Instruction
- Total number of questions : 20
- Time allotted : 30:00 Minutes:Seconds.
- Each question carry 1 mark, no negative marks.
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- All the best
Company and Commercial Law [ Question No: 1 To 20 ] :
Direction for [ Question No: 1 To 1 ] :
In the following question, a Statement is followed by two Conclusions, I and II.
Statement : Allegations have been made by the Minority Shareholders that ABC's promoters sold the optionally convertible preference shares and redeemable preference shares to a trust controlled by ABC's promoters at prices significantly below their fair market value, thereby causing a financial loss to ABC and its shareholders. What is the recourse for minority shareholders under law ?
Conclusion I : The Minority Shareholders can file for class action under Section 245 of the Companies Act, 2013, seeking directions from NCLT to either reverse the sale of optionally convertible preference shares and redeemable preference shares or to compensate the Minority Shareholders.
Conclusion II : The aggrieved members may proceed individually to protect their rights against acts of oppression or mismanagement under Section 241 of the Companies Act, 2013.
In the context of the above Statement and Conclusions, which one of the following is correct ?
Which document is the evidence that all the requirements of Companies Act have been complied with in respect of registration ?
The term 'Allonge' under Negotiable Act, 1881 means :
Under the Competition Act, the power to check whether appreciable adverse effect on competition has caused or not is that of :
The Corporate Social Responsibility Committee consists of :
In every listed company how many directors shall be independent directors ?
Which of the following powers is to be exercised by resolution at board meetings ?
What do you mean by a floating charge ?
'Goodwill' of a partnership firm business is the property of the partnership under section ................ of Partnership Act, 1932.
'Future Goods' as defined in the Sale of Goods Act, 1930 means :
To be appointed as a Director of a Company, he needs :
Ascertained goods for the purpose of Sole of Goods Act, 1930 means :
A contract of sole under Section 4 of the sole of Goods Act, 1930 comprises of :
Alternation in partnership agreement has to be brought to the notice of registration of firms within a period of :
In which judgment, the Hon'ble Supreme Court laid down that a complaint based on a second or successive dishonour of cheque is maintainable, if no complaint based on an earlier dishonour of cheque followed by statutory notice issued on the basis thereof had been filed;
In which judgment, under the Negotiable Instruments Act, 1881 the Hon'ble Supreme Court held that though compounding requires consent of both the parties, but even in absence of such consent, the Court can, in the interest of justice, on being satisfied that the complainant has been duly compensated, in its discretion, close the proceedings and discharge the accused:-
Provisions regarding appointment and Qualification of Director have been described in Which chapter of Companies Act-2013?
Provisions regarding Formation of company have been discussed in which section of The Companies Act, 2013?
A company shall, on and from the fifteenth day of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it. Which section of Companies Act-2013, has been discussed here?
Section 233 of the Companies Act, 2013, deals with "fast track merger". What is the time duration and the concerned authority for approval ?
Total number of questions : 20
Number of answered questions : 0
Number of unanswered questions : 20
Company and Commercial Law [ Question No: 1 To 20 ] :
Direction for [ Question No: 1 To 1 ] :
In the following question, a Statement is followed by two Conclusions, I and II.
Statement : Allegations have been made by the Minority Shareholders that ABC's promoters sold the optionally convertible preference shares and redeemable preference shares to a trust controlled by ABC's promoters at prices significantly below their fair market value, thereby causing a financial loss to ABC and its shareholders. What is the recourse for minority shareholders under law ?
Conclusion I : The Minority Shareholders can file for class action under Section 245 of the Companies Act, 2013, seeking directions from NCLT to either reverse the sale of optionally convertible preference shares and redeemable preference shares or to compensate the Minority Shareholders.
Conclusion II : The aggrieved members may proceed individually to protect their rights against acts of oppression or mismanagement under Section 241 of the Companies Act, 2013.
In the context of the above Statement and Conclusions, which one of the following is correct ?
Your Answer : (Not Answered)
Correct Answer : B
Both Conclusions I and II follow.
Section 245 of the Companies Act, 2013 lets a prescribed number of members or depositors file a class action before the National Company Law Tribunal if they believe the company's affairs are being conducted prejudicially to its interests or theirs. The Tribunal may restrain the company or its directors from acts that breach the law, and award damages or compensation against the wrongdoers. A sale of the company's preference shares to a promoter-controlled trust at an undervalue fits that remedy, so Conclusion I follows.
Section 241 separately lets members who qualify under Section 244 apply to the Tribunal for relief against oppression and mismanagement, and the Tribunal may waive the qualifying thresholds. That is the remedy in Conclusion II. The two remedies coexist, so options accepting only one, or neither, are too narrow.
Which document is the evidence that all the requirements of Companies Act have been complied with in respect of registration ?
Your Answer : (Not Answered)
Correct Answer : C
The document is the certificate of incorporation.
When the Registrar of Companies is satisfied that the requirements of the Act on registration have been met, he registers the documents and issues a certificate of incorporation. The Companies Act, 1956 (Section 35) made that certificate conclusive evidence that all the requirements of the Act in respect of registration had been complied with, and the 2013 Act continues to treat it as the proof of incorporation.
The memorandum and articles are the company's constitutional documents, and the certificate of commencement of business was required of public companies before they could start business, not as evidence of registration.
The term 'Allonge' under Negotiable Act, 1881 means :
Your Answer : (Not Answered)
Correct Answer : C
The answer is both (A) and (B).
An allonge is a slip of paper attached to a negotiable instrument to carry further endorsements when there is no room left on the instrument itself. Section 15 of the Negotiable Instruments Act provides that an endorsement may be written on such a slip annexed to the instrument.
Statement (A) gives the purpose, further negotiation, and statement (B) the occasion, when the instrument is already full of endorsements. Both describe the same thing, so the key accepts both rather than either alone.
Under the Competition Act, the power to check whether appreciable adverse effect on competition has caused or not is that of :
Your Answer : (Not Answered)
Correct Answer : A
The power belongs to the CCI, the Competition Commission of India.
Under Sections 3, 4 and 20 of the Competition Act, 2002, the Commission inquires whether an agreement, an abuse of dominant position or a combination causes or is likely to cause an appreciable adverse effect on competition in India. Section 19(3) and Section 20(4) list the factors the Commission must consider in deciding this.
The Central Government makes rules and appoints members, but it does not decide this question. The Finance Minister and the Finance Commission have no role under the Act.
The Corporate Social Responsibility Committee consists of :
Your Answer : (Not Answered)
Correct Answer : B
The CSR Committee consists of three or more directors, of whom at least one should be an independent director.
Section 135(1) of the Companies Act, 2013 requires every company meeting the net worth, turnover or net profit thresholds to constitute a Corporate Social Responsibility Committee of the Board, consisting of three or more directors, out of which at least one director shall be an independent director.
The Act does not require four directors, nor that all members be independent. (Companies not required to appoint an independent director may have two directors, but option B states the general rule in the Act.)
In every listed company how many directors shall be independent directors ?
Your Answer : (Not Answered)
Correct Answer : B
At least one third of the total number of directors must be independent.
Section 149(4) of the Companies Act, 2013 requires every listed public company to have at least one-third of the total number of directors as independent directors, any fraction being rounded off to one. The Central Government may prescribe a minimum for other classes of public companies.
Two-thirds, one-half and three-quarters are not the statutory minimum. Separately, SEBI's listing regulations require at least half the board to be independent where the chairperson is an executive director, but the Companies Act figure the question asks for is one third.
Which of the following powers is to be exercised by resolution at board meetings ?
Your Answer : (Not Answered)
Correct Answer : B
The powers exercised by board resolution are to diversify the business, to approve amalgamation, merger and reconstruction, and to issue securities including debentures.
Section 179(3) of the Companies Act, 2013 lists the powers the board must exercise by resolution at its meetings, including making calls, authorising buy-back, issuing securities, borrowing, investing funds, granting loans, diversifying the business, approving amalgamation, merger or reconstruction, and taking over a company.
The other options each include a power that needs a special resolution of the shareholders under section 180: selling the undertaking, giving time for repayment of a debt due from a director, or investing compensation money.
What do you mean by a floating charge ?
Your Answer : (Not Answered)
Correct Answer : B
A floating charge is a charge on present and future assets which can be used in the ordinary course of business.
A floating charge is an equitable charge over a class of assets, present and future, that change from time to time, such as stock-in-trade and book debts. Until the charge crystallises, on winding up or default, the company may deal with those assets in the ordinary course of its business without the charge-holder's consent.
Option C contradicts the defining feature, the freedom to use the assets. Options A and D describe fixed assets under a fixed charge, which the company cannot deal with freely.
'Goodwill' of a partnership firm business is the property of the partnership under section ................ of Partnership Act, 1932.
Your Answer : (Not Answered)
Correct Answer : A
Goodwill is property of the firm under Section 14 of the Partnership Act, 1932.
Section 14 says that, subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired for the firm or for its business, and includes also the goodwill of the business.
Section 15 requires firm property to be held and used exclusively for the firm's business, Section 16 deals with personal profits earned by partners, and Section 17 with the rights and duties of partners after a change in the firm.
'Future Goods' as defined in the Sale of Goods Act, 1930 means :
Your Answer : (Not Answered)
Correct Answer : C
'Future goods' covers both (A) and (B).
Section 2(6) of the Sale of Goods Act, 1930 defines future goods as goods to be manufactured or produced or acquired by the seller after the making of the contract of sale. So goods to be made after the contract, and goods the seller has yet to acquire, are both future goods.
Each of the first two options gives only one limb of the definition. 'Either (A) or (B)' wrongly suggests that only one of the two meanings applies at a time, when the definition includes both.
To be appointed as a Director of a Company, he needs :
Your Answer : (Not Answered)
Correct Answer : D
The keyed answer is 'Except (A) all the remaining', that is, statements (B) and (C).
Under the Companies Act, 2013, no share qualification is required by law to become a director. A director need not hold shares in the company unless its articles require it, or he chooses to, which is what statement (B) says. Section 152(3) provides that no person shall be appointed a director unless he has been allotted a Director Identification Number under Section 154, which is statement (C).
Statement (A), that a director must possess qualification shares, reflects older practice and is not a statutory requirement, so it is rightly excluded.
Ascertained goods for the purpose of Sole of Goods Act, 1930 means :
Your Answer : (Not Answered)
Correct Answer : B
Ascertained goods are goods identified in accordance with the agreement after the contract of sale is made.
The Sale of Goods Act defines 'specific goods' in Section 2(14) as goods identified and agreed upon at the time the contract of sale is made. 'Ascertained goods' is not defined in the Act, but the courts have used it for goods that were unascertained when the contract was made and were later identified and appropriated to the contract in accordance with the agreement. Until goods are ascertained, no property in them can pass to the buyer (Section 18).
The first option is therefore the definition of specific goods, and goods identified before the contract are likewise specific, so neither option, nor 'either', defines ascertained goods.
A contract of sole under Section 4 of the sole of Goods Act, 1930 comprises of :
Your Answer : (Not Answered)
Correct Answer : A
A contract of sale comprises both executory and executed contracts of sale.
Section 4 of the Sale of Goods Act, 1930 says that a contract of sale may be absolute or conditional, and that where under it the property in the goods is transferred from seller to buyer, it is called a sale (an executed contract); where the transfer is to take place at a future time or on a condition, it is an agreement to sell (an executory contract). An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled.
So the term 'contract of sale' covers both, and the options naming only one of them are incomplete.
Alternation in partnership agreement has to be brought to the notice of registration of firms within a period of :
Your Answer : (Not Answered)
Correct Answer : B
The answer is 90 days, on the Maharashtra version of the Partnership Act.
Section 63 of the Indian Partnership Act, 1932 provides for notice to the Registrar of changes in a firm, such as its name, place of business or the partners. As enacted it fixes no time limit, and outside Maharashtra courts have allowed a reasonable time. Maharashtra amended the section (Maharashtra Act 29 of 1984, in force from 1 January 1985) so that notice has to be given within 90 days, and the question comes from a Maharashtra examination.
So 90 days is the only option tied to a statute; 100, 60 and 20 days appear in no version I found. I confirmed the Maharashtra amendment from a secondary summary and not from the amending Act's text, and the question's phrase 'alteration in partnership agreement' loosely covers the changes the section names.
In which judgment, the Hon'ble Supreme Court laid down that a complaint based on a second or successive dishonour of cheque is maintainable, if no complaint based on an earlier dishonour of cheque followed by statutory notice issued on the basis thereof had been filed;
Your Answer : (Not Answered)
Correct Answer : A
The judgment is (2013) 1 SCC 177, M.S.R. Leathers Vs. S. Palaniappan & Anr.
In MSR Leathers a three-judge bench held that there is nothing in Section 138 of the Negotiable Instruments Act that bars a prosecution based on a second or successive dishonour of the same cheque, so long as no complaint had been filed on an earlier dishonour followed by a statutory notice.
It overruled Sadanandan Bhadran v. Madhavan Sunil Kumar (1998), which had held that only one cause of action arises and a second notice on re-presentation cannot found a complaint. The other two cases did not decide this point.
In which judgment, under the Negotiable Instruments Act, 1881 the Hon'ble Supreme Court held that though compounding requires consent of both the parties, but even in absence of such consent, the Court can, in the interest of justice, on being satisfied that the complainant has been duly compensated, in its discretion, close the proceedings and discharge the accused:-
Your Answer : (Not Answered)
Correct Answer : B
The judgment is Meters and Instruments Private Limited vs. Kanchan Mehta, AIR 2017 SC 4594.
In this 2017 decision on cheque dishonour cases under Section 138 of the Negotiable Instruments Act, the Supreme Court held that although compounding ordinarily requires the consent of both parties, the court may, in the interest of justice, close the proceedings and discharge the accused where it is satisfied that the complainant has been duly compensated, even without the complainant's consent.
Damodar S. Prabhu (2010) laid down graded costs for compounding at different stages, and JIK Industries (2012) held that compounding under Section 147 still requires the complainant's consent. Prateek Jain (2014) also concerned the compounding of cheque cases, not discharge without the complainant's consent.
Provisions regarding appointment and Qualification of Director have been described in Which chapter of Companies Act-2013?
Your Answer : (Not Answered)
Correct Answer : B
The appointment and qualifications of directors are provided for in Chapter XI of the Companies Act, 2013, which runs from Section 149 on the company to have a Board of Directors up to the later sections on directors' duties and disqualifications.
Chapter X deals with audit and auditors, Chapter VIII with declaration and payment of dividend, and Chapter V with the acceptance of deposits by companies. None of these deals with directors, so only Chapter XI fits.
Provisions regarding Formation of company have been discussed in which section of The Companies Act, 2013?
Your Answer : (Not Answered)
Correct Answer : A
The formation of a company is dealt with in Section 3 of the Companies Act, 2013, which provides that a company may be formed for any lawful purpose by seven or more persons for a public company, two or more for a private company, and one person for a One Person Company, by subscribing their names to a memorandum and complying with the Act.
Section 5 deals with the articles of a company, Section 6 with the overriding effect of the Act, and Section 7 with incorporation. They come after the provision on formation.
A company shall, on and from the fifteenth day of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it. Which section of Companies Act-2013, has been discussed here?
Your Answer : (Not Answered)
Correct Answer : D
The requirement that a company have a registered office capable of receiving communications from the fifteenth day of its incorporation is in Section 12(1) of the Companies Act, 2013.
Section 12 has several sub-sections, and the other option from the same section, 12(5), is a different sub-clause of it, not the one stating the fifteenth-day rule. Section 18 deals with the conversion of companies already registered, and Section 25 does not provide for the registered office. The question quotes the opening provision, so 12(1) is the one.
Section 233 of the Companies Act, 2013, deals with "fast track merger". What is the time duration and the concerned authority for approval ?
Your Answer : (Not Answered)
Correct Answer : A
The answer is 60-90 days, Regional Director.
Section 233 of the Companies Act, 2013 lets small companies, holding companies and their wholly owned subsidiaries, and other prescribed classes merge without going to the National Company Law Tribunal. The scheme goes to the Registrar and Official Liquidator for objections within thirty days, is approved by the members and creditors, and is then confirmed by the Central Government, a power exercised by the Regional Director. The process is built to finish in a few months.
The NCLT and NCLAT options name the forum the fast-track route is designed to avoid; the RD refers a scheme to the NCLT only if it considers it against the public interest. A one-year timeline would defeat the purpose of a fast-track procedure.
Marks
Total number of questions : 20
Number of answered questions : 0
Number of unanswered questions : 20