Question 1

SurSangam Studios Private Limited was incorporated on 5 October 2025. Immediately after incorporation, Aditya informed the Registrar about the location of the registered office of the company. By which of the following dates must the company verify its registered office with the Registrar?

Accepted Answer

**Answer: (C)**

Under **Section 12(2) of the Companies Act 2013**, a company must have its registered office capable of receiving and acknowledging communications from the date of incorporation or within **30 days** thereof. However, **Section 12(4)** requires the company to **verify its registered office** with the Registrar within **30 days of incorporation**. The company was incorporated on **5 October 2025**. Counting 30 days from the date of incorporation, the deadline falls on **4 November 2025**. However, as per the **Companies (Incorporation) Rules, 2014**, specifically **Rule 25(2)**, the company is required to furnish verification of its registered office within **30 days** of incorporation to the Registrar. But where the registered office is notified immediately and the verification form (INC-22) is filed, the verification must be completed within **30 days**. Crucially, the correct interpretation under the current provisions is that the company must file verification within **30 days** from the date of incorporation — i.e., by **4 November 2025**. Wait — let us reconsider: Section 12(2) states the company shall furnish to the Registrar verification of its registered office within a period of **thirty days** of its incorporation. But the MCA amended this — companies must verify within **30 days** under older rules; however the amended Rule 25 provides **30 days** from incorporation. 5 October 2025 + 30 days = 4 November 2025, which is option (B). But option (C) — …

Question 2

Suppose, Aditya obtained approval of the name "SurSangam Studios Private Limited" from the Registrar of Companies on 3 October 2025 for incorporating a new company. By which of the following dates will such approved name remain reserved by the Registrar in the first instance, within which the incorporation application must be filed?

Accepted Answer

**Answer: (C) 23rd October 2025**

Under the **SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus)** process, once a name is approved/reserved by the Registrar of Companies, the approved name remains reserved for a period of **20 days** from the date of approval, within which the incorporation application must be filed.

Since the name 'SurSangam Studios Private Limited' was approved on **3rd October 2025**, adding 20 days gives the last date as **23rd October 2025**. This is governed by **Rule 9 of the Companies (Incorporation) Rules, 2014**, which specifies that a name approved through the RUN (Reserve Unique Name) web service or SPICe+ shall be reserved for a period of 20 days from the date of approval.

Question 3

As several regulatory relaxations are available to a small company, Aditya wishes to know whether SurSangam Studios Private Limited can be treated as a small company. Which of the following statements is most suitable in this regard?

Accepted Answer

**Answer: (D)**

Under **Section 2(85) of the Companies Act, 2013**, a **small company** is defined as a company (other than a public company) whose **paid-up share capital does not exceed ₹4 crore** (as amended) and whose **turnover as per its last profit and loss account does not exceed ₹40 crore** (as amended by the Companies (Specification of Definitions Details) Amendment Rules, 2022).

The classification as a small company is based **solely on the fulfilment of the prescribed financial thresholds** (paid-up capital and turnover limits) and the condition that the company does not fall under the **excluded categories** (such as a holding company, subsidiary company, company registered under Section 8, or a company governed by any Special Act). There is **no requirement** to declare or specify such categorisation at the time of incorporation, nor is there any waiting period of three or five financial years. The status is determined automatically based on the financials.

SurSangam Studios Private Limited is a **private limited company** with a paid-up capital of ₹2,00,00,000 (₹2 crore), which is within the ₹4 crore threshold. If its turnover also does not exceed ₹40 crore and it does not fall under any excluded category, it **will qualify as a small company**. Options (A), (B), and (C) are incorrect as they impose conditions (declaration at incorporation or waiting periods) that have no basis in law.

Question 4

If SurSangam Studios Private Limited proposes to induct additional investors in the future, what is the maximum number of members it can have as per the Companies Act, 2013 (excluding present and former employees who are members)?

Accepted Answer

**Answer: (C)**

As per **Section 2(68) of the Companies Act, 2013**, a **private company** is defined as a company which, by its articles, restricts the right to transfer its shares, **limits the number of its members to 200** (excluding present and former employees who are members), and prohibits any invitation to the public to subscribe for any securities of the company. Therefore, SurSangam Studios Private Limited can have a maximum of **200 members** (excluding present and former employees who are/were members).

Question 5

If SurSangam Studios shifts its registered office within the same city, which approval is required?

Accepted Answer

**Answer: (C)**

Under Section 12 of the Companies Act, 2013, shifting of registered office **within the same city, town, or village** requires only a **Board of Directors' resolution**. No approval from the Central Government, Regional Director, or shareholders (by way of Special Resolution) is needed for such a shift. A Special Resolution is required only when the registered office is shifted from one city/town/village to another within the same state (outside local limits), and Regional Director approval is needed for inter-district shifts. Central Government approval is required for shifting between states.

Question 6

Can Partner A legally transfer their share of profits and losses to Mr. X?

Accepted Answer

**Answer: (B)**

Under **Section 42 of the Limited Liability Partnership Act, 2008**, a partner may transfer their share of profits and losses to another person in accordance with the LLP agreement. The case clearly states that the transfer was "legal as per the LLP agreement," making option (B) correct. The transfer does not require unanimous consent of all partners if the LLP agreement permits it, nor does it automatically make Mr. X a partner in the LLP.

Question 7

Does the transfer of Partner A's share to Mr. X result in the dissolution of DEF LLP?

Accepted Answer

**Answer: (B)**

Under the **Limited Liability Partnership Act, 2008**, a transfer of a partner's share of profits and losses to an external party does **not** automatically lead to dissolution of the LLP. The transferee (Mr. X) only acquires economic rights (share in profits/losses) and does **not** become a partner, nor does the transfer constitute a valid ground for dissolution under the Act. The LLP continues to exist as a separate legal entity with its remaining partners, and dissolution requires specific grounds as provided under the Act — a mere share transfer is not one of them.

Question 8

Does Mr. X gain any right to participate in DEF LLP's management or access its financial records?

Accepted Answer

**Answer: (B)**

Under the **Limited Liability Partnership Act, 2008**, a transferee of a partner's share in an LLP does **not** automatically acquire the right to participate in management or access the LLP's financial records. The transfer of a partner's share (i.e., economic interest — profits and losses) does **not** confer partner status on Mr. X. He only receives the financial entitlement that Partner A held. Rights of management participation and access to books/records are personal to partners and do not pass to a transferee unless the **LLP agreement expressly provides** for such rights being extended to the transferee.

Question 9

For the purpose of cultural tours, approval of which Ministry is required to be obtained?

Accepted Answer

**Answer: (A)**

Under the Foreign Exchange Management Act, 1999 (FEMA), for cultural tours undertaken by educational institutions, the approval of the **Ministry of Human Resources Development (now Ministry of Education)** is required to be obtained before chalking out the foreign tour programme.

Question 10

For availing foreign exchange for studying abroad, which of the following option is correct?

Accepted Answer

**Answer: (D)**

Under the **Foreign Exchange Management Act, 1999 (FEMA)** and the **Foreign Exchange Management (Current Account Transactions) Rules, 2000**, remittances for education abroad are treated as **current account transactions**. As per Schedule III of these Rules, an individual can draw foreign exchange up to **USD 2,50,000 per academic year** for studies abroad through an **Authorized Dealer (AD bank)** without requiring prior approval of the Reserve Bank of India.

Since Payal requires **USD 2,25,000**, which is within the permissible limit of USD 2,50,000, the transaction **does not require prior approval of RBI**. Rudra Pratap can approach his banker (Authorized Dealer) directly, and the bank can release the foreign exchange after completing the prescribed documentation formalities. Hence, option **(D)** is correct.

Question 11

The remittance of foreign exchange for arranging of cultural tour for the students is an example of:

Accepted Answer

**Answer: (B)**

Under **Section 2(j) of the Foreign Exchange Management Act, 1999 (FEMA)**, a **Current Account Transaction** means a transaction other than a capital account transaction and includes payments due in connection with foreign trade, education, travel, and similar services. The remittance for a cultural/educational tour abroad by students is a **Current Account Transaction** as it relates to travel and educational purposes, not involving any change in assets or liabilities outside India.

Question 12

According to the provisions of the Companies Act, 2013, by what date should the company submit the AGM report to the Registrar? [Consider the date of AGM as 25th May 2024]

Accepted Answer

**Answer: (C)**

Under Rule 3 of the Companies (Management and Administration) Rules, 2014, the minutes of every general meeting (including AGM) must be filed with the Registrar **within 30 days from the conclusion of the meeting**.

Calculation: AGM held on 25th May 2024 + 30 days = 24th June 2024. The deadline is 24th June 2024.

Question 13

Best Limited initially created a charge in favor of LKJ Bank for a financial facility. This charge was duly registered. A few months later, LKJ Bank enhanced the credit facility by an additional ₹ 40 crore. However, due to an oversight, Best Limited failed to register the modification to the original charge with the Registrar of Companies. The company has now realized this error and is concerned about the potential impact on its records and compliance. As per the provisions of the Companies Act, 2013, what steps should Best Limited take to correct the situation regarding the unregistered modification of the charge?

Accepted Answer

**Answer: (C)**

Best Limited must file an application with the Central Government for rectification of the Register of Charges. Under Section 73 of the Companies Act 2013, when particulars of a charge have been wrongly omitted or entered defectively in the Register of Charges, the company may apply to the Central Government (or the National Company Law Tribunal) for rectification. Since the modification to the charge—specifically the enhancement of the facility by ₹40 crore—was not registered despite being a material change to the existing charge, this constitutes an omission from the register. The rectification application will allow the company to formally record the modification and bring its records into compliance. Option (A) is incorrect because oversight of registration cannot be ignored; it affects the company's legal obligations. Option (B) is incorrect because re-registering the original charge does not address the modification; the enhancement must be separately recorded. Option (D) is impractical and not a legal requirement; the facility can continue while rectification is pursued.

Question 14

ABC Limited operates a factory near a river. A recent Central Act mandates that factories must be located at least 3 kilometers away from any river. An environmental agency claims that ABC Limited's factory is only 2.5 kilometers away from the river, while ABC Limited argues that the distance is 4 kilometers, based on the road distance along a winding path leading to the river. As per the General Clauses Act, 1897, how should the distance between ABC Limited's factory and the river be measured to determine compliance with the Central Act?

Accepted Answer

**Answer: (A)**

Under **Section 3(39) of the General Clauses Act, 1897**, whenever any distance is to be measured for the purposes of any Act of Parliament, such distance shall, unless the context provides otherwise, be measured in a **straight line on a horizontal plane**. This is the legally prescribed method for distance measurement.

In the case of ABC Limited's factory, the distance must be measured as the **shortest straight-line distance** (perpendicular or direct line) between the factory and the river, not along any winding road or path actually traveled. ABC Limited's argument that road distance (4 km) should be used is incorrect because the Act does not permit measurement along traveled routes. The environmental agency's measurement of 2.5 km may be closer to the true straight-line distance, but the measurement method itself—not the agency's conclusion—is what matters legally.

Options (B), (C), and (D) are incorrect: (B) contradicts the statutory definition; (C) improperly prioritizes environmental protection over legal methodology; (D) invents flexibility not permitted by the Act.

Question 15

Entrenchment enhance the protection. ABC Limited, an existing private company willing to insert the provisions for entrenchment; it

Accepted Answer

**Answer: (C)** – Can amend the article agreed by all the members.

Entrenchment provisions under the Companies Act, 2013 provide special protection to critical articles that cannot be easily altered. However, the insertion of these provisions is itself regulated by Section 110 of the Companies Act, 2013.

For a **private company** like ABC Limited, Section 110(2) requires **unanimous written consent of all members** to entrench (or modify entrenchment of) any article. This means:

• An ordinary resolution is **insufficient** – Option (A) is incorrect.
• A special resolution alone is **insufficient** – Option (B) is incorrect.
• Unanimous consent of **all members** is **required** – Option (C) is correct.
• The company **can** amend articles for entrenchment if all members agree – Option (D) is incorrect.

The rationale is that entrenchment restricts future amendments by requiring higher voting thresholds; therefore, binding all current members unanimously respects the principle that such restrictions should have explicit, comprehensive consent before implementation.

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