MULTIPLE CHOICE QUESTIONS
Incorporation of Company & Incidental Matters
2.1 - Formation of a Company (Secs. 3, 3A and 8)
Q.1 Red Limited was incorporated on 1st April, 2016 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, 2025. By 15th January, 2025, 244 members had withdrawn their holding.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.
Ans.: Members severally liable in certain cases:
[RTP-Nov. 19]
Conclusion
Q.2 Alfa School started imparting education on 01.04.2015, 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 202 5, 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, March 19]
Ans.: Powers that can be exercised by the Central Government against Sec. 8 company:
Revocation of license:
Order for Winding up or Amalgamation of the company
Order for providing amalgamation to form a single company
Q.3 Mr. X, in association with his relative formed a company to promote education for the children of 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 compl aint against the company, C.G 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-Oct. 18]
Ans.: Revocation of License of Sec. 8 company:
Conclusion
Chapter 2
Incorporation of Company & incidental Matters
Q.4 Alpha Herbals, a section 8 Company is planning to declare dividend in the Annual General Meeting for the Financial Year ended 31 .03.2025. Mr. Chopra is holding 800 equity shares as on date. State whether the act of the company is according to the provisions of the Companies Act, 2013 [MTP - Oct 20, RTP-May 21]
Ans.: Declaration of dividend by Sec. 8 company:
Conclusion
Q.5 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.
Examine the feasibility of the proposal and advise the promoters considering the provisions of the Companies Act, 2013. [MTP-Nov. 20, May 19 (5 Marks)]
Or
A group of enthusiastic women is planning to establish the Nursing Medicare Association, a limited liability company with the objective of providing comprehensive theory and practical training to aspiring nurses. The association aims to operate under the provisions of section 8 of the Companies Act, 2013, with a core objective of education. The intended duration for the association's operation is set at ten years, after which a dissolution will be initiated. In the event of dissolution, any remaining assets exceeding liabilities will be allocated among the members according to the standard procedures per mitted by the Companies Act.
Assess the viability of the proposal and offer guidance to the promoters, taking into account the regulations outlined in the Companies Act, 2013. [Nov. 23 (5 Marks)]
Ans.: Formation of Companies with Charitable Objects, etc.:
Q.6 Naveen incorporated a “One Person Company” making his sister Navita as the nominee. Navita is leaving India permanently due to her marriage ab road. 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 Navita is leaving India permanently, is it mandatory for her to withdraw her nomination in the said One Person Company?
(b) If Navita maintained the status of Resident of India after her marriage, then can she continue her nomination in the said One Person Company? [Nov. 19 (2 Marks), RTP- May 21]
Ans.: Nominee in case of OPC:
whether resident in India or otherwise
Conclusion:
Q.7 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 activity in the form of One Person Company with his brother Mr. King as its nominee. On 4th May, 2024, 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 202 4 under the above said Act.
(i) Mr. Shyam son of Mr. Raja who is 15 years old as on 5th May 2024.
(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 2023 to 16th August 2023. 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’. [Nov. 20 (6 Marks)]
Chapter 2
Ans.: Nominee in case of OPC:
Incorporation of Company & incidental Matters
whether resident in India or otherwise
120 days
Conclusion:
Q.8 State Cricket Club was formed as a Limited Liability Company u/s 8 of the Companies Act, 2013 with the object of promoting cricket by arranging introductory cricket 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. Cool, 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 State Cricket Club can be merged with M/s. Cool Net Private Limited, a company engaged in the business of networking? [July 21 (5 Marks), MTP-March 22 ; Oct. 22, Oct. 23]
Ans.: (i) Revocation of License of Sec. 8 company:
Incorporation of Company & Incidental Matters Chapter 2
Conclusion
(ii) Winding up of Sec. 8 company:
Conclusion
(iii) Amalgamation of Sec. 8 company with another company:
Conclusion
Q.9 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-Nov. 21]
Ans.: Minimum number of persons required to form a company:
onsequences when the number of members falls below the minimum prescribed limit:
Q.10 Chhavish, an Indian citizen and resident of India formed "Ekta Readymade Garments Ltd.” as One Person Company on 1st April 2022 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 2024 where final delivery will be completed by December 2024. To expand the production capacity, the company 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 Ltd.” can convert into any other kind of company as on 1st December 2024?
(C) If the company increases its paid-up share capital by ₹ 30 lakhs in August, 2023, can it be converted in any other kind of company immediately? [Dec. 21 (3 Marks)]
Chapter 2
Ans.: Provisions related with One Person Company:
Incorporation of Company & incidental Matters
(i) Persons eligible to act as a member of OPC: whether resident in India or otherwise
(ii) Conversion of OPC into other company as on 01st Dec. 2024:
(iii) Conversion of OPC into other company in Aug. 2023:
Q.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-April 22]
Ans.: Provisions Related with Sec. 8 Company:
Q.12 One of the matters contained in the articles of Dhimaan Foundation, incorporated as a limited company u/s 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]
Incorporation of Company & Incidental Matters Chapter 2
Ans.: Provisions related with Sec. 8 company:
Conclusion
Q.13 Mr. Aditya had incorporated a one person company on 07.07.2024. 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]
Ans.: Nominee in case of OPC:
Conclusion
Q.14 Explain the provisions of the Companies Act, 2013- who can get a licence to operate as a section 8 company (non-profit organization)? [ MTP-April 24]
Ans.: Licence to operate as Sec. 8 Company:
2.2 - Incorporation of Company and Commencement of Business (Secs. 7, 9 and 10A)
Q.15 Mahima Ltd. was incorporated by furnishing false information. As per the Companies Act, 2013, state the powers of the Tribunal (NCLT) in this regard. [Nov. 19 (5 Marks)] Or
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-April 23]
Chapter 2 Incorporation of Company & incidental Matters
Ans.: Powers of Tribunal in case a company is incorporated by furnishing any false information:
Q.16 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-April 21]
Ans.: Commencement of Business:
Q.17 Sapphire Private Limited has registered its articles along with memorandum as on 1st July 2024. The directors of the company seek your advice regarding effect of registration of the company on the company itself and on its members. [May 22 (3 Marks)]
Ans.: Effects of Registration of a company:
2.3 - Memorandum of Association (Sec. 4) & Articles of Association (Sec. 5)
Q.18 Highlight differences between the MOA and AOA.
Ans.: Differences between the MOA and AOA:
Content Supremacy
Scope
Q.19 Yadav Dairy Products Private Limited has registered its articles along with memorandum at the time of registration of company in December, 2019. 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.
Ans.: Provisions for entrenchment:
[RTP–May 20]
Corporate & Other Laws (Law) | CRACKER
AUTHOR : PANKAJ GARG
PUBLISHER : TAXMANN
DATE OF PUBLICATION : OCTOBER 2024
EDITION : 4TH EDITION
ISBN NO : 9789364558693
NO. OF PAGES : 566
BINDING TYPE : PAPERBACK
DESCRIPTION
This book is prepared exclusively for the Intermediate Level of Chartered Accountancy Examination requirement. It includes past exam questions and detailed point-wise answers, strictly following the ICAI syllabus. Additionally, it features MCQs and Integrated Case Scenarios.
The Present Publication is the 4th Edition for the CA-Inter | New Syllabus | Jan./May 2025 Exams. This book is authored by Pankaj Garg, with the following noteworthy features:
• Strictly adheres to the New Syllabus of ICAI
• [Topic-wise and Attempt-wise Coverage of Questions] on every topic
• [Detailed Point-wise Answers] for easy learning
• Coverage includes:
o Past Exam Questions till the Sept. 2024 Exam
o RTPs and MTPs of ICAI till the May 2024 Exam
o 560+ Descriptive Questions
o 370 Multiple Choice Questions
o 80 Integrated Case Scenarios
• [Marks Distribution of Past Exams] is provided Chapter-wise for the May and Sept. 2024 Exams