Q1One Person Company — nominee formalities
0 marks hard
Case: Utkarsh incorporated 'Utkarsh Pharmaceutical Private Limited' (One Person Company) with registered office at New Delhi having ₹40 lakh as authorised share capital. He requested his elder brother Yashwant, a doctor in general medicine, to be the nominee for his OPC, who agreed. After seven years of successful operations, Utkarsh along with his wife Divya wishes to convert the OPC into a Private Limited Company. Yashwant also started Vinayak Multicare Hospital Private Limited with Raghu, with authorised share capital of ₹10 crore and paid up share capital of ₹5 crore, having 60 shareholders of w…
Yashwant, the elder brother of Utkarsh agreed to become nominee in his Utkarsh Pharmaceutical Private Limited (One Person Company). Which of the following regarding the formalities must be completed by Utkarsh while making Yashwant nominee?
(A) Utkarsh must have obtained a written consent letter from Yashwant and stated his name as nominee in the Memorandum of Association under Nomination clause.
(B) Utkarsh must have obtained a written consent letter from Yashwant and stated his name as a nominee, in the Articles of Association, under Nomination clause.
(C) Utkarsh must have obtained a written consent letter from Yashwant and it should be filed without stating his name as a nominee either in Memorandum or Articles of Association, since there is no such requirement.
(D) Utkarsh must have obtained a written consent letter from Yashwant within fifteen days after incorporation and must be kept in the records maintained at the registered office of the company.
Q2Private company — maximum number of members
0 marks hard
Case: Utkarsh incorporated 'Utkarsh Pharmaceutical Private Limited' (One Person Company) with registered office at New Delhi having ₹40 lakh as authorised share capital. He requested his elder brother Yashwant, a doctor in general medicine, to be the nominee for his OPC, who agreed. After seven years of successful operations, Utkarsh along with his wife Divya wishes to convert the OPC into a Private Limited Company. Yashwant also started Vinayak Multicare Hospital Private Limited with Raghu, with authorised share capital of ₹10 crore and paid up share capital of ₹5 crore, having 60 shareholders of w…
It is clear from the case scenario that Yashwant has formed Vinayak Multicare Hospital Private Limited with sixty shareholders of which two shareholders are ex-employees and the other three are still the employees of the company. Which of the following is the correct option relating to maximum shareholders to whom the shares may be allotted in the company?
(A) Vinayak Multicare Hospital Private Limited can issue shares to maximum one hundred fifty persons.
(B) Vinayak Multicare Hospital Private Limited can issue shares to maximum one hundred forty persons.
(C) Vinayak Multicare Hospital Private Limited can issue shares to maximum one hundred forty five persons.
(D) Vinayak Multicare Hospital Private Limited can issue shares to maximum ninety persons.
Q3One Person Company — prohibition on non-banking financial ac
0 marks hard
Case: Utkarsh incorporated 'Utkarsh Pharmaceutical Private Limited' (One Person Company) with registered office at New Delhi having ₹40 lakh as authorised share capital. He requested his elder brother Yashwant, a doctor in general medicine, to be the nominee for his OPC, who agreed. After seven years of successful operations, Utkarsh along with his wife Divya wishes to convert the OPC into a Private Limited Company. Yashwant also started Vinayak Multicare Hospital Private Limited with Raghu, with authorised share capital of ₹10 crore and paid up share capital of ₹5 crore, having 60 shareholders of w…
Whether Utkarsh, the owner of Utkarsh Pharmaceutical Private Limited (One Person Company) can carry out Non-banking Financial Investment activities including investment in securities of any body corporate?
(A) Utkarsh, the owner of One Person Company can undertake to carry out such activities only when its paid up share capital is at least ₹1 crore.
(B) Utkarsh, the owner of One Person Company can carry out such activities only when its paid up share capital is at least ₹2 crore.
(C) Utkarsh, the owner of One Person Company can carry out such activities only when its paid up share capital is at least ₹5 crore.
(D) Utkarsh, the owner of One Person Company cannot undertake carrying out non-banking financial investment activities including investment in securities of any body corporates irrespective of the quantum of its paid up share capital.
Q4Private company — exclusion of employee-shareholders from me
0 marks hard
Case: Utkarsh incorporated 'Utkarsh Pharmaceutical Private Limited' (One Person Company) with registered office at New Delhi having ₹40 lakh as authorised share capital. He requested his elder brother Yashwant, a doctor in general medicine, to be the nominee for his OPC, who agreed. After seven years of successful operations, Utkarsh along with his wife Divya wishes to convert the OPC into a Private Limited Company. Yashwant also started Vinayak Multicare Hospital Private Limited with Raghu, with authorised share capital of ₹10 crore and paid up share capital of ₹5 crore, having 60 shareholders of w…
Vinayak Multicare Hospital is incorporated as a private company with 60 shareholders and 5 employee-shareholders. For determining if it breaches the statutory limit on the number of members in a private company, how should the employee-shareholders be counted under the Companies Act, 2013?
(A) All 60 shareholders plus the 5 employees must be counted, totaling 65 members for the limit calculation.
(B) Only the 5 employee-shareholders are counted as members, since employees are considered distinct from regular shareholders.
(C) Only the shareholders who are not employees are counted, because employee-shareholders are excluded.
(D) Neither the 60 shareholders nor the 5 employee-shareholders are counted, as private companies have no statutory member limit.
Q5LLP — consequences of reduction to single partner
0 marks hard
Case: ABC Solutions LLP, registered under the Limited Liability Partnership Act, 2008, operates a software consultancy firm based in Punjab with two partners: Mr. X (Designated Partner) and Mr. Y. The LLP Agreement requires a 30-day notice for resignation, but Mr. Y skips notice and unilaterally files Form 6 with the RoC in January 2026, intimating cessation of his partnership interest with immediate effect. The LLP fails to file mandatory Form 4 within the prescribed time, attracting a penalty of ₹100 per day for each designated partner. Mr. X, knowing of Mr. Y's cessation since January 2026, conti…
Under the Limited Liability Partnership Act 2008, what is the general consequence when an LLP is reduced to only one partner because the other partner leaves, and no new partner is admitted within the prescribed period?
(A) The LLP and the remaining partner may continue temporarily, but the remaining partner can become personally liable if a new partner is not admitted within the statutory period.
(B) The LLP may continue its business indefinitely as a single-partner entity with no additional consequences.
(C) The LLP is automatically converted into a traditional partnership with the remaining partner as sole proprietor.
(D) The LLP is required to immediately cease all business operations and is automatically dissolved on that day.
Q6LLP — personal liability of sole remaining partner after gra
0 marks hard
Case: ABC Solutions LLP, registered under the Limited Liability Partnership Act, 2008, operates a software consultancy firm based in Punjab with two partners: Mr. X (Designated Partner) and Mr. Y. The LLP Agreement requires a 30-day notice for resignation, but Mr. Y skips notice and unilaterally files Form 6 with the RoC in January 2026, intimating cessation of his partnership interest with immediate effect. The LLP fails to file mandatory Form 4 within the prescribed time, attracting a penalty of ₹100 per day for each designated partner. Mr. X, knowing of Mr. Y's cessation since January 2026, conti…
If the LLP continues business with only one partner beyond the statutory grace period without admitting a new partner, what is the typical nature of the remaining partner's liability for obligations incurred during that default period under the Act?
(A) The remaining partner continues to enjoy full limited liability, with no change in protection.
(B) The remaining partner may be held personally liable, similar to a partner in a traditional unlimited liability partnership, for obligations incurred during the non-compliant period.
(C) The remaining partner becomes personally liable only if the leaving partner consents in writing to such liability.
(D) The remaining partner becomes liable only for intentional wrongs, but not for contractual debts incurred during the period.
Q7LLP — liability of ceased partner for post-cessation debts
0 marks hard
Case: ABC Solutions LLP, registered under the Limited Liability Partnership Act, 2008, operates a software consultancy firm based in Punjab with two partners: Mr. X (Designated Partner) and Mr. Y. The LLP Agreement requires a 30-day notice for resignation, but Mr. Y skips notice and unilaterally files Form 6 with the RoC in January 2026, intimating cessation of his partnership interest with immediate effect. The LLP fails to file mandatory Form 4 within the prescribed time, attracting a penalty of ₹100 per day for each designated partner. Mr. X, knowing of Mr. Y's cessation since January 2026, conti…
Assume Mr. Y has resigned from ABC Solutions LLP, and his cessation has been duly filed and recorded. A creditor supplies goods two months later, relying on old stationery still showing Mr. Y as partner. What is the most likely legal position of Mr. Y regarding this new debt?
(A) Mr. Y has no liability because he validly ceased to be a partner and proper notice was given.
(B) The remaining partner may be held personally liable, similar to a partner in a traditional unlimited liability partnership, for obligations incurred during the non-compliant period.
(C) The remaining partner becomes personally liable only if the leaving partner consents in writing to such liability.
(D) The remaining partner becomes liable only for non-intentional wrongs, but not for contractual debts incurred during the period.
Q8LLP — personal liability of sole remaining partner for suppl
0 marks hard
Case: ABC Solutions LLP, registered under the Limited Liability Partnership Act, 2008, operates a software consultancy firm based in Punjab with two partners: Mr. X (Designated Partner) and Mr. Y. The LLP Agreement requires a 30-day notice for resignation, but Mr. Y skips notice and unilaterally files Form 6 with the RoC in January 2026, intimating cessation of his partnership interest with immediate effect. The LLP fails to file mandatory Form 4 within the prescribed time, attracting a penalty of ₹100 per day for each designated partner. Mr. X, knowing of Mr. Y's cessation since January 2026, conti…
Can suppliers proceed against Mr. X's personal property for recovery of ₹50 lakh?
(A) No, LLP liability is always unlimited.
(B) Mr. Y and Mr. X share liability equally because partners are always jointly liable for LLP debts.
(C) Mr. X is liable.
(D) Mr. Y is liable as a partner for all such contracts where his name appeared on the stationery used for the transaction.
Q9Government company — auditor appointment by CAG
0 marks easy
XYZ Limited is a company with 51% of its equity shares held by the State Government of Maharashtra and 49% by private investors. The Board of XYZ Limited seeks to appoint an auditor for the upcoming financial year. As per the Companies Act, 2013, which of the following statements is correct regarding the appointment of the auditor?
(A) The Board of XYZ Limited has the authority to appoint the auditor through a board resolution.
(B) The Comptroller and Auditor General (CAG) of India will appoint the auditor for XYZ Limited.
(C) The shareholders of XYZ Limited will appoint the auditor in the annual general meeting.
(D) The State Government of Maharashtra, holding the majority stake, will appoint the auditor.
Q10CSR applicability — threshold criteria under Section 135
0 marks easy
A listed company has a net worth of ₹480 crore, turnover of ₹1200 crore, and net profit of ₹3 crore in the immediately preceding financial year. How does CSR provisions apply to this company?
(A) CSR provisions applies because it satisfies the turnover threshold, even though the net worth and net profit thresholds are not met.
(B) CSR provisions does not apply because the company must satisfy at least two of the three thresholds simultaneously.
(C) CSR provisions applies only if the company's shares are listed on a recognized stock exchange and it meets all three thresholds cumulatively.
(D) CSR provisions does not apply because the net worth is below ₹500 crore and net profit is below ₹5 crore.
Q11Section 27 — variation of terms of prospectus; restriction o
0 marks easy
XYZ Limited issued a prospectus to raise funds for a new manufacturing project. After successfully raising the funds, the company identified an investment opportunity in a different industry six months later, requiring a significant portion of the funds. The proposed investment involved trading in equity shares of other listed companies. The board of directors suggested varying the original objectives for which the funds were raised to allow this new investment and recommended passing a special resolution in the company's general meeting. While the promoters and controlling shareholders supported this change, some shareholders expressed concerns, particularly regarding the deviation from the initially stated purpose of the funds. Based on the provisions of the Companies Act, 2013, advise on the validity of the proposal to redirect the funds toward this new investment.
Q12Section 54 — sweat equity shares by start-up company; lock-i
0 marks easy
John Pvt Ltd. is an unlisted company incorporated in the year 2012. The company has share capital of rupees fifty crores. The company has decided to issue sweat equity shares to its directors and employees. The company decided to issue 10% sweat equity shares (which in total will add up to 30% of its paid up equity shares), with a locking period of five years, as it is a start-up company. Explain the provisions for issue of sweat equity shares by a start-up company, with reference to the provisions of the Companies Act, 2013.
Q13Share application money — deemed deposits; book adjustment n
0 marks easy
RS Ltd. received share application money of ₹50 Lakh on 01.06.2025 but failed to allot shares within the prescribed time limit. The share application money of ₹5 Lakh received from Mr. Khanna, a customer of the Company, was refunded by way of book adjustment towards the dues payable by him to the company on 30.07.2025. The Company Secretary of RS Ltd. reported to the Board that the entire amount of ₹50 Lakh shall be deemed to be 'Deposits' as on 31.07.2025 and the Company is required to comply with the provisions of the Companies Act, 2013 applicable to acceptance of deposits in relation to this amount. You are required to examine the validity of the reporting of the Company Secretary in the light of the relevant provisions of the Companies Act, 2013.
Q14Sections 77 and 79 — duty of acquiring company to register e
0 marks easy
PQR Limited, a manufacturing company, is in the process of expanding its operations. To support this expansion, PQR Limited has acquired a plot of land along with the buildings on it from ABC Limited, another company in the same industry. The property is subject to an existing charge, created in favour of a bank as security for a loan taken by ABC Limited, which was registered by ABC Limited at that time. The directors of PQR Limited are of the opinion that as the charge for the property was already created, there is no further obligation to be fulfilled from the side of PQR Limited. After negotiations, the bank, as the charge holder, consents to the sale and transfer of the property to PQR Limited with the condition that PQR Limited must register a new charge over the acquired property as security for its own loan obligations. Advise whether the contention of directors of PQR Limited is correct. Give your answer in terms of the provisions of the Companies Act, 2013.
Q15Joint shareholders — e-voting seniority; remote e-voting per
0 marks easy
Discuss the following in the light of the provisions of the Companies Act, 2013:
Q16Section 103 — quorum for public company; corporate represent
0 marks easy
Prime Industries Ltd., a public limited company with 800 members, convenes its General Meeting at 11:00 AM on 15th March 2027. The Articles of Association do not prescribe a higher quorum. At the meeting, the following individuals are present: Rahul Sharma, Priya Patel, and Vikram Singh (three individual members, present in person); Arjun Mehta, authorized by Horizon Pvt. Ltd. (a corporate member) through a board resolution to represent it; Neha Kapoor, authorized by Summit Ltd. (another corporate member) through a board resolution to represent it; Karan Desai and Maya Reddy (two individual members, present only by proxy). Arjun Mehta arrives at 11:15 AM. Discuss the quorum requirements as per the provisions of the Companies Act, 2013, addressing:
Q17Section 60 LLP Act — compromise with creditors; mandatory di
0 marks easy
Bright Consultants LLP is facing temporary financial difficulties and proposes a compromise with its unsecured creditors for payment of 70% of the outstanding dues in full settlement. An application is made before the Tribunal by one of the partners of the LLP seeking directions to convene a meeting of creditors. The Tribunal orders the meeting to be held. At the meeting, creditors representing 75% in value of the total outstanding debt vote in favour of the proposed compromise. The LLP thereafter approaches the Tribunal for sanction of the scheme. However: (1) The LLP fails to disclose in its application that an investigation proceeding is pending against it under the Limited Liability Partnership Act, 2008. (2) After obtaining the Tribunal's sanction order, the LLP does not file the order with the Registrar within 30 days. A dissenting creditor challenges the validity of the compromise on these grounds. Examine as per the provisions of the Limited Liability Partnership Act, 2008:
Q18Sections 17 and 18 General Clauses Act — reference to offici
0 marks easy
The National Infrastructure Authority Act, 2005 (a Central Act enacted after the commencement of the General Clauses Act, 1897) provides that: 'The Chairperson of the National Infrastructure Authority shall have the power to grant licences for strategic highway projects.' In 2024, the designation of 'Chairperson' was replaced by 'Managing Director' through an amendment to the parent Act. The powers and functions earlier exercised by the Chairperson were formally vested in the Managing Director. A dispute arose when a company challenged the validity of a licence granted by the Managing Director on the ground that the original provision of the Act referred only to the 'Chairperson' and not to the 'Managing Director.' The company contends that since the Act specifically mentions 'Chairperson,' only that office-holder could exercise the power and not any successor authority. With reference to the provisions of the General Clauses Act, 1897 relating to 'Successors,' examine whether the licence granted by the Managing Director is valid.
Q19Interpretation of statutes — usage and custom; contemporanea
0 marks easy
The Central Government enacted the Industrial Regulation Act, 1985. One of the provisions of the Act uses the term 'processing unit', but the term is not specifically defined in the statute. For the last 30 years, licensing authorities across the country have consistently treated small packaging units as 'processing units' under the Act. Several industries have been granted licences on this basis. The Legislature has amended the Act multiple times over the years, but has never altered this interpretation. Further, in one case, a High Court also accepted this long-standing practice while deciding a dispute. Recently, a new regulatory authority has taken a different view and denied licence to a packaging unit, arguing that the term 'processing unit' should be interpreted strictly as per its dictionary meaning and not according to past administrative practice. The affected company challenges the decision and contends that long-standing usage and practice should guide the interpretation of the statute. While interpreting a statute, what is the effect of usage, customs and long-standing practice? Explain with reference to relevant principles and Latin maxims.
Q20FEMA Section 2(v) — residential status of foreign company, I
0 marks easy
Golden Global Ltd. is a company incorporated and registered in Germany. On 1st April 2012, it established a branch office at Chennai, India. The Chennai branch subsequently began controlling the operations of another branch of Golden Global Ltd. situated in Dubai. With reference to the provisions of the Foreign Exchange Management Act, 1999, determine the residential status of: