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GETTING THE MOST FROM THIS BOOK
A QUICK GUIDE
1 INITIAL READING
After your initial reading of a
particular chapter in your
study material, go through the
questions in our 3, 5, and 11
attempt’s compilations,
focusing on the chapter
you've just covered. Make
note of challenging questions
for later reference.
2
FIRST REVISION
During your first revision, revisit the marked questions.
If you still can't answer them, highlight them in red and
review the related concepts to improve your
understanding. This process helps you to grasp the key
concepts and address your weak points
3 KEEP GOING WITH THE

REVISIONS
Repeat the reading and revision process
as often as possible before your exams.
Each iteration will enhance your
confidence and knowledge.
4 EXAMINERS COMMENTS
Pay attention to the examiner's comments in
our compilations, as they highlight common
mistakes. Learning from these errors will
help you avoid them in your exams
Frequently Asked Questions
1. Why RTP’s, MTP’s and PYP’s?
RTP’s, MTP’s, and PYP’s are extremely important to ensure that you reproduce ICAI language.
These questions train you to understand what is important and what is expected of you.
At least 41% of questions* are asked from previous RTP’s, MTP’s and PYP’s.
2. What is included?
In this compiler, all questions from the last 3, 5 or 11 attempts depending on the one you have
selected will be available. There will be references to the marks and the attempt from which
they were asked. Identical or similar questions have been removed and references for both
attempts are mentioned.
3. What is the benefit of Chapter-wise?

We have categorized each and every question from all Old RTPs, MTP’s, and PYP’s into
chapters. This means that you don't have to wait until you've completed your entire syllabus
to tackle an RTP, MTP, or past paper. You can start solving these questions to check your
conceptual clarity right after finishing a particular chapter.
4. What does amended for the latest attempt mean?

When we reviewed all the questions from the past 11 attempts of RTP, MTP, and PYP’S, we
didn't just segregate them Chapterwise; we also updated them to reflect the latest provisions.
All the answers provided in the compilation are applicable for the May 2024 examination. So,
there's no need to stress about outdated or incorrect information.
5. How are Old RTP’s, MTP’s & PYP’s beneficial for me?
All old RTPs, MTPs, and PYPs have been organized according to the new syllabus issued by ICAI.
This means that if a specific chapter from the old scheme is not included in the new scheme,
it has been omitted. If a particular chapter in the new scheme is based on concepts from two
or more chapters in the old scheme, it has been adapted to align with how the chapter should
be in the new scheme. If a chapter is only partially included in the new scheme, the questions
related to those specific concepts are only included in the corresponding chapter of the new
scheme. A comprehensive reconciliation of the chapters between the new scheme and the old
scheme is provided on the following page.
6. What if a new attempt is added post my purchase?

If you have purchased materials for the May 2024 attempt, you will receive a file with the
questions segregated Chapterwise specifically for that attempt.
7. What does N/A mean?

It could mean any of the following:
1. No questions from that chapter have been included in the selected attempts.
2. The chapter is newly introduced, and as a result, no questions have been previously asked
in RTP’s, MTP’s, or PYP’s.
*This is on an average based on the last 11 attempts

Corporate and Other Laws
Reconciliation of chapters of the new scheme (May’24) with old course
New Chapter Name as per NEW Syllabus Comparison with

Chapter chapters of Old
No. Scheme
1 Preliminary Same
2 Incorporation of Company and Matters Incidental Same
Thereto
3 Prospectus and Allotment of Securities Same
4 Share Capital and Debentures Same
5 Acceptance of Deposits by Companies Same
6 Registration of Charges Same
7 Management & Administration Same
8 Declaration and Payment of Dividend Same
9 Accounts of Companies Same
10 Audit and Auditors Same
11 Companies Incorporated Outside India * Not a part of CA
inter syllabus in the
old scheme
12 The Limited Liability Partnership Act, 2008 NEW addition
Not a part of CA
old scheme
13 The General Clauses Act, 1897 Same
14 Interpretation of Statutes Same
15 The Foreign Exchange Management Act, 1999 * Not a part of CA
old scheme
*These Chapters were earlier a part of CA Final Paper 4: Corporate and Other Laws.
Table of Contents
` Particulars Page Number
1 Preliminary 1.1 – 1.12
2 Incorporation of Company and Matters 2.1- 2.24
Incidental Thereto
3 Prospectus and Allotment of Securities 3.1 – 3.19
4 Share Capital and Debentures 4.1 - 4.29
5 Acceptance of Deposits by Companies 5.1 - 5.16
6 Registration of Charges 6.1 – 6.15
7 Management & Administration 7.1 – 7.33
8 Declaration and Payment of Dividend 8.1 – 8.18
9 Accounts of Companies 9.1 – 9.24
10 Audit and Auditors 10.1–10.23
11 Companies Incorporated Outside India 11.1 – 11.25
12 The Limited Liability Partnership Act, 2008 *N/A
13 The General Clauses Act, 1897 13.1 – 13.20
14 Interpretation of Statutes 14.1 – 14.19
15 The Foreign Exchange Management Act, 1999 15.1 – 15.30
16 Case Scenarios 16.1 – 16.48
21 MTPs: March’18, April’18, Aug’18, Oct’18, May’19, April’19,

Oct’19, May’20, Oct’20, March’21, April’21, Oct ’21, Nov
’21, March ’22, April ’22, Sep ’22, Oct ’22, March ’23,
April '23, Sep ’23 & Oct ‘23
11 PYPs: May’18, Nov’18, May’19, Nov’19, Nov’20, Jan’21, July
’21, Dec ’21, May’22, Nov ’22, May ‘23
12 RTPs: May’18, Nov’18, May’19, Nov’19, May’20, Nov’20,
May’21, Nov ’21, May ’22, Nov ’22, May ’23, Nov ‘23
1.1
Chapter 1
Preliminary
Question 1
New Private Ltd. is a company registered under the Companies Act, 2013 with a paid -up share capital
of ` 70 lakh and turnover of ` 30 crores. Explain the meaning of the “Small Company” and examine the
following in accordance with the provisions of the Companies Act, 2013:
(i) Whether the New Private Ltd. can avail the status of small company?
(ii) What will be your answer if the turnover of the company is ` 15 crore and the capital is same as
` 70 lakh? (MTP 5 Marks Oct 21, MTP 6 Marks, Oct 20, PYP May ’18 6 Marks, Old & New SM)
(Same concept different figures MTP 6 Marks Apr’22)(PYP 5 Marks ,May ’23)
Answer 1
Small Company: According to Section 2(85) of the Companies Act, 2013, Small Company means a
company, other than a public company,—
(i) paid-up share capital of which does not exceed four crores rupees or such higher amount as may
be prescribed which shall not be more than ten crore rupees; and
(ii) turnover of which as per its last profit and loss account does not exceed forty crore rupees or such
higher amount as may be prescribed which shall not be more than one hundred crore rupees.
Nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act.
(1) In the present case, New Private Ltd., a company registered under the Companies Act, 2013 with
a paid up share capital of ` 70 lakh and having turnover of ` 30 crore.
Since both the criteria of share capital not exceeding ` 4 crores and second criteria of turnover
not exceeding 40 crores is met it can avail the status of small company.
(2) If the turnover of the company is ` 15 crore, then both the criteria will be fulfilled and New
Private Ltd. can avail the status of small company.
Question 2
Kavya Ltd. has a paid up share-capital of Rs. 80 crores. Amjali Ltd. holds a total of Rs. 50 crores of
Kavya Ltd. Now, Kavya ltd. is making huge profits and wants to expand its business and is aiming at
investing in Amjali Ltd. Kavya Ltd. has approached you to analyse whether as per the provisions of the
Companies Act, 2013, they can hold 1/10th of the share capital of Amjali Ltd. (MTP 5 Marks ,March
21)
Answer 2
In terms of section 2 (87) of the Companies Act 2013 "subsidiary company" or "subsidiary", in relation
to any other company (that is to say the holding company), means a company in which the holding
company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total voting power either at its own or together
with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not have layers of
subsidiaries beyond such numbers as may be prescribed.
Since, Kavya ltd. is holding more than one half (50 crores out of 80 crores) of the total share capital of
Kavya Ltd., it (Amjali Ltd.) is holding of Kavya Ltd.
Further, as per the provisions of section 19 of the Companies Act, 2013, no company shall, either by
itself or through its nominees, hold any shares in its holding company and no holding company shall
Chapter 1 Preliminary
1.2
allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares
of a company to its subsidiary company shall be void:
Provided that nothing in this sub-section shall apply to a case—
(a) where the subsidiary company holds such shares as the legal representative of a deceased member
of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it became a subsidiary company of the
holding company
In the given question, Kavya ltd. cannot acquire the shares of Amjali Ltd. as the acquisition of shares does
not fall within the ambit of any of the exceptions provided in section 19.
Question 3 (Includes concepts of Chap 7- Management & Administration)

AB Limited issued equity shares of ` 1,00,000 (10000 shares of ` 10 each) on 01.04.2020 which have
been fully subscribed whereby XY Limited holds 4000 shares and PQ Limited holds 2000 shares in AB
Limited. AB Limited is also holding 20% equity shares of RS Limited before the date of issue of equity
shares stated above. RS Limited controls the composition of Board of Directors of XY Limited and PQ
Limited from 01.08.2020. Examine with relevant provisions of the Companies Act, 2013:
(i) Whether AB Limited is a subsidiary of RS Limited?
(ii) Whether AB Limited can hold shares of RS Limited?
(iii) Whether AB Limited can vote at Annual General Meeting of RS Limited held on 30.09.2020?
(RTP Nov ’21)(Same concept different figures MTP 6 Marks , March ’22)
Answer 3
This given problem is based on sub-clause (87) of Clause 2 read with section 19 of the Companies Act,
2013.
As per sub-clause (87) of Clause 2 of the Companies Act, 2013 "subsidiary company" or "subsidiary", in
relation to any other company (i.e., the holding company), means a company in which the holding
company—
(ii) exercises or controls more than one-half of the total voting power either at its own or together with
one or more of its subsidiary companies.
For the purposes of this clause, Explanation is given providing that a company shall be deemed to be a
subsidiary company of the holding company even if the control referred to in point (i) or point (ii) above,
is of another subsidiary company of the holding company.
Whereas Section 19 provides that, no company shall, hold any shares in its holding company and no
holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment
or transfer of shares of a company to its subsidiary company shall be void.
Provided that nothing in this sub-section shall apply to a case where the subsidiary company is a
shareholder even before it became a subsidiary company of the holding company.
Here in the instant case, AB Ltd. issued 10,000 equity shares on 1.4.2020 whereby XY Ltd. & PQ Ltd.
holds 4000 & 2000 shares respectively in AB Ltd., Considering 1 share = 1 vote, XY Ltd. and PQ Ltd.
together holds more than one-half (50%) of the total voting power. Therefore, AB Ltd. will be subsidiary
to XY Ltd. & PQ Ltd. from 1.4.2020.
Whereas AB Ltd. is already holding 20% equity shares of RS Ltd. before the date of issue of equity shares
i.e. 1.4.2020.
Further, RS Ltd. controls the composition of Board of Directors of XY Ltd. and PQ Ltd. from 01.08.2020.
In the light of sub-clause (87) of Clause 2, RS Ltd. is a holding company of XY Ltd. and PQ Ltd. (Subsidiary
companies).
Following are the answers to the questions:
(i) Yes. In this case AB Ltd. shall be deemed to be a subsidiary company of the holding company (RS
Ltd.) as RS Ltd. controls the composition of subsidiary companies XY Ltd. & PQ Ltd. as per
1.3
explanation to sub-clause (87) of Clause 2.

(ii) Yes. In this case AB Limited is a subsidiary of RS Limited as AB Ltd. was holding 20% of equity shares
of RS Ltd. even before it became a subsidiary company of the RS Ltd. (i.e. on 01 08.2020), according
to the exception to section 19.
(iii) No. The subsidiary company shall have a right to vote at a meeting of the holding company only in
respect of the shares held by it as a legal representative or as a trustee but not where the subsidiary
company is a shareholder even before it became a subsidiary company of the holding company.
Therefore, AB Ltd. cannot vote at AGM of RS Ltd. held on 30.9.2020.
Question 4
The paid-up share capital of Altar Private Limited is ` 1 crore, consisting of 8 lacs Equity Shares of ` 10
each, fully paid-up and 2 lacs Cumulative Preference Shares of `10 each, fully paid-up. New Private
Limited and Ultra Private Limited are holding 3 lacs Equity Shares and 50,000 Equity Shares
respectively in Altar Private Limited. New Private Limited and Ultra Private Limited are the subsidiaries
of PQR Private Limited. With reference to the provisions of the Companies Act, 2013 examine whether
Altar Private Limited is a subsidiary of PQR Private Limited? Would your answer be different if PQR
Private Limited has 8 out of 9 Directors on the Board of Altar Private Limited?(RTP May’19 & May’18)
Answer 4
In terms of section 2 (87) of the Companies Act 2013 "subsidiary company" or "subsidiary", in relation to
any other company (that is to say the holding company), means a company in which the holding
company—
(ii) exercises or controls more than one-half of the total voting power either at its own or together with
one or more of its subsidiary companies:
Explanation. —For the purposes of this clause,—
(a) a company shall be deemed to be a subsidiary company of the holding company even if the control
referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding
company;
(b) the composition of a company's Board of Directors shall be deemed to be controlled by another
company if that other company by exercise of some power exercisable by it at its discretion can
appoint or remove all or a majority of the directors.
In the present case, New Pvt. Ltd. and Ultra Pvt. Ltd. together hold less than one half of the total
share capital i.e. less than one-half of total voting power. Hence, PQR Private Ltd. (holding of New Pvt.
Ltd. and Ultra Pvt. Ltd) will not be a holding company of Altar Pvt. Ltd. However, if PQR Pvt. Ltd. has 8 out
of 9 Directors on the Board of Altar Pvt. Ltd. i.e. controls the composition of the Board of Directors; it
(PQR Pvt. Ltd.) will be treated as the holding company of Altar Pvt. Ltd.
Question 5
Following are some of the securities, issued by different companies related with each other, as follows:-
Company Securities Issued Remarks
Kleshrahit Ltd. Listed non-convertible Has the power to appoint 2/3rd
redeemable preference shares issued on directors in Indriyadaman Ltd.
private placement basis in terms of
relevant SEBI Regulations.
Indriyadaman Ltd. Listed non-convertible debt securities Holding 60% voting power in Sajagta
issued on private placement basis in (P) Ltd.
terms of relevant SEBI Regulations.
Sajagta (P) Ltd. Listed non-convertible debt securities The company holds 52% equity shares
issued on private placement basis in in Pratibodh Ltd. as an investment on
terms of relevant SEBI Regulations. behalf of another company in a
capacity of a trustee.
1.4
Equity shares issued by the Kleshrahit Ltd. and Indriyadaman Ltd. are not listed in any of the
recognized stock exchanges.
In the context of aforesaid facts, answer the following question(s):-
(a) Whether the aforesaid companies can be considered as listed company(ies)?
(b) Explain the relationship between the aforesaid companies? (RTP May ’22)
Answer 5
(a) According to section 2(52) of the Companies Act, 2013, listed company means a company which has
any of its securities listed on any recognized stock exchange; Provided that such class of companies,
which have listed or intend to list such class of securities, as may be prescribed in consultation with the
Securities and Exchange Board, shall not be considered as listed companies.
According to rule 2A of the Companies (Specification of definitions details) Rules, 2014, the following
classes of companies shall not be considered as listed companies, namely:-
(a) Public companies which have not listed their equity shares on a recognized stock exchange but have
listed their –
(i) non-convertible debt securities issued on private placement basis in terms of SEBI (Issue and
Listing of Debt Securities) Regulations, 2008; or
(ii) non-convertible redeemable preference shares issued on private placement basis in terms of
SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or
(iii) both categories of (i) and (ii) above.
(b) Private companies which have listed their non-convertible debt securities on private placement basis
on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Regulations,
2008;
(c) Public companies which have not listed their equity shares on a recognized stock exchange but whose
equity shares are listed on a stock exchange in a jurisdiction as specified in sub-section (3) of section
23 of the Act.
Company Name Analysis and Conclusion
Kleshrahit Ltd. Equity shares issued by the company are not listed. However, the company has
issued listed non- convertible redeemable preference shares issued on private
placement basis in terms of relevant SEBI Regulations which falls in the exceptions
to the listed company, given as per clause (a)(ii) to Rule 2A, as aforesaid, and
accordingly, Kleshrahit Ltd. shall not be considered as a listed company.
Indriyadaman Ltd. Equity shares issued by the company are not listed. However, the company has
issued listed non- convertible debt securities issued on private placement basis in
terms of relevant SEBI Regulations which falls in the exceptions to the listed
company, given as per clause (a)(i) to Rule 2A, as aforesaid, and accordingly,
Indriyadaman Ltd. shall not be considered as a listed company.
Sajagta (P) Ltd. The company has issued listed non-convertible debt securities issued on private
placement basis on a recognised Stock Exchange in terms of relevant SEBI
Regulations which falls in the exceptions to the listed company given as per clause
(b) to Rule 2A, as aforesaid, and accordingly, Sajagta (P) Ltd. shall not be
considered as a listed company.
(b) According to section 2(46) of the Companies Act, 2013, holding company in relation to one or more
other companies, means a company of which such companies are subsidiary companies.
According to section 2(87) of the Companies Act, 2013, subsidiary company or subsidiary, in relation to
any other company (that is to say the holding company), means a company in which the holding
company—
(ii) exercises or controls more than one-half of the total voting power either at its own or
together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not have layers of
1.5
subsidiaries beyond such numbers as may be prescribed.

Explanation—For the purposes of this clause,—
(a) a company shall be deemed to be a subsidiary company of the holding company even if the control
referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding
company;
(b) the composition of a company’s Board of Directors shall be deemed to be controlled by another
company if that other company by exercise of some power exercisable by it at its discretion can
appoint or remove all or a majority of the directors;
(c) the expression “company” includes any body corporate;
(d) “layer” in relation to a holding company means its subsidiary or subsidiaries; As per the notification
dated 27th December 2013, Ministry clarified that the shares held by a company or power
exercisable by it in another company in a fiduciary capacity shall not be counted for the purpose of
determining the holding – subsidiary relationship in terms of the provision of section 2(87) of the
Companies Act, 2013.
(i) Relationship between Kleshrahit Ltd. & Indriyadaman Ltd.
It is given that Kleshrahit Ltd. has the power to appoint 2/3rd directors in Indriyadaman Ltd. i.e.
majority of the directors can be appointed by Kleshrahit Ltd.
Accordingly, as per sub-clause (i) to section 2(87) read with the Explanation given in point (b), it
can be understood that Indriyadaman Ltd. is the subsidiary company of Kleshrahit Ltd. while the
latter is the holding company of Indriyadaman Ltd.
(ii) Relationship between Indriyadaman Ltd. & Sajagta (P) Ltd.
It is given that Indriyadaman Ltd. is holding 60% voting power in Sajagta (p) Ltd.
Accordingly, as per sub-clause (ii) to section 2(87), it can be understood that Sajagta (P) Ltd. is the
subsidiary company of Indriyadaman Ltd. while the latter is the holding company of Sajagta (P)
Ltd. as Indriyadaman Ltd. controls more than one-half of the total voting power of Sajagta (P) Ltd.
(iii) Relationship between Kleshrahit Ltd. & Sajagta (P) Ltd.
It is given that Indriyadaman Ltd. is holding 60% voting power in Sajagta (p) Ltd. and it has been
derived that Indriyadaman Ltd. is the subsidiary company of Kleshrahit Ltd. and Sajagta (P) Ltd. is
the subsidiary company of Indriyadaman Ltd., respectively.
Accordingly, as per sub-clause (ii) to section 2(87) read with the Explanation given in point (a), that
a company shall be deemed to be a subsidiary company of the holding company even if the control
is of another subsidiary company of the holding company i.e. subsidiary of subsidiary company
will be deemed to be a subsidiary of the holding company.
Hence, it can be understood that Sajagta (P) Ltd. is deemed to be subsidiary company of Kleshrahit
Ltd. while the latter would be considered as the holding company of Sajagta (P) Ltd.
(iv) Relationship between Sajagta (P) Ltd. & Pratibodh Ltd.
It is given that Sajagta (P) Ltd. holds 52% equity shares in Pratibodh Ltd. as an investment on behalf
of another company in a capacity of a trustee i.e. in a fiduciary capacity.
As per the notification dated 27th December 2013, Ministry (MCA) clarified that the shares held
by a company or power exercisable by it in another company in a fiduciary capacity shall not be
counted for the purpose of determining the holding–subsidiary relationship in terms of the
provision of section 2(87) of the Companies Act, 2013.
Accordingly, Sajagta (P) Ltd. & Pratibodh Ltd. do not share any holding– subsidiary relationship as
the former holds shares in latter just in a fiduciary capacity on behalf of another company.
Question 6
Geeta Private Limited is a start-up company. Mr. Prabodh has been appointed as Accounts Manager
of Geeta Private Limited. The Board meeting for approval of accounts is to be held on 01.08.2022 and
he has to prepare the financial statements for approval by the Board. Referring to section 2(40) of the
Companies Act, 2013, advise Mr. Prabodh about the statements that are required to be prepared.
(RTP Nov’22)
Answer 6
As per section 2(40) of the Companies Act, 2013, Financial Statement in relation to a company,
1.6
includes—
(i) a balance sheet as at the end of the financial year;
(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income
and expenditure account for the financial year;
(iii) cash flow statement for the financial year;
(iv) a statement of changes in equity, if applicable; and
(v) any explanatory note annexed to, or forming part of, any document referred to in sub- clause (i) to
sub-clause (iv):
Exemption: As per the proviso to section 2(40), the financial statement, with respect to one person
company, small company, dormant company and private company (if such private company is a start-
up) may not include the cash flow statement.
In the instant case, Mr. Prabodh has to prepare the above financial statements except Cash Flow
Statement; since Geeta Private Limited is a start-up private company
Question 7
Hastprat Ltd. is an unlisted public company, having five directors in its board which includes two
independent directors.
Sankul (P) Ltd., is subsidiary company of Hastprat Ltd., actively carrying on its business, having paid
up capital of ` 1.5 crore with 40 members and turnover of ` 18 crore, respectively and the said company
is not a start-up company.
In the context of aforesaid case-scenario, please answer to the following question(s):-
Whether Sankul (P) Ltd. is mandatorily required to prepare cash flow statement for the financial year
as a part of its financial statements?
Provide your answer by analysing Sankul (P) Ltd. into following category of companies:-
(i) One person company, (ii) Small company, (iii) Dormant company and (iv) Private company,
respectively. (RTP May ‘23)
Answer 7
According to section 2(10) of the Companies Act, 2013,
Financial statement in relation to a company, includes—
(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an
income and expenditure account for the financial year;
(v) any explanatory note annexed to, or forming part of, any document referred to in sub- clause (i)
to sub-clause (iv):
Provided that the financial statement, with respect to one person company, small company, dormant
company and private company (if such private company is a start-up) may not include the cash flow
statement.
For considering the applicability of preparation cash flow statement in case of Sankul (P) Ltd., it is
required first to be analyzed that Sankul (P) Ltd. does not fall in any of the categories of companies
mentioned under proviso to section 2(10) of the Companies Act, 2013:
(i) One person company – It is given that the company is having 40 members and also
its name does not contain the words ‘OPC’, so it is not a one person company.
(ii) Small company – A company which is a subsidiary company cannot be categorized as a small
company as per proviso to section 2(85) even though its paid up capital and turnover are within
the prescribed limits and accordingly, as Sankul (P) Ltd. is a subsidiary company of Hastprat Ltd.,
it cannot be considered as small company also.
(iii) Dormant company – It is given that the company is actively carrying on its business, so it cannot
be also categorized as a dormant company based upon the facts given.
1.7
(iv) Private company (which is a start-up) – It is given that Sankul (P) Ltd. is not a start- up company
and also, as per proviso to section 2(71) of the Act, a company which is a subsidiary of a company,
not being a private company, shall be deemed to be public company for the purposes of this Act
even where such subsidiary company continues to be a private company in its articles.
So, Sankul (P) Ltd. shall be deemed to be a public company as it is subsidiary of Hastprat Ltd., an
unlisted public company and so it will not fall into this category of exemption as well.
Thus, it can be concluded that Sankul (P) Ltd. is mandatorily required to prepare cash flow statement
for the financial year as a part of its financial statements as it does not fall in any of the categories of
companies mentioned under proviso to section 2(10) of the Companies Act, 2013.
Question 8
Teresa Ltd. is a company registered in New York (U.S.A.). The company has no place of business
established in India, but it is doing online business through data interchange in India. Explain with
reference to relevant provisions of the Companies Act, 2013 whether Teresa Ltd. will be treated as
Foreign Company. (PYP Nov’18,6 Marks) (Same concept different figures PYP Nov’19 2 Marks)
Answer 8
According to section 2(42) of the Companies Act, 2013, foreign company means any company or body
corporate incorporated outside India which,-
(a) has a place of business in India whether by itself or through an agent, physically or through electronic
mode; and
(b) conducts any business activity in India in any other manner.
As per the Rule given in the Companies (Specification of Definitions Details) Rules, 2014, the term
“electronic mode”, means carrying out electronically based, whether main server is installed in India or
not, including, but not limited to-
(i) Business to business and business to consumer transactions, data interchange and other digital
supply transactions;
(ii) Offering to accept deposits or inviting deposits or accepting deposits or subscriptions in securities,
in India or from citizens of India;
(iii) Financial settlements, web based marketing, advisory and transactional services, database services
and products, supply chain management;
(iv) Online services such as telemarketing, telecommuting, telemedicine, education and information
research; and
(v) All related data communication services, whether conducted by e-mail, mobile devices, social
media, cloud computing, document management, voice or data transmission or otherwise;
In the given question, Teresa Ltd. will be treated as a foreign company within the meaning of section
2(42) of the Companies Act, 2013 since it is doing online business through data interchange in India
even though the company has no place of business established in India.
Question 9
The information extracted from the audited Financial Statement of Smart Solutions Private Limited
as at 31st March, 2020 is as below:
(1) Paid-up equity share capital ₹ 50,00,000 divided into 5,00,000 equity shares (carrying voting
rights) of ₹ 10 each. There is no change in the paid-up share capital thereafter.
(2) The turnover is ₹ 2,00,00,000.
It is further understood that Nice Software Limited, which is a public limited company, is holding
2,00,000 equity shares, fully paid-up, of Smart Solutions Private Limited. Smart Solutions Private
Limited has filed its Financial Statement for the said year with the Registrar of Companies (ROC)
excluding the Cash Flow Statement within the prescribed time line during the financial year 2020-21.
The ROC has issued a notice to Smart Solutions Private Limited as it has failed to file the cash flow
statement along with the Balance Sheet and Profit and Loss Account. You are to advise on the
following points explaining the provisions of the Companies Act, 2013:
1.8
(i) Whether Smart Solutions Private Limited shall be deemed to be a small company whose
significant equity shares are held by a public company?
(ii) Whether Smart Solutions Private Limited has defaulted in filing its financial statement? (PYP
July ’21 , 6 Marks)(MTP 6 Marks Oct ’23)
Answer 9
(i) According to section 2(85) of the Companies Act, 2013, small company means a company, other
than a public company, having-
(A) paid-up share capital not exceeding four crore rupees or such higher amount as may be
prescribed which shall not be more than ten crore rupees; and
(B) turnover as per profit and loss account for the immediately preceding financial year not
exceeding forty crore rupees or such higher amount as may be prescribed which shall not
be more than one hundred crore rupees:
Provided that nothing in this clause shall apply to a holding company or a subsidiary company.
Also, according to section 2(87), subsidiary company, in relation to any other company (that is to say
the holding company), means a company in which the holding company exercises or controls more
than one-half of the total voting power either at its own or together with one or more of its
subsidiary companies. In the given question, Nice Software Limited (a public company) holds
2,00,000 equity shares of Smart Solutions Private Limited (having paid up share capital of 5,00,000
equity shares @ ₹ 10 totaling ₹ 50 lakhs). Hence, Smart Solutions Private Limited is not a subsidiary
of Nice Software Limited and hence it is a private company and not a deemed public company.
Further, the paid up share capital (₹ 50 lakhs) and turnover (₹ 2 crores) is within the limit as
prescribed under section 2(87), hence, Smart Solutions Private Limited can be categorised as a small
company.
(ii) According to section 2 (40), Financial statement in relation to a company, includes—
a. a balance sheet as at the end of the financial year;
b. a profit and loss account, or in the case of a company carrying on any activity not for profit,
an income and expenditure account for the financial year;
c. cash flow statement for the financial year;
d. a statement of changes in equity, if applicable; and
e. any explanatory note annexed to, or forming part of, any document referred to in points
(a) to (d):
Provided that the financial statement, with respect to One Person Company, small company and
dormant company, may not include the cash flow statement.
Smart Solutions Private Limited being a small company is exempted from filing a cash flow statement
as a part of its financial statements. Thus, Smart Solutions Private Limited has not defaulted in filing
its financial statements with ROC.
Question 10
Define “Small Company”. (PYP 2 Marks Dec ‘21)
Answer 10
According to section (85) of the Companies Act, 2013, ‘Small company’ means a company, other than a
public company,—
(i) paid-up share capital of which does not exceed four crore rupees or such higher amount as may
be prescribed which shall not be more than ten crore rupees; and
(ii) turnover of which as per profit and loss account for the immediately preceding financial year does
not exceed forty crore rupees or such higher amount as may be prescribed which shall not be
more than one hundred crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
1.9
(B) a company registered under section 8; or

(C) a company or body corporate governed by any special Act.
As per the Companies (Specification of Definitions Details) Rules, 2014 , for the purposes of sub-clause
(i) and sub-clause (ii) of clause (85) of section 2 of the Act, paid up capital and turnover of the small
company shall not exceed rupees four crores and rupees forty crores respectively.
Question 11
ABC Private Ltd. has two wholly owned subsidiary companies, D Private Limited and E Private
Limited. Examine, whether, D Private Limited and E Private Limited will be treated as related party
as per the provisions of the Companies Act, 2013? (PYP 3 Marks , May ’22)
Answer 11
According to section 2(76)(viii) of the Companies Act, 2013, Related party, with reference to a
company, means any body corporate which is -
(A) a holding, subsidiary or an associate company of such company;
(B) a subsidiary of a holding company to which it is also a subsidiary; or
(C) an investing company or the venturer of the company;
In the given Question, D Private Limited and E Private Limited are wholly owned subsidiary companies
of ABC Private Ltd. According to stated clause (B), above, D Private Limited and E Private Limited are
related parties.
However, as per the Notification No. G.S.R. 464(E) dated 5th June, 2015, clause (viii) shall not apply
with respect to section 188 to a private company, though being a related parties.
Alternate Answer
According to section 2(76)(viii)(B) of the Companies Act, 2013, Related party, with reference to a
company, means any body corporate which is a subsidiary of a holding company to which it is also a
subsidiary.
However, Clause (viii) shall not apply with respect to section 188 (Related Party transactions) to a
private company vide Notification No. G.S.R. 464(E) dated 5th June, 2015.
In the given Question, D Private Limited and E Private Limited are wholly owned subsidiary companies
of ABC Private Ltd. According to stated clause (B), above, D Private Limited and E Private Limited are
related parties.
However, as per the mentioned Notification, clause (viii) shall not apply with respect to section 188 to
a private company. Therefore, D Private Limited and E Private Limited are not related parties for the
purpose of section 188.
Question 12
Referring the relevant provisions of the Companies Act, 2013, examine, whether following
companies will be considered as listed company or unlisted company:
I. ABC Limited, a public company, has listed its non-convertible Debt securities issued on private
placement basis in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
II. CHG Limited, a public company, has listed its non-convertible redeemable preference shares
issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible
Redeemable Preference Shares) Regulations, 2013.
III. PRS Limited, a public company, which has not listed its equity shares on a recognized stock
exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified
in sub-section (3) of section 23 of the Companies Act, 2013. (PYP 5 Marks , Nov ‘22)
1.10
Answer 12
According to Section 2(52) of the Companies Act, 2013, listed company means a company which has
any of its securities listed on any recognized stock exchange.
RULE 2A: According to Rule 2A of the Companies (Specification of definitions details) Rules, 2014, the
following classes of companies shall not be considered as listed companies, namely:-
(a) Public companies which have not listed their equity shares on a recognized stock exchange but
have listed their –
(i) non-convertible debt securities issued on private placement basis in terms of SEBI (Issue
and Listing of Debt Securities) Regulations, 2008; or
(ii) non-convertible redeemable preference shares issued on private placement basis in
terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares)
Regulations, 2013; or
(iii) both categories of (i) and (ii) above.
(b) Public companies which have not listed their equity shares on a recognized stock exchange but
whose equity shares are listed on a stock exchange in a jurisdiction as specified in sub-section
(3) of section 23 of the Act.
In view of the above provisions of the Act:
(i) ABC Limited is an unlisted company.
(ii) CHG Limited is an unlisted company.
(iii) PRS Limited is an unlisted company.
Question 13
What does the term Financial Statements include in relation to a company under the Companies Act,
2013? Which companies need not prepare a cash flow statement? (PYP Nov’18,4 Marks)
Answer 13
According to section 2(40) of the Companies Act, 2013, Financial statement in relation to a company,
includes—
(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an
income and expenditure account for the financial year;
(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to
sub-clause (iv):
Provided that the financial statement, with respect to one person company, small company, dormant
company and private company (if such private company is a start-up company) may not include the
cash flow statement.
EXAMINERS’ COMMENTS ON THE PERFORMANCE OF EXAMINEES:

Performance of the Examinees was above average. Most of the Examinees have correctly
defined the term “Financial Statements” under the Companies Act, 2013.
Multiple Choice Questions (MCQ’s)

Question 1
A Ltd. is holding 61% shares in B Ltd. and B Ltd. holds 51% in C Ltd. State which is the correct statement
here:
(a) C Ltd. is the holding company to A Ltd.
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(b) C Ltd. is the holding company to B Ltd.

(c) B Ltd. is the Subsidiary to C Ltd.
(d) Both B Ltd. and C Ltd. are subsidiary to A Ltd. (MTP 1 Mark , Sep’22)
Answer 1 : (d)
Question 2
“Associate company”, in relation to another company, means a company in which that other
company has a significant influence, but which is not a subsidiary company of the company
having such influence and includes a joint venture company. Here, the words ‘significant influence’
means:
(a) Control of at least 10% of total voting power
(b) Control of at least 15% of total voting power
(c) Control of at least 20% of total voting power
(d) Control of at least 25% of total voting power (MTP 1 Mark March ‘23)
Answer 2 (c)
Question 3
Such shares which are issued by a company to its directors or employees at a discount or for a
consideration other than cash for working extraordinary hard and achieving desired output is
honoured with:
(a) Equity Shares
(b) Preference Shares
(c) Sweat Equity Shares
(d) Redeemable preference shares (RTP Nov 21)
Answer 3
The Answer is (c)
Question 4
Roma along with her six friends has got incorporated Roma Trading Ltd. in May 2019. She kept the
paid-up share capital at ` 30 lacs. Further, in April 2020, she noticed that in the last financial year, the
turnover of the company was well below ` 2 crores. Advise whether the company can be treated as a
‘small company’.
(a) Roma Trading Ltd. is definitely a ‘small company’ since its paid-up capital is much below ` 50 lacs
and also its turnover has not exceeded the threshold limit of ` 2 crores.
(b) The concept of ‘small company’ is applicable only in case of a private limited company/OPC and
therefore, despite meeting the criteria of ‘small company’ it being a public limited company cannot
enjoy benefits of ‘small company’.
(c) Unlike a private limited company/OPC which automatically becomes a ‘small company’ as soon as
it meets the criteria of ‘small company’, Roma Trading Ltd. being a public limited company has to
maintain the norms applicable to a ‘small company’ continuously for two years so that, thereafter,
it is treated as a ‘small company’.
(d) If all the shareholders of Roma Trading Ltd. give an undertaking to the ROC stating that they will
not let the paid share capital and also turnover exceed the limits applicable to a ‘small company’ in
the next two years, then it can be treated as a ‘small company’. (RTP Nov ’20)
Answer 4
The Answer is (b)
Question 5
A Ltd. is the holding company of B Ltd. Another company C Ltd. is the subsidiary company of B Ltd. Is
there any relationship between A Ltd. and C Ltd.(RTP May ’19)
(a) There is no relationship between A Ltd. and C Ltd.
1.12
(b) C Ltd. is deemed to be the subsidiary of A Ltd.

(c) A Ltd. shall be deemed to be the holding company of C Ltd. provided A Ltd. acquires at least 10%
stake in C Ltd.
(d) C Ltd. shall be deemed to be the subsidiary of A Ltd. if the latter company acquires minimum 10%
stake in the former company within six months after C Ltd. becomes subsidiary of B Ltd.
Answer 5
The Answer is (b)
Question 6
A Public company may be formed by:
(a) Only two persons
(b) Not more than three persons
(c) Not more than Seven Persons
(d) Seven or more Persons : (PYP Nov’22)
Answer 6 : (d)
2.1
Chapter 2
Incorporation of Company and Matters Incidental there to
Question 1
Alfa school started imparting education on 1.4.2010, with the sole objective of providing education to
children of weaker society either free of cost or at a very nominal fee depending upon the financial
condition of their parents. However, on 30th March 2018, it came to the knowledge of the Central
Government that the said school was operating by violating the objects of its objective clause due to
which it was granted the status of a section 8 company under the Companies Act, 2013. Describe what
powers can be exercised by the Central Government against the Alfa School, in such a case?
(MTP Aug’18-6 Marks, MTP Mar’19-5 Marks, Old & New SM)
Answer 1
Section 8 of the Companies Act, 2013 deals with the formation of companies which are formed to promote
the charitable objects of commerce, art, science, education, sports etc. Such company intends to apply its
profit in promoting its objects. Section 8 companies are registered by the Registrar only when a license is
issued by the Central Government to them. Since, Alfa School was a Section 8 company and it had started
violating the objects of its objective clause, hence in such a situation the following powers can be exercised
by the Central Government:
(i) The Central Government may by order revoke the license of the company where the company
contravenes any of the requirements or the conditions of this sections subject to which a license is
issued or where the affairs of the company are conducted fraudulently, or violative of the objects of
the company or prejudicial to public interest, and on revocation the Registrar shall put ‘Limited’ or
‘Private Limited’ against the company’s name in the register. But before such revocation, the Central
Government must give it a written notice of its intention to revoke the license and opportunity to be
heard in the matter.
(ii) Where a license is revoked, the Central Government may, by order, if it is satisfied that it is essential
in the public interest, direct that the company be wound up under this Act or amalgamated with
another company registered under this section.
However, no such order shall be made unless the company is given a reasonable opportunity of being
heard.
(iii) Where a license is revoked and where the Central Government is satisfied that it is essential in the
public interest that the company registered under this section should be amalgamated with another
company registered under this section and having similar objects, then, notwithstanding anything to
the contrary contained in this Act, the Central Government may, by order, provide for such
amalgamation to form a single company with such constitution, properties, powers, rights, interest,
authorities and privileges and with such liabilities, duties and obligations as may be specified in the
order.
Question 2
The directors of Smart Computers limited borrowed a sum of money from Mr. Tridev. The company's
articles provided that the directors may borrow on bonds such sums as may, from time to time, be
authorized by resolution passed at a general meeting of the company. The shareholders claimed that
there had been no such resolution authorizing the loan, and therefore, it was taken without their
authority and the company is not bound to repay the loan to Tridev. In the light of the contention of
shareholders, decide whether the company is bound to pay the loan. (MTP 6 Marks May 20)
Answer 2
Doctrine of Indoor Management: According to this doctrine, persons dealing with the company need not
enquire whether internal proceedings relating to the contract are followed correctly, once they are
satisfied that the transaction is in accordance with the memorandum and articles of association.
Stakeholders need not enquire whether the necessary meeting was convened and held properly or
whether necessary resolution was passed properly. They are entitled to take it for granted that the
company had gone through all these proceedings in a regular manner.
Chapter 2 Incorporation of Company and Matters Incidental Thereto

2.2
The doctrine helps to protect external members from the company and states that the people are entitled
to presume that internal proceedings are as per documents submitted with the Registrar of Companies.
Thus,
1. What happens internal to a company is not a matter of public knowledge. An outsider can only
presume the intentions of a company, but not know the information he/she is not privy to.
2. If not for the doctrine, the company could escape creditors by denying the authority of officials to act
on its behalf.
In the given question, Mr.Tridev being a person external to the company, need not enquire whether the
necessary meeting was convened and held properly or whether necessary resolution was passed properly.
Even if the shareholders claim that no resolution authorizing the loan was passed, the company is bound to
pay the loan to Mr.Tridev.
Question 3
XYZ a One-Person Company (OPC) was incorporated during the year 2017-18 with an authorized capital
of ` 45.00 lakhs (4.5 lakh shares of ` 10 each), The capital was fully subscribed and paid up. Turnover of
the company during 2017-18 and 2018-19 was ` 2.00 crores and ` 2.5 crores respectively. Promoter of
the company seeks your advice in following circumstances, whether XYZ (OPC) can convert into any
other kind of company during 2019-20. Please, advise with reference to relevant provisions of the
Companies Act, 2013 in the below mentioned circumstances:
(i) If promoter increases the paid up capital of the company by` 10.00 lakhs during 2019-20.
(ii) If turnover of the company during 2019-20 was ` 3.00 crores. (MTP 5 Marks Oct ‘20)
(6 Marks April ‘19) (RTP May ’19, PYP 4 Marks ,Nov ’18)
Answer 3
As per Rule 3 of the Companies (Incorporation) Rules, 2014, no One Person Company (OPC) can convert
voluntarily into any kind of company except a section 8 company
Besides, Section 18 of the Companies Act, 2013 provides that a company of any class registered under
this Act may convert itself as a company of other class under this Act by alteration of memorandum and
articles of the company in accordance with the provisions of Chapter II of the Act.
Question 4
Explain the provisions of the Companies Act, 2013 relating to the ‘Service of Documents’ on a
company and the members of the company. (MTP 3 Marks March 21,MTP 5 Marks Nov 21, MTP 5
Marks Sep’22, Old & New SM)
Answer 4
Under section 20 of the Companies Act, 2013 a document may be served on a company or an officer
thereof by sending it to the company or the officer at the registered office of the company by registered
post or by speed post or by courier service or by leaving it at its registered office or by means of such
electronic or other mode as may be prescribed. However, in case where securities are held with a
depository, the records of the beneficial ownership may be served by such depository on the company by
means of electronic or other mode.
Under section 20 (2), save as provided in the Act or the rule thereunder for filing of documents with the
registrar in electronic mode, a document may be served on Registrar or any member by sending it to him
by post or by registered post or by speed post or by courier or by delivering at his office or address, or by
such electronic or other mode as may be prescribed. However, a member may request for delivery of any
document through a particular mode, for which he shall pay such fees as may be determined by the
company in its annual general meeting.

2.3
Question 5
Mr. Shyamlal is a B. Tech in computer science. He has promoted an IT start up and got it registered as a
Private Limited Company. Initially, only he and his family members are holding all the shares in the
company. While drafting the Articles of Association of the company, it has been included that Mr.
Shyamlal will remain as a director of the company for lifetime. Mr. Mehra, a close friend of Mr.
Shyamlal has warned him (Mr. Shyamlal) that in future if 75% or more shares in the company are held
by non- family members then by passing a Special Resolution, the relevant articles can be amended and
Mr. Shyamlal may be removed from the post of director. Mr. Shyamlal has approached you to advise
him for protecting his position as a director for lifetime. Give your answer as per the provisions of the
Companies Act, 2013. (MTP 6 Marks April 21)
Answer 5
As per the provisions of sub-section (3) of section 5 of the Companies Act, 2013, the articles may contain
provisions for entrenchment to the effect that specified provisions of the articles may be altered only if
conditions or procedures as that are more restrictive than those applicable in the case of special
resolution are met or complied with.
Usually, an article of association may be altered by passing a special resolution but entrenchment makes it
one difficult to change it. So, entrenchment means making something more protective. Manner of
inclusion of the entrenchment provision:
As per the provisions of sub-section (4) of section 5 of the Companies Act, 2013, the provisions of
entrenchment shall only be made either on formation of a company, or by an amendment in the Articles of
Association as agreed to by all the members of the company in the case of a private company and by a
special resolution in case of a public company.
Notice to the Registrar of the entrenchment provision:
As per the provisions of sub-section (4) of section 5 of the Companies Act, 2013, where the articles
contain provision for entrenchment whether made on formation or by amendment, the company shall
give notice to the Registrar of such provisions in such form and manner as may be prescribed.
In the said situation the IT startup company is a private company. Therefore, Mr. Shyamlal can get the
articles altered which is agreed to by all the members whereby the amended article will say that he can
be removed from the post of director only if, say, 95% votes are cast in favour of the resolution and give
notice of the same to the Registrar.
Question 6
Mr. Dinesh incorporated a new Private Limited Company under the provisions of the Companies Act,
2013 and desires to commence the business immediately. Please advise Mr. Dinesh about the
procedure for commencement of business as laid under the provisions of the Section 10A of the
Companies Act, 2013. (MTP 5 Marks April 21)
Answer 6
As per Section 10A of the Companies Act, 2013, a company incorporated after the commencement of
the Companies (Amendment) Second Ordinance, 2019 and having a share capital shall not commence
any business or exercise any borrowing powers unless:
(i) A declaration is filed by a director within a period of 180 days of the date of incorporation of the
company in such form and verified in such manner as may be prescribed, with the Registrar that
every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on
the date of making of such declaration; and
(ii) The company has filed with the Registrar a verification of it registered office as provided in sub-
section (2) of section 12. Mr. Dinesh has to comply with the above requirements and procedure for
commencing the business of the company.

2.4
Question 7
The persons (not being members) dealing with the company are always protected by the doctrine of
indoor management. Explain. (MTP 6 Marks Oct 21 & Sep ‘22)
Answer 7
Doctrine of Indoor Management
According to this doctrine, persons dealing with the company need not inquire whether internal proceedings
relating to the contract are followed correctly, once they are satisfied that the transaction is in accordance
with the memorandum and articles of association.
Stakeholders need not enquire whether the necessary meeting was convened and held properly or
whether necessary resolution was passed properly. They are entitled to take it for granted that the
company had gone through all these proceedings in a regular manner.
The doctrine helps to protect external members from the company and states that the people are entitled
to presume that internal proceedings are as per documents submitted with the Registrar of Companies.
The doctrine of indoor management is opposite to the doctrine of constructive notice. Whereas the
doctrine of constructive notice protects a company against outsiders, the doctrine of indoor management
protects outsiders against the actions of a company. This doctrine also is a safeguard against the
possibility of abusing the doctrine of constructive notice.
Question 8
What is the minimum number of persons required to form a Private company and a Public company.
Explain the consequences when the number of members falls below the minimum prescribed limit.
(MTP 6 Marks Nov 21)
Answer 8
According to section 3 of the Companies Act, 2013, a company may be formed for any lawful purpose
by—
(a) 7 or more persons, where the company to be formed is to be a public company;
(b) 2 or more persons, where the company to be formed is to be a private company; or
by subscribing their names or his name to a memorandum and complying with the requirements of this Act
in respect of registration.
According to section 3A,
 If at any time the number of members of a company is reduced,
 in the case of a public company, below 7,
 in the case of a private company, below 2,
and the company carries on business for more than six months while the number of members
is so reduced, then
 every person who is a member of the company during the time that it so carries on business after
those six months and is cognizant (aware) of the fact that it is carrying on business with less than
seven members or two members, as the case may be,
 shall be severally liable for the payment of the whole debts of the company contracted during that
time (after six months) and may be severally sued therefore.
Question 9
Mr. X, in association with his relative formed a company to promote education for the children of

2.5
poor section. A licence was issued by the Central Government allowing the said company to be
registered under section 8 of the Company. Government aids and lot of funds were contributed by
public for the fulfilment of the benevolent object. However, on the compliant against the company,
CG came to know about the manipulation of the funds in the company and so order to revoke the
licence of the company. Further, directed for the amalgamation with another company registered
under this section with an object to save girl child.
Examine the legal position as to the order passed by the Central government in the given situation in
the light of the Companies Act, 2013. (MTP 6 Marks Oct ‘18)
Answer 9
As per the Section 8 of the Companies Act, 2013, the Central Government may by order revoke the
license of the company where the company contravenes any of the requirements or the conditions of this
sections subject to which a license is issued or where the affairs of the company are conducted
fraudulently, or violative of the objects of the company or prejudicial to public interest.
Where a license is revoked, the Central Government may, by order, if it is satisfied that it is essential in
the public interest, direct that the company be wound up under this Act or amalgamated with another
company registered under this section.
Where a license is revoked and where the Central Government is satisfied that it is essential in the public
interest that the company registered under this section should be amalgamated with another company
registered under this section and having similar objects, then, the Central Government may, by order,
provide for such amalgamation to form a single company with such constitution, properties, powers, rights,
interest, authorities and privileges and with such liabilities, duties and obligations as may be specified in the
order.
According to the given situation, on revocation of licence, the Central Government ordered for the
amalgamation of the company with the separate entity registered under the section 8 of the Companies Act,
2013. However, an object for which both the Companies formed were promoting different objects.
Accordingly, the order passed by the Central Government after the revocation of license, is not in
compliance of the Section 8 of the Companies Act, 2013.
Question 10
Gully Gilli Danda Club was formed as a Limited Liability Company under section 8 of the Companies
Act, 2013 with the object of promoting Gilli Danda by arranging introductory courses at district level
and friendly matches. The club has been earning surplus. Of late, the affairs of the company are
conducted fraudulently and dividend was paid to its members. Mr. A, a member decided to make a
complaint with Regulatory Authority to curb the fraudulent activities by cancelling the licence given to
the company.
(i) Is there any provision under the Companies Act, 2013 to revoke the licence? If so, state the provisions.
(ii) Whether the company may be wound up?
(iii) Whether the Gully Gilli Danda Club can be merged with Stick Private Limited, a company engaged in
the business of networking? (MTP 5 Marks March ’22 & Oct ’22 & Oct ‘23)(PYP July 21 5 Marks)
Answer 10
(i) According to section 8(6) of the Companies Act, 2013, the Central Government may by order revoke the
licence of the company where the company contravenes any of the requirements or the conditions of
section 8 subject to which a licence is issued or where the affairs of the company are conducted
fraudulently, or in violation of the objects of the company or prejudicial to public interest, and on
revocation, the Registrar shall put ‘Limited’ or ‘Private Limited’ against the company’s name in the register.
But before such revocation, the Central Government must give it a written notice of its intention to revoke
the licence and opportunity to be heard in the matter.
Hence, in the instant case, the Central Government can revoke the license given to Gully Gilli Danda Club as
section 8 company, as the affairs of the company are conducted fraudulently and dividend was paid to its
members which is in contravention to the conditions given under section 8.
2.6
(ii) Where a licence is revoked, the Central Government may, by order, if it is satisfied that it is essential in the
public interest, direct that the company be wound up under this Act or amalgamated with another
company registered under this section.
However, no such order shall be made unless the company is given a reasonable opportunity of being
heard. [Section 8(7)]. Hence, the stated company may be wound up.
(iii) A company registered under this section shall amalgamate only with another company registered under
this section and having similar objects. [Section 8(10)]
In the instant case, Gully Gilli Danda Club cannot be merged with Stick Private Limited as the objects of
both the companies are different and not similar.
Question 11
Sai along with his six friends desires to incorporate a Section 8 Company under the Companies Act, 2013.
He is seeking your advice in the following matters :
(i) What is the minimum paid-up capital requirement in case of a Section 8 Company ?
(ii) Whether a firm can be member of the Section 8 Company ?
(iii) Whether the Section 8 Company can pay dividend to its members ?
Advise, Sai with reference to the provisions of Companies Act, 2013. (MTP 5 Marks April 22)
Answer 11
(i) The requirement of having a minimum paid up share capital shall not apply to a section 8 company vide
notification dated 5th June 2015.
(ii) Yes, under section 8(3) of the Companies Act, 2013, a firm may be a member of the company registered under
section 8.
(iii) According to Section 8(1)(c) of the Companies Act, 2013, section 8 company cannot pay dividend to its
members as it prohibits the payment of dividends to its members.
Question 12
Paritosh and friends got registered a company in the name of Taxmann advisory Private Limited. Taxmann
is a registered trademark. After 5 years when the owner of trademark came to know about the same, it
filed an application with relevant authority. Can the company be compelled to change its name by the
owner of trademark? Can the owner of registered trademark request the company and then company
changes its name at its discretion? (MTP 6 Marks April 22, RTP May ’23, Old & New SM)
Answer 12
According to section 16 of the Companies Act, 2013 if a company is registered by a name which,—
 in the opinion of the Central Government, is identical with the name by which a company had been
previously registered, it may direct the company to change its name. Then the company shall by
passing an ordinary resolution change its name within 3 months.
 is identical with a registered trade mark and owner of that trade mark apply to the Central
Government within three years of incorporation of registration of the company, it may direct the
company to change its name. Then the company shall change its name by passing an ordinary
resolution within 3 months.
Company shall give notice to ROC along with the order of Central Government within 15 days of change. In
case of default, company and defaulting officer are punishable.
In the given case, owner of registered trademark is filing objection after 5 years of registration of
company with identical name. While it should have filed the same within 3 years. Therefore, the company

2.7
cannot be compelled to change its name. As per section 13, company can anytime change its name by
passing a special resolution and taking approval of Central Government. Therefore, if owner of registered
trademark requests the company for change of its name and the company accepts the same then it can
change its name voluntarily by following the provisions of section 13.
Question 13
A group of individuals intend to form a club namely 'Budding Pilots Flying Club' as limited liability
company to impart class room teaching and aircraft flight training to trainee pilots. It was decided to
form a limited liability company for charitable purpose under Section 8 of the Companies Act, 2013 for a
period of ten years and thereafter the club will be dissolved and the surplus of assets over the liabilities,
if any, will be distributed amongst the members as a usual procedure allowed under the Companies Act,
2013. Examine the feasibility of the proposal and advise the promoters considering the provisions of
the Companies Act, 2013. (MTP 5 Marks Oct 20, PYP May ’19 , 5 Marks, Old & New SM)
Answer 13
According to section 8(1) of the Companies Act, 2013, where it is proved to the satisfaction of the
Central Government that a person or an association of persons proposed to be registered under this Act
as a limited company—
(a) has in its objects the promotion of commerce, art, science, sports, education, research, social
welfare, religion, charity, protection of environment or any such other object;
(b) intends to apply its profits, if any, or other income in promoting its objects; and
(c) intends to prohibit the payment of any dividend to its members;
the Central Government may, by issue of licence, allow that person or association of persons to be
registered as a limited liability company.
In the instant case, the decision of the group of individuals to form a limited liability company for
charitable purpose under section 8 for a period of ten years and thereafter to dissolve the club and to
distribute the surplus of assets over the liabilities, if any, amongst the members will not hold good, since
there is a restriction as pointed out in point (b) above regarding application of its profits or other income
only in promoting its objects. Further, there is restriction in the application of the surplus assets of such a
company in the event of winding up or dissolution of the company as provided in sub-section (9) of
Section 8 of the Companies Act, 2013. Therefore, the proposal is not feasible.
Question 14
Octagon Limited is holding 58% of the paid up share capital of Pentagon Limited. Vijay, one of the
shareholders of Octagon Limited, holding 10% shares of the company, has made a charitable trust. He
donated his 10% shareholding in Octagon Limited and ₹ 20 crore to the trust. He appointed Pentagon
Limited as the trustee. All the assets of the trust are held in the name of Pentagon Limited.
As per the provisions of the Companies Act, 2013, decide whether Pentagon Limited can hold shares of
Octagon Limited. (MTP 6 Marks Sep’22 & March ’23, RTP Nov ’19, Old & New SM)
Answer 14
According to section 19 of the Companies Act, 2013 a company shall not hold any shares in its holding
company either by itself or through its nominees. Also, holding company shall not allot or transfer its shares
to any of its subsidiary companies and any such allotment or transfer of shares of a company to its
subsidiary company shall be void.
Following are the exceptions to the above rule—
(a) where the subsidiary company holds such shares as the legal representative of a deceased member of the
holding company; or

2.8

(c) where the subsidiary company is a shareholder even before it became a subsidiary company of the holding
company but in this case, it will not have a right to vote in the meeting of holding company.
In the given case, one of the shareholders of holding company (Octagon Limited) has transferred his shares
in the holding company to a trust where the shares will be held by subsidiary company (Pentagon Limited). It
means now subsidiary will hold shares in the holding company. But it will hold shares in the capacity of a
trustee. Therefore, we can conclude that in the given situation Pentagon Limited can hold shares in Octagon
Limited.
Question 15
The Articles of Association of a Company may contain provisions for entrenchment under Section 5 of the
Companies Act, 2013. What is meant by entrenchment provisions in this context? Also state the relevant
provisions of the said Act dealing with entrenchment provisions. (MTP 6 Marks Oct’22, PYP 3 Marks
Nov’20)
Answer 15
Entrenchment: Usually an article of association may be altered by passing special resolution but
entrenchment makes it more difficult to change it. So, entrenchment means making something more
protective.
Section 5 of the Companies Act, 2013 describes the provisions relating to entrenchment.
Articles may contain provisions for entrenchment [Section 5(3)]: The articles may contain provisions for
entrenchment to the effect that specified provisions of the articles may be altered only if conditions or
procedures as that are more restrictive than those applicable in the case of a special resolution, are met or
complied with.
Manner of inclusion of the entrenchment provision [Section 5(4)]: The provisions for entrenchment shall only
be made either on formation of a company, or by an amendment in the articles agreed to by all the
members of the company in the case of a private company and by a special resolution in the case of a public
company.
Notice to the registrar of the entrenchment provision [Section 5(5)]: Where the articles contain provisions for
entrenchment, whether made on formation or by amendment, the company shall give notice to the
Registrar of such provisions in such form and manner as may be prescribed.
Question 16
Mr. Ram along with his brothers got registered a company in the state of Telangana by furnishing false
information knowingly. What action may be taken against the company and its promoters under the
provisions of the companies act, 2013?(MTP 4 Marks April ’23, PYP Nov’19 5 Marks)
Answer 16
As per section 7 of the Companies Act, 2013 where a company has been got incorporated by furnishing
any incorrect information, the Tribunal may on an application made to it, on being satisfied that the
situation so warrants:
(a) pass orders for regulation of the management of the company including changes, if any, in its
memorandum and articles; or
(b) direct that liability of the members shall be unlimited; or
(c) direct removal of the name of the company from the register of companies; or
(d) pass an order for the winding up of the company; or
(e) pass such other orders as it may deem fit:
Provided that before making any order under this sub-section,—

2.9
(i) the company shall be given a reasonable opportunity of being heard in the matter; and
(ii) the Tribunal shall take into consideration the transactions entered into by the company.
Also the promoters, the persons named as the first directors of the company and the persons making
declaration at the time of registration of company shall each be liable for action under section 447.
Question 17
Give answer in the following cases as per the Companies Act, 2013
(i) X Ltd., holds 20 lacs shares in ABZ Ltd. In 2017, ABZ Ltd. controls the composition of the Board of
directors of X Ltd. and transfers certain shares to it. State whether such transfer of shares by ABZ
Ltd. to X Ltd. is valid.
(ii) In continuation of above facts, Mr. R, is a member of the ABZ Ltd. He met an accident. Mr. N
(son of Mr. R), is one of the director of the X Ltd. He was also a nominee of shares held by Mr. R.
Being a legal representative and nominee, Mr. N gets transferred the shares of Mr. R. State on the
validity of the transfer of such shares to Mr. N of X Ltd. (MTP Oct ’18 ,7 Marks)
Answer 17
As per section 2(84) of the Companies Act, 2013, X Ltd. is a subsidiary company of ABZ Ltd. as ABZ Ltd.
controls the composition of the Board of Directors of X Ltd.
Further, section 19 of the companies Act provides that no company shall, either by itself or through its
nominees, hold any shares in its holding company and no holding company shall allot or transfer its shares
to any of its subsidiary companies and any such allotment or transfer of shares of a company to its
subsidiary company shall be void.
Provided that this sub-section shall not apply-
(a) where the subsidiary company holds such shares as the legal representative of a deceased
member of the holding company; or
(c) where the subsidiary company is a shareholder even before it became a subsidiary
company of the holding company
On the basis of the above provisions, following are the answers:
(i) In the given case, X ltd. already holds shares in ABZ Ltd. before becoming its subsidiary. The given
situations falls within the purview of the exceptions when such transfer of shares by holding
company to its subsidiary is permissible. So this transfer of shares by ABZ Ltd. to X Ltd. is
valid.
(ii) This situation falls within the purview of exemption stating that such subsidiary company who
holds such shares as the legal representative of a deceased member of the holding company,
are entitled to hold the shares of the holding company. So Mr. N being the legal representative
of the deceased member of the Holding company, was entitled for the holding of shares of ABZ
Ltd.
Question 18
Red Limited was incorporated on 1st April, 2014 is facing severe effects of depression of the economy.
Owing to its bad financial status most of the members have started withdrawing their holding from the
company. The company had 250 members on 10th January, 2019. By 15th January, 2019, 244 members
had withdrawn their holding. No new member has invested in the company after 15th February till date.
Now, Mr. A, an existing member has approached you to advise him regarding his liabilities in such a
situation. (RTP Nov’19)
Answer 18
According to section 3A of the Companies Act, 2013, If at any time the number of members of a company is
reduced, in the case of a public company, below seven, in the case of a private company, below two, and the

2.10
company carries on business for more than six months while the number of members is so reduced, every
person who is a member of the company during the time that it so carries on business after those six
months and is cognizant of the fact that it is carrying on business with less than seven members or two
members, as the case may be, shall be severally liable for the payment of the whole debts of the company
contracted during that time, and may be severally sued therefor. Hence, in the given situation, the number
of member in the said public company have fallen below 7 [250-244=6] and these members have continued
beyond the specified limit of 6 months, the reduced members of the company during the period of 1 month
shall be severally liable for the payment of the whole debts of the company contracted during that time,
and may be severally sued therefor.
Question 19
Vintage security equipments limited is a manufacturer of CCTV cameras. It has raised Rs 100 crores
through public issue of its equity shares for starting one more unit of CCTV camera manufacturing. It has
utilized 10 crores rupees and then it realized that its existing business has no potential for expansion
because government has reduced customs duty on import of CCTV camera hence imported cameras from
china are cheaper than its own manufacturing. Now it wants to utilize remaining amount in mobile
app development business by adding a new object in its memorandum of association.
Does the Companies Act, 2013 allow such change of object. If not then what advise will you give to
company. If yes, then give steps to be followed. (RTP Nov’19, Old & New SM)
Answer 19
According to section 13 of the Companies Act, 2013 a company, which has raised money from public
through prospectus and still has any unutilised amount out of the money so raised, shall not change its
objects for which it raised the money through prospectus unless a special resolution is passed by the
company and—
(i) the details in respect of such resolution shall also be published in the newspapers(one in English and
one in vernacular language) which is in circulation at the place where the registered office of the
company is situated and shall also be placed on the website of the company, if any, indicating therein
the justification for such change;
(ii) the dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders
having control in accordance with SEBI regulations.
Company will have to file copy of special resolution with ROC and he will certify the registration within a
period of thirty days. Alteration will be effective only after this certificate by ROC. Looking at the above
provision we can say that company can add the object of mobile app development in its memorandum and
divert public money into that business. But for that it will have to comply with above requirements.
Question 20
The Board of Directors of Sindhu Limited wants to make some changes and to alter some Clauses of the
Articles of Association which are to be urgently carried out, which include the increase in Authorized
Capital of the company, issue of shares, increase in borrowing limits and increase in the number of
directors. Discuss about the provisions of the Companies Act, 2013 to be followed for alteration of Articles
of Association. (RTP Nov’18)
Answer 20
Alteration in Articles of Association: Section 14 of the Companies Act, 2013, vests companies with power to
alter or add to its articles. The law with respect to alteration of articles is as follows:
(1) Alteration by special resolution: Subject to the provisions of this Act and the conditions contained in its
memorandum, if any, a company may, by a special resolution alter its articles.
(2) Filing of alteration with the registrar: Every alteration of the articles and a copy of the order of the Tribunal
approving the alteration, shall be filed with the Registrar, together with a printed copy of the altered
articles, within a period of fifteen days in such manner as may be prescribed, who shall register the same.
(3) Any alteration made shall be valid: Any alteration of the articles registered as above shall, subject to the
provisions of this Act, be valid as if it were originally contained in the articles.
(4) Alteration noted in every copy: Every alteration made in articles of a company shall be noted in every copy
of the articles, as the case may be. If a company makes any default in complying with the stated provisions,

2.11
the company and every officer who is in default shall be liable to a penalty of one thousand rupees for
every copy of the articles issued without such alteration. [Section 15]
Question 21
Nadeem incorporated a "One Person Company" making his sister Nisha as the nominee. Nisha is
leaving India permanently due to her marriage abroad. Due to this fact, she is withdrawing her
consent of nomination in the said One Person Company. Taking into considerations the provisions of
the Companies Act, 2013 answer the questions given below.
(A) If Nisha is leaving India permanently, is it mandatory for her to withdraw her nomination in the
said One Person Company?
(B) If Nisha maintained the status of Resident of India after her marriage, then can she continue her
nomination in the said One Person Company? (RTP May 21, PYP Nov’19 2 Marks)
Answer 21
As per Rule 3 & 4 of the Companies (Incorporation) Rules, 2014 following the answers:
(A) No it is not mandatory for Nisha to withdraw her nomination as a natural person who is an Indian
citizen and resident in India shall be a nominee in OPC.
(B) Nisha can continue her nomination irrespective of her residential status.
As per amendment a natural person who is an Indian citizen whether resident in India or otherwise
shall be a nominee for the sole member of an OPC
Question 22
Yadav Dairy Products Private limited has registered its articles along with memorandum at the time of
registration of company in December, 2014. Now directors of the company are of the view that
provisions of articles regarding forfeiture of shares should not be changed except by a resolution of 90%
majority. While as per section 14 of the Companies Act, 2013 articles may be changed by passing a
special resolution only. Hence, one of the directors is of the view that they cannot make a provision
against the Companies Act, 2013. You are required to advise the company on this matter.(RTP May ’20,
Old & New SM)
Answer 22
As per section 5 of the Companies Act, 2013 the article may contain provisions for entrenchment to the
effect that specified provisions of the articles may be altered only if more restrictive conditions than a
special resolution, are met. The provisions for entrenchment shall only be made either on formation of a
company, or by an amendment in the articles agreed to by all the members of the company in the case of
a private company and by a special resolution in the case of a public company. Where the articles contain
provisions for entrenchment, whether made on formation or by amendment, the company shall give
notice to the Registrar of such provisions in prescribed manner. In the present case, Yadav Dairy Products
Private Limited is a private company and wants to protect provisions of articles regarding forfeiture of
shares. It means it wants to make entrenchment of articles, which is allowed. But the company will have
to pass a resolution taking permission of all the members and it should also give notice to Register of
Companies regarding entrenchment of articles.
Question 23
One of the matters contained in the articles of Dhimaan Foundation, incorporated as a limited company
under section 8 of the Companies Act, 2013, was altered by passing a special resolution in its general
meeting and thereafter, intimation for the same was given to Registrar of Companies.
However, such alteration in the articles was opposed by Dhwaj & Co., a partnership firm which is its
member that there such alteration was not valid.
Advise, as per the provisions of the Companies Act, 2013, whether the contention of Dhwaj & Co. was
valid and whether it can be a member in such company? (RTP May ’22)
Answer 23
According to section 8 of the Companies Act, 2013, a company registered under this section shall not alter
the provisions of its memorandum or articles except with the previous approval of the Central Government

2.12
(the power has been delegated to Registrar of Companies).

Also, a firm may be a member of the company registered under section.
Here, one of the matters of articles of Dhimaan Foundation was altered by passing a special resolution in its
general meeting and thereafter, intimation for the same was given to Registrar of Companies.
As per the provisions of the Act, it is necessary to take previous approval of the Registrar of Companies for
the same which was not done in the present case and thus the contention of Dhwaj & Co. was valid.
Also, section 8 allows a firm to be a member of such company and hence, Dhwaj & Co. can be its member.
Question 24
Mr. Abhi is a Chartered Accountant and MBA by profession, has been appointed as an Executive Director
on the Board of XYZ Limited. His job profile includes advising the Board of Directors of the company on
various compliance matters, strategies, business plans, and risk matters relating to the company. Keeping
in view of above position whether Mr. Abhi can be classified as the Promoter of XYZ Limited? Please
examine the same under the provisions of the Companies Act, 2013. (RTP May ’22)
Answer 24
According to section 2(69) of the Companies Act, 2013, Promoter means a person:-
(a) Who has been named as such in a prospectus or is identified by the company in the annual return; or
(b) Who has control over the affairs of the company, directly or indirectly whether as a shareholder, director
or otherwise; or
(c) In accordance with whose advice, directions or instructions the Board of Directors of the company is
accustomed to act.
Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional
capacity. As the job profile of Mr. Abhi is only limited to advise the Board of Directors on various
compliance matters, strategies, business plans and risk matters relating to business of the company and
that too only in a professional capacity, he will not be classified as a Promoter of XYZ Limited.
Question 25
Mr. Aditya had incorporated a one person company on 07.07.2021. Mr. Yash was named as a nominee
in the memorandum of the said one person company. Now, Mr. Aditya, considering the perpetual
nature of company form of business, desires to appoint ABC Private Limited as a nominee instead of Mr.
Yash. Examine with reference to the Companies Act, 2013, whether the proposal of Mr. Aditya to
appoint ABC Private Limited as a nominee is valid? (RTP Nov’22)
Answer 25
As per the provisions of Rule 3(1) of the Companies (Incorporation) Rules, 2014, only a natural person
who is an Indian citizen whether resident in India or otherwise-
(a) shall be eligible to incorporate a One Person Company (OPC);
(b) shall be a nominee for the sole member of a One Person Company (OPC).
By taking into account the above provisions, ABC Private Ltd. cannot be appointed as nominee in one
person company as only natural persons can be appointed as a nominee. Hence, the proposal of Mr.
Aditya to appoint ABC Private Ltd. as a nominee is not valid.
Question 26
As at 31st March, 2018, the paid up share capital of S Ltd. is Rs 1,00,00,000 divided into 10,00,000 equity
shares of Rs 10 each. Of this, H Ltd. is holding 6,00,000 equity shares and 4,00,000 equity shares are held
by others. Simultaneously, S Ltd. is holding 5% equity shares of H Ltd. out of which 1% shares are held
as a legal representative of a deceased member of H Ltd. On the basis of the given information, examine
and answer the following queries with reference to the provisions of the Companies Act, 2013 :

2.13
(i) Can S Ltd. make further investment in equity shares of H Ltd. during 2018-19?
(ii) Can S Ltd. exercise voting rights at Annual general meeting of H Ltd.?
(iii) Can H Ltd. allot or transfer some of its shares to S Ltd.? [PYP May’19,4 Marks]
Answer 26
The paid up share capital of S Ltd. is Rs 1,00,00,000 divided into 10,00,000 equity shares of Rs 10 each. Of
this, H Ltd. is holding 6,00,000 equity shares.
Hence, H Ltd. is the holding company of S Ltd. and S Ltd. is the subsidiary company of H Ltd. by virtue of
section 2(87) of the Companies Act, 2013.
In the instant case,
(i) As per the provisions of sub-section (1) of Section 19 of the Companies Act, 2013, no company shall, either
by itself or through its nominees, hold any shares in its holding company. Therefore, S Ltd. cannot make
further investment in equity shares of H Ltd. during 2018-19.
(ii) As per second proviso to Section 19, a subsidiary company shall have a right to vote at a meeting of the
holding company only in respect of the shares held by it as a legal representative or as a trustee.
Therefore, S Ltd. can exercise voting rights at the Annual General Meeting of H Ltd. only in respect of 1%
shares held as a legal representative of a deceased member of H Ltd.
(iii) Section 19 also provides that no holding company shall allot or transfer its shares to any of its subsidiary
companies and any such allotment or transfer of shares of a company to its subsidiary company shall be
void. Therefore, H Ltd. cannot allot or transfer some of its shares to S Ltd.
Question 27
Mr. Raja along with his family members is running successfully a trading business. He is capable of
developing his ideas and participating in the market place. To achieve this, Mr. Raja formed a single
person economic entity in the form of One Person Company with his brother Mr. King as its nominee.
On 4th May 2020, Mr. King withdrew his consent as Nominee of the One Person Company. Can he do
so under the provisions of the Companies Act, 2013?
Examine whether the following individuals are eligible for being nominated as Nominee of the One Person
Company as on 5th May 2020 under the above said Act.
(i) Mr. Shyam, son of Mr. Raja who is 15 years old as on 5th May 2020.
(ii) Ms. Devaki an Indian Citizen, sister of Mr. Raja stays in Dubai and India. She stayed in India
during the period from 2nd January 2019 to 16th August 2019. Thereafter she left for Dubai and
stayed there.
(iii) Mr. Ashok, an Indian Citizen residing in India who is presently a member of a 'One Person
Company'. (PYP 6 Marks Nov 20)
Answer 27
As per section 3 of the Companies Act, 2013, the memorandum of One Person Company (OPC) shall
indicate the name of the other person (nominee), who shall, in the event of the subscriber’s death or his
incapacity to contract, become the member of the company. The other person (nominee) whose name is
given in the memorandum shall give his prior written consent in prescribed form and the same shall be
filed with Registrar of companies at the time of incorporation along with its Memorandum of Association
and Articles of Association. Such other person (nominee) may withdraw his consent in such manner as may
be prescribed. Therefore, in terms of the above law, Mr. King, the nominee, whose name was given in
the memorandum, can withdraw his consent as a nominee of the OPC by giving a notice in writing to the
sole member and to the One Person Company.
Following are the answers to the second part of the question as regards the eligibility for being nominated
as nominee:
(i) As per the Rule 3 of the Companies (Incorporation) Rules, 2014, no minor shall become member or
nominee of the OPC. Therefore, Mr. Shyam, being a minor is not eligible for being nominated as
Nominee of the OPC.
(ii) No it is not mandatory to withdraw nomination in the OPC as a natural person who is an Indian

2.14
citizen whether resident in India or otherwise shall be a nominee for the sole member in an OPC
As per amendment only a natural person who is an Indian citizen whether resident in India or
otherwise shall be a nominee for the sole member in an OPC
(iii) As per the Rule 3 of the Companies (Incorporation) Rules, 2014, a person shall not be a member
of more than one OPC at any point of time and the said person shall not be a nominee of more
than one OPC. Mr. Ashok, an Indian Citizen residing in India who is a member of an OPC (Not a
nominee in any OPC), can be nominated as nominee.
Question 28
The role of doctrine of 'Indoor management' is opposed to that of the role of 'Constructive notice'.
Comment on this statement with reference to the Companies Act, 2013. (PYP 5 Marks Jan 21)(MTP 6
Marks Sep ’23)
OR
The persons (not being members) dealing with the company are always protected by the doctrine of
Indoor management. Explain. Also, explain when doctrine of Constructive Notice will apply. (PYP 6
Marks Nov 18, Old & New SM)
Answer 28
Doctrine of Indoor Management
According to this doctrine, persons dealing with the company cannot be assumed to have knowledge of
internal problems of the company. They can simply assume that all the required things were done properly
in the company. Stakeholders need not enquire whether the necessary meeting was convened and held
properly or whether necessary resolution was passed properly. They are entitled to take it for granted
that the company had gone through all these proceedings in a regular manner. The doctrine helps protect
external members from the company and states that the people are entitled to presume that internal
proceedings are as per documents submitted with the Registrar of Companies. The doctrine of indoor
management was evolved around 150 years ago in the context of the doctrine of constructive notice. The
role of doctrine of indoor management is opposed to of the role of doctrine of constructive notice.
Whereas the doctrine of constructive notice protects a company against outsiders, the doctrine of
indoor management protects outsiders against the actions of a company. This doctrine also is a possible
safeguard against the possibility of abusing the doctrine of constructive notice.
Basis for Doctrine of Indoor Management
1. What happens internal to a company is not a matter of public knowledge. An outsider can only
presume the intentions of a company, but not know the information he/she is not privy to.
2. If not for the doctrine, the company could escape creditors by denying the authority of officials to
act on its behalf.
Exceptions to Doctrine of Indoor Management (Applicability of doctrine of constructive notice)
Knowledge of irregularity: In case this ‘outsider’ has actual knowledge of irregularity within the company,
the benefit under the rule of indoor management would no longer be available. In fact, he/she may well be
considered part of the irregularity.
Negligence: If, with a minimum of effort, the irregularities within a company could be discovered, the
benefit of the rule of indoor management would not apply. The protection of the rule is also not available
in the circumstances where company does not make proper inquiry.
Forgery: The rule does not apply where a person relies upon a document that turns out to be forged
since nothing can validate forgery. A company can never be held bound for forgeries committed by its
officers.
The above doctrines have been well considered while framing the provisions of various Acts pertaining to
the companies worldwide. The Companies Act, 2013 and the earlier Acts relevant for the Companies in
India are no exception to the same.

2.15
Question 29
Examine the validity of the following different decisions/proposals regarding change of office by A Ltd.
under the provisions of the Companies Act, 2013:
(i) The Registered office is shifted from Thane (Local Limit of Thane District) to Dadar (Local limit of
Mumbai District), both places falling within the jurisdiction of the Registrar of Mumbai, by
passing a special resolution but without obtaining the approval of the Regional Director.
(ii) The Registered office is situated in Mumbai, Maharashtra (within the jurisdiction of the Registrar,
Mumbai, Maharashtra State) whereas the Corporate Office is situated in Pune, Maharashtra
State (within the jurisdiction of the Registrar, Pune). A Ltd. proposes to shift its corporate office
from· Pune to Mumbai under the authority of a Board· resolution.
(iii) The registered office situated in certain place of a city is proposed to be shifted to another place
within the local limits of the same city under the authority of Board Resolution. (PYP July 21, 5
Marks, MTP 4 Marks Mar’23)
Answer 29
Regarding the validity of Proposals w.r.t change of registered office by A Ltd. in the light of the section
12 of the Companies Act, 2013:
(i) In the first case, where the Registered office is shifted from Thane to Dadar (one District to another
District) falling under jurisdiction of same ROC i.e. Registrar of Mumbai.
As per Section 12 (5) of the Act which deals with the change in registered office outside the local limit
from one town or city to another in the same state, may take place by virtue of a special resolution
passed by the company. No approval of regional director is required. Accordingly, said proposal is
valid.
(ii) Section 12 talks about shifting of Registered office only, In the second case the corporate office is
being shifted from Pune to Mumbai under the authority of Board resolution. Shifting of corporate
office under the board resolution is valid.
[Note: It may be assumed that corporate office and registered office are same. Then in this case,
registered office situated in Mumbai is changed from Mumbai to Pune falling the jurisdiction of
different of ROC’s in the same State.
In line section 12 (5) of the Act, where a company changes the place of its registered office from the
jurisdiction of one Registrar to the jurisdiction of another Registrar within the same State, there such
change is to be confirmed by the Regional Director on an application made by the company.
Accordingly, the said proposal may be treated as invalid, due to lack of confirmation by Regional
director of such change.]
(iii) In the third case, change of registered office within the local limits of the same city.Said proposal is
valid in terms it has been passed under the authority of Board resolution.
Question 30
Chhavish, an Indian citizen and resident of India formed “Ekta Readymade Garments (OPC) Private Ltd.”
as One Person Company on 1st April 2018 with his wife Mrs. Jyoti as nominee. The authorized and paid-
up share capital of the company is ` 35 lakhs. He got in touch with a readymade garments buyer and
was expecting to receive a substantial order by August 2020 where final delivery will be completed by
December 2020. To expand the production capacity, the decided to invest an additional capital of ` 10
lakhs in plant and machinery. As a result, the company’s authorized and paid-up share capital is now `
45 Lakhs. Promoter of the company seeks your advice. Considering the case and referring the provisions
of the Companies Act, 2013, advice:
(A) Who is eligible to act as a member of OPC?
(B) Whether “Ekta Readymade Garments (OPC) Private Ltd.” can convert into any other kind of

2.16
company as on 1st December 2020?

(C) If the company increases its paid up share capital by ` 30 lakhs in August, 2019, can it be
converted in any other kind of company immediately? (3 Marks Dec ‘21)
Answer 30
(A) The memorandum of OPC shall indicate the name of the other person (nominee), who shall, in the
event of the subscriber’s death or his incapacity to contract, become the member of the company.
Only a natural person who is an Indian citizen whether resident in India or otherwise-
(a) shall be eligible to incorporate One Person Company (OPC);
(b) shall be a nominee for the sole member of One Person Company (OPC).
As per amendment An OPC can be voluntarily converted to any kind of company except a section 8
company.
Hence as per amendment of omission of Rule 7 there is no restriction to convert a one person
company.
Question 31
S Ltd acquired 10% paid up share capital of H Ltd on 15th March 2017. H Ltd acquired 55% paid up share
capital of S Ltd on 10th March 2018. H Ltd. on 25th September, 2020 decided to issue bonus shares in
the ratio of 1:1 to the existing shareholders. Accordingly, bonus shares were allotted to S Ltd. Examine
under the provisions of the Companies Act, 2013 and decide
(i) the validity of holding of shares by S Ltd. in H Ltd.
(ii) allotment of Bonus shares by H Ltd. to S Ltd. (PYP 4 Marks Nov 20)
Answer 31
As per Section 19 of the Companies Act, 2013, no company shall, hold any shares in its holding company
and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such
allotment or transfer of shares of a company to its subsidiary company shall be void. However, this shall
not apply where the subsidiary company is a shareholder even before it became a subsidiary company of
the holding company. In the given case, H Ltd. has acquired 55% paid up share capital of S Ltd. on 10th
March 2018. Whereas, S Ltd. has been holding 10% paid up share capital of H Ltd. since 15th March, 2017.
The said instance as asked in the question falls under the exception stated above.
Therefore -
(i) Holding of shares by S Ltd. in H Ltd. is valid in view of the proviso (c) to sub-section (1) of section 19
of the Act, which states that the restrictions of provisions of section 19(1) will not be applicable where
the subsidiary company is a shareholder even before it became a subsidiary company of the holding
company.
(ii) Allotment of bonus shares by H Ltd. to S Ltd. is also valid in view of the above proviso.
Question 32
MNP Limited is a registered public company having the following:
i Directors and their Relatives 18
ii Employees 26
iii Ex-Employees (Shares were allotted during employment) 15
iv Members holding shares jointly (7 x 2) 14
v Other Members 137
The Board of Directors of MNP Limited proposes to convert the company into a private limited
company. Referring the provisions of the Companies Act, 2013, advise:

2.17
i. Whether the company can be converted into a private company?

ii. Whether existing number of members need to be reduced for the proposed private company?
(PYP 6 Marks May ’22)
Answer 32
According to Section 2(68) of the Companies Act, 2013, "Private company" means a company having
prescribed minimum paid-up share capital, and which by its articles, limits the number of its members to
two hundred.
However, where two or more persons hold one or more shares in a company jointly, they shall, for the
purposes of this clause, be treated as a single member.
It is further provided that following shall not be included in the number of members -
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company
while in that employment and have continued to be members after the employment ceased.
Accordingly, total Number of members in MNP Limited are:
(i) Directors and their relatives 18
(ii) Joint shareholders (7x2) 7
(iii) Other Members 137
Total 162
(i) MNP Limited may be converted into a private company only if the total members of the company are
limited to 200. In the instant case, since existing number of members are 162 which is within the
prescribed maximum limit of 200, so MNP Limited can be converted into a private company.
(ii) There is no need for reduction in the number of members for the proposed private company as existing
number of members are 162 which does not exceed maximum limit of 200.
Question 33
Sapphire Private Limited has registered its articles along with memorandum as on 1st July 2021. The
directors of the company seeks your advice regarding the effect of registration of the company on the
company itself and on its members.(PYP 3 Marks May ’22)
Answer 33
As per Section 9 and 10 of the Companies Act, 2013 following shall be the effect of registration of a
company:
(1) From the date of incorporation, the subscribers to the memorandum and all members of the
company, shall become a body corporate.
(2) Such a registered company shall be capable of exercising all the functions of an incorporated
company with the perpetual succession with power to acquire, hold and dispose of property, and
to contract and to sue and be sued.
(3) The memorandum and articles shall, when registered, bind the company and the members thereof
to the same extent as if they respectively had been signed by the company and by each member,
and contained covenants on its and his part to observe all the provisions of the memorandum and
of the articles.
(4) All monies payable by any member to the company under the memorandum or articles shall be a
debt due from him to the company.

2.18
Question 34
The Article of Association (AOA) of AB Ltd. provides that documents may be served upon the
company only through Speed Post. Suresh dispatches some documents to the company by courier,
under certificate of posting. The company did not accept it on the ground that it is in violation of the
AOA. As a result, Suresh suffered from loss. Explain with reference to the provisions of the
Companies Act, 2013:
(i) Whether refusal of document by the company is valid?

(ii) Whether Suresh can claim damages for it? (PYP 5 Marks Nov ‘22)
Answer 34
Serving of document to Company
In terms of Section 20(1) of the Companies Act, 2013, a document may be served on a company or an
officer thereof by sending it to the company or the officer at the registered office of the company by-
 registered post, or
 speed post, or
 courier service, or
 leaving it at its registered office, or
 means of such electronic or other mode as may be prescribed.
In the instant case, Suresh dispatches some document to AB Ltd. by courier whereas the AOA of said
company provides that documents may be served upon the company only through Speed Post. AB
Ltd. did not accept the documents on the ground that it is in violation of the AOA.
Taking into account the above provision,
(i) Refusal of documents by AB Ltd. is not valid as sending of documents by courier to AB Ltd. is
complying with the provisions given under section 20(1) of the Act.
(ii) Since, the AB Ltd. is at fault by not accepting the documents sent by Suresh, YES, he can claim
the damages for any loss occurred to him.
Question 35
Satvikya Private Limited was formed on 25th April, 2020. At the time of formation, it had provided in
its articles that the company shall not be permitted to accept or keep advance subscription or call
money in advance.
However, in the August 2023, the need was felt to amend the articles with respect to retention of
calls-in-advance.
Decide whether the provision inserted in the articles at the time of formation of the company, can be
considered as void? (RTP , Nov ’23)
Answer 35
Section 50 of the Companies Act, 2013, deals with acceptance of call money in advance by a company
which requires that such acceptance can be made only if the company is authorised by its articles to do
so.
According to section 6 of the Companies Act, 2013,‘Save as otherwise expressly provided in this Act—
(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in
the memorandum or articles of a company, or in any agreement executed by it, or in any
resolution passed by the company in general meeting or by its Board of Directors, whether the
same be registered, executed or passed, as the case may be, before or after the commencement
of this Act; and
(b) any provision contained in the memorandum, articles, agreement or resolution shall, to the
extent to which it is repugnant (in conflict) to the provisions of this Act, become or be void, as

2.19
the case may be.’

In simple words, the provisions of this Act shall have overriding effect. It is also to be noted that section
6, starts with “Save as otherwise ….”. It means that if any other section of the Act says that article is
superior then we will treat it accordingly.
Here, in the given case, articles of Satvikya Private Limited provide that the company shall not be
permitted to accept or keep advance subscription or call money in advance and accordingly here, such
provision contained in the articles of association will prevail and cannot be considered as void.
MULTIPLE CHOICE QUESTIONS (MCQs)

Question 1
The Registrar shall register any alteration of the memorandum with respect to the objects of the company
and certify the registration within a period of _ from the date of filing of the special resolution.
(MTP Oct’19, 1 Mark)
(a) 30 days (b) 60 days (c) 90 days (d) 6 months
Answer 1 : (a)
Question 2
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. (MTP March’19, 1 Mark)
Answer 2 : (d)
Question 3
In Roopali Marketing Company Private Limited (Authorised capital 50,000 shares of Rs. 10 each and paid-
up share capital of Rs. 4,50,000), 1000 shares are jointly held by Abeer and Abheek; another 800 shares
are jointly held by Seema and Srividya; and another 1200 are jointly held by Ramesh, Raksha and
Rajneesh. Further, 42,000 shares are held by 193 individual persons in their individual capacity. Is it
possible for the company to induct more persons?
a) The company is unable to induct more persons since it already has two hundred individual
members.
b) The company can induct four more persons as members.
c) The company can induct another 20 persons (i.e. 10% of two hundred individual members) after
seeking permission from the concerned ROC.
d) If the company does not want to seek permission of the concerned ROC, it can induct only 10 more
persons (i.e. 5% of two hundred individual members). (MTP May’20,March’19, 2 Marks)
Answer 3 : (b)
Question 4
Vinay and Sanjay made a name reservation application accompanied by requisite fee to the Registrar for

2.20
forming a new private company. The Registrar accorded its approval for reservation of most preferred
name Vinanjay Softwares Private Ltd. on 7th July, 2018. By which date necessary documents for
incorporation of the company must be submitted to the Registrar so that the reserved name does not
get lapsed.
(a) Latest by 20th July, 2018 (b) Latest by 27th July, 2018
(c) Latest by 4th August, 2018 (d) Latest by 4th September, 2018
(MTP March’19, 2 Marks)
Answer 4 : (b)
Question 5
Food lovers Inc. was incorporated as a one person company (OPC) on 1st September 2015 with paid up
share capital of Rs. 25 lacs. This OPC wants to convert itself into a private limited company during the year
ending on 31st March 2017. But the provisions of the Companies Act, 2013 prohibits an OPC from doing so
before the expiry of a specified period. From the following options in which situation this OPC will
mandatorily be converted into a private/public company even before expiry of such period—
a. After the expiry of two years from the date of its incorporation
b. Paid up share capital of the company is increased beyond fifty lakh rupees
c. The average annual turnover during the relevant period exceeds one crore rupees
d. If the application is filed with the ROC within 90 days of its incorporation as OPC, to be
convertedinto a Private Limited company. (MTP April’19, 2 Marks)
Answer 5 : (b) (as per amendment answer is d)
(As per amendment the following Rule “No such company can convert voluntarily into any kind of company
unless two years have expired from the date of incorporation of One Person Company, except threshold
limit (paid up share capital) is increased beyond fifty lakh rupees or its average annual turnover during the
relevant period exceeds two crore rupees” has been omitted.)
Question 6
Swastik Private Limited passed a Special Resolution to change its name to Swastik Darshan Private
Limited on 30th May, 2019. Relevant MCA filing was done on due time and then Company got its new
stationery printed on 1st July, 2019. However there was a delay in issue of Certificate and Company
received new certificate on 20th August, 2019 which was issued on 10th August, 2019. Company wants
to enter into a lease agreement for new premise. When they can do such agreement in new name of the
Company?
(a) 30th May, 2019
(b) 1st July, 2019
(c) 20th August, 2019
(d) 10th August, 2019 (MTP 1 Mark May 20)
Answer 6 : (c)
Question 7
If a company changes its name; which of the following is most accurate:
(a) It is not allowed to use old name in any way
(b) New name should not be identical with old name
(c) Old name should be painted/printed for next 1 year along with new name

2.21
(d) Old name should be painted/printed for next 2 years along with new name (MTP 1 Mark Oct 20)
Answer 7 : (d)
Question 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, 2019, its turnover was less than Rs. 2.00 crores and its paid up share capital was less
than Rs. 50 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 immediately following financial year.
(b) If the acquisition of minimum 5% stake in another ‘small company’ materializes in the second
financial year (and not in the immediately following 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’. (MTP 2 Marks March 21 & Sep ‘23)
Answer 8 : (c)
Question 9
Anu got incorporated ‘One Person Company’ with her sister Alpa as the nominee and about three
years have passed satisfactorily. From time to time, Anu does a number of charitable works and is
associated with three NGOs. In the meantime, her business under her OPC has also flourished. Now
she is contemplating to convert the OPC either as a Section 8 company (i.e. formation of companies with
charitable objects). Choose the correct option.
(a) Since company belongs to Anu, she has full discretion to convert the OPC either as a Section 8
company or as a private or public company
(b) Since the company was formed as a private company, the only option available with Anu is to
convert it into a public limited company.
(c) There is specific prohibition on converting OPC into a Section 8 company; otherwise, it can be
converted into a private or public company without any hindrance.
(d) Since Anu does a lot of charitable works there is no prohibition to converts his OPC into a
Section 8 company (companies formed with charitable objects). (MTP 2 Marks April 21)
Answer 9 : (c)
Question 10
If a company is registered by furnishing incorrect information then its winding up may be ordered by:
(a) Central Government
(b) Registrar of Companies

2.22
(c) National Company Law Tribunal

(d) Court (MTP 1 Mark April 21)
Answer 10 : (c)
Question 11
L made an offer to MD of a company. MD accepted the offer though he had no authority to do so.
Subsequently L withdrew the offer but the company ratified the MD’s acceptance. State which of the
statement given hereunder is correct:
(a) L was bound with the offer
(b) An offer once accepted cannot be withdrawn
(c) Both option (a) & (b) is correct
(d) L is not bound to an offer. (MTP 2 Marks Mar ’19, Oct 19)
Answer 11 : (d)
Question 12
Kamya Ltd. is incorporated on 3rd January, 2021. As per the Companies Act, 2013, what will be the
financial year for the company:
(a) 31st March, 2021
(b) 31st December, 2021
(c) 31st March, 2022
(d) 30th September, 2022 (MTP 2 Marks March ‘22)
Answer 12 : (C)
Question 13
__________cannot be a subscriber to the Memorandum of Association and Articles of Association.
(a) A company
(b) Government
(c) Minor
(d) Major (MTP 1 Mark April 22)
Answer 13 : (c)
Question 14
In case of a private company, the provisions for entrenchment may be made at the time of formation of
the company or by amendment of articles,
(a) By passing a special resolution
(b) With the consent of all the members
(c) By passing a special resolution and approval of the Central Government
(d) With the consent of all the members and approval of the Central Government (MTP 1 Mark April 22
& Sep ‘23)
Answer 14 : (b)

2.23
Question 15
Where a company is granted licence under section 8, it is not required to use the word …………… even
though it is a limited company:
(a) Guarantee company
(b) Limited Liability Partnership
(c) Limited or Private Limited, as the case may be
(d) Development Authority (MTP 1 Mark April 22, Sep’22)
Answer 15 : (c)
Question 16
The Best Dry Fruits Ltd was incorporated under the Companies Act, 1913. Whether the provisions of the
Companies Act, 2013 shall apply on it:
(a) No, the provisions of the Companies Act, 2013 shall not apply on it .
(b) Yes, the provisions of the Companies Act, 2013 shall apply on it .
(c) The Companies Act, 1913 was enacted by the British Government, hence only an Act made by British
Government shall apply on such company.
(d)Since, this company was incorporated by the British Government, hence the Companies Act of UK
Govt shall apply. (MTP 2 Marks Sep’22)
Answer 16 : (b)
Question 17
New Ltd. is incorporated on 3rd January, 2022. As per the Companies Act, 2013, what will be the financial
year for the company:
(a) 31st March, 2022

(b) 31st December, 2022
(c) 31st March, 2023
(d) 30th September, 2023 (MTP 2 Marks March ‘23)
Answer 17: (c)
Question 18
In case of an application for reservation of name or for change of its name by an existing company, the
Registrar may reserve the name for a period of from the date of approval
(a) 90 days
(b) 60 days
(c) 30 days
(d) 20 days (MTP 1 Mark April ‘23)
Answer 18 : (b)
Question 19
Today, it’s May 2023. Mr. Nilanjan Chattopadhyay a 24 years old Indian youngster, who returned back to
India in January month of 2023 after completing his education in bio-nutrient and willing to form an OPC;
but not sure about the requirements or pre-conditions regarding eligibility. He read some articles on
provisions related to OPC and concluded;

2.24
(i) OPC can be formed by Indian Citizen only

(ii) He can’t form OPC because in immediate previous year he was not resident in India
Choose the correct option:
(a) Both the conclusions are valid
(b) None of the conclusion is valid
(c) First conclusion is invalid
(d) Second conclusion is invalid (MTP 2 Marks April ‘23)
Answer 19 : (d)
Question 20
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.(RTP May’19)
Answer 20 : (b)
Question 21
Vinay and Sanjay made a name reservation application accompanied by requisite fee to the Registrar for
forming a new private company. The Registrar accorded its approval for reservation of most preferred
name Vinanjay Softwares Private Ltd. on 7th July, 2018. By which date necessary documents for
incorporation of the company must be submitted to the Registrar so that the reserved name does not get
lapsed.(RTP May ’19)
(a) Latest by 20th July, 2018 (b) Latest by 27th July, 2018
(c) Latest by 4th August, 2018 (d) Latest by 4th September, 2018
Question 21: (b)

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CA Finalist _______________________________

3 KEEP GOING WITH THE

3. What is the benefit of Chapter-wise?

4. What does amended for the latest attempt mean?

6. What if a new attempt is added post my purchase?

7. What does N/A mean?

*This is on an average based on the last 11 attempts

New Chapter Name as per NEW Syllabus Comparison with

21 MTPs: March’18, April’18, Aug’18, Oct’18, May’19, April’19,

Question 3 (Includes concepts of Chap 7- Management & Administration)

explanation to sub-clause (87) of Clause 2.

subsidiaries beyond such numbers as may be prescribed.

(B) a company registered under section 8; or

EXAMINERS’ COMMENTS ON THE PERFORMANCE OF EXAMINEES:

Multiple Choice Questions (MCQ’s)

(b) C Ltd. is the holding company to B Ltd.

(b) C Ltd. is deemed to be the subsidiary of A Ltd.

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

(b) where the subsidiary company holds such shares as a trustee; or

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

(the power has been delegated to Registrar of Companies).

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

company as on 1st December 2020?

Chapter 2 Incorporation of Company and Matters Incidental Thereto

i. Whether the company can be converted into a private company?

Chapter 2 Incorporation of Company and Matters Incidental Thereto

(i) Whether refusal of document by the company is valid?

Chapter 2 Incorporation of Company and Matters Incidental Thereto

the case may be.’

MULTIPLE CHOICE QUESTIONS (MCQs)

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

Chapter 2 Incorporation of Company and Matters Incidental Thereto

(c) National Company Law Tribunal

Chapter 2 Incorporation of Company and Matters Incidental Thereto

(a) 31st March, 2022

Chapter 2 Incorporation of Company and Matters Incidental Thereto

(i) OPC can be formed by Indian Citizen only

Chapter 2 Incorporation of Company and Matters Incidental Thereto

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