statements do not comply
with the Accounting Standards ?
(iv) To what extent is the Central Government empowered to exempt a company from preparing the
financial statements in compliance with the Indian Accounting Standards ? Marks 8

b) What is the meaning of Eligible company for the purpose of Chapter V of the Companies Act, 2013. Marks 3

c) Mr. Ankit Sharma wants to form a LLP taking him, his wife Mrs. Archika Sharma and One HUF as partners for
that. Whether this LLP can be incorporated under LLP Act, 2008? Explain.
Marks 4

d) Mr Akshat entered into an agreement for purchasing a commercial property in Delhi belonging to NRT Ltd. At
the time of registration, Mr Akshat comes to know that the title deed of the company is not free and the
company expresses its inability to get the title deed transferred in the name of Mr Akshat saying that he ought
to have had the knowledge of charge created on the property of the company. Examine with the help of
‘Notice of a charge’, whether the contention of NRT LTD. is correct? Marks 2

Q5) Answer the following:

a)A General Meeting was scheduled to be held on 15th April, 2016 at 3.00 P.M. As per the notice the members
who are unable to attend a meeting in person can appoint a proxy and the proxy forms duly filled should be
sent to the company so as to reach at least 48 hours before the meeting. Mr. X, a member of the company
appoints Mr. Y as his proxy and the proxy form dated 10-04-2016 was deposited by Mr. Y with the company at
 its registered Office on 11-04-2016. However, Mr. X changes his mind and on 12-04-2016 gives another proxy
to Mr. Z and it was deposited on the same day with the company. Similarly, another member Mr. W also gives
two separate proxies to two individuals named Mr. M and Mr. N. In the case of Mr. M, the proxy dated 12-04-
2016 was deposited with the company on the same day and the proxy form in favour of Mr. N was deposited
on 14-04-2016. All the proxies viz., Y, Z, M and N were present before the meeting.
According to the provisions of the Companies Act, 2013, who would be the persons allowed to represent at
proxies for members X and W respectively ? Marks 4

b) Explain the rule of ‘ejusdem generis’ with regard to interpretation of statutes. Marks 4

c) State the persons responsible for complying with the provisions regarding maintenance of Books of Accounts
of a company. Support with the help of relevant provisions of the Companies Act, 2013. Marks 4
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d) Kapoor Builders Limited decides to pay 2.5 percent of the value of debentures as underwriting commission to
the underwriters but the Articles of the company authorize only 2.0 percent underwriting commission on
debentures. The company further decides to pay the underwriting commission in the form of flats. Examine
the validity of the above arrangements under the provisions of the Companies Act,2013. Marks 5