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Mock Test Paper - Series II: April, 2024

Date of Paper: 4 April, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP – I

PAPER – 2: CORPORATE AND OTHER LAWS
Time Allowed – 3 Hours Maximum Marks – 100
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case Scenario based MCQs (30 Marks)
Part I is compulsory
Case Scenario 1
ACC Private Limited was incorporated in July 2001. Its shares are listed on BSE
and NSE. It is registered with an authorised share capital of ` 20 crore divided into
2 crore equity shares of ` 10/- each. The paid-up share capital of the company is
` 10 crore divided into 1 crore equity shares of ` 10/- each.
The Board of Directors of the company in their meeting held on 11th August, 2023
declared interim dividend. The Annual General Meeting of the company was held
on 1st September, 2023. The company had incurred losses in the previous financial
year as well as in the current financial year upto the period ended June 30, 2023.
In the previous five financial years, the company had declared the dividend as
under:
Financial Year Dividend declared per Dividend declared
Ended share (`) rate (%)
March 31, 2023 Nil Nil
March 31, 2022 1.00 10%
March 31, 2021 1.10 11%
March 31, 2020 1.30 13%
March 31, 2019 1.20 12%
The company has deposited the amount of dividend declared in a separate account
with ABC Bank on August 14, 2023. Out of the total dividend declared, ` 60,000
payable to few equity shareholders remains unclaimed even after the expiry of
statutory period within which dividend was required to be paid and had been
transferred to a separate bank account Unpaid Dividend Account on 20th
September 2023. The company prepares a statement containing the names of
shareholders, their last known address and the unpaid dividend amount to such
each shareholder and place on its website.

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Meanwhile, the company obtained a term loan of ` 15 crore from Laxmi Bank
Limited on August 20, 2023, securing it with a charge on the company's assets,
including its own buildings (in India and Germany) and intangible assets (trademark
right over the company’s logo). According to the Companies Act, 2013, the
company was required to register this charge with the Registrar within a specified
timeframe. However, the company failed to complete the registration process within
the prescribed timeline.
The Board of Directors has requested their Company Secretary to confirm them
whether they are required to incur expenditure towards Corporate Social
Responsibility during the financial year 2023-2024 and is required to constitute
CSR committee.
The financial particulars in respect of immediately preceding financial year are as
under:
S. No. Particulars Amount (` in crore)
1 Net worth 100
2 Turnover 1010
3 Net Profit 4.9
4 Borrowings 60
On the basis of above facts and by applying applicable provisions of the Companies
Act, 2013 and the applicable Rules therein, choose the correct answer (one out of
four) of the following Multiple Choice Questions (MCQs 1-5) given herein under: -
1. The company can create charge in favour of the lender on the assets which
are:
(a) Tangible Assets and situated in India only
(b) Intangible Assets and situated in India only
(c) Assets that are tangible or otherwise and situated in India or Germany
(d) Assets that are tangible or otherwise and situated in India only
2. The maximum rate at which interim dividend can be declared by the Board
during the current financial year is as under: -
(a) The board cannot declare the interim dividend at a rate higher than the
average dividend declared by the company immediately during
preceding two financial years, i.e. 5%.
(b) The board cannot declare the interim dividend at a rate higher than the
average dividend declared by the company immediately during
preceding three financial years, i.e. 7%.
(c) The board cannot declare the interim dividend at a rate higher than the
average dividend declared by the company immediately during
preceding four financial years, i.e. 8.5%.
(d) The board cannot declare the interim dividend at a rate higher than the
average dividend declared by the company immediately during
preceding five financial years, i.e. 9.2%.
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3. In respect of dividend declared which of the Statement is not correct?

(a) The company has transferred the dividend amount to separate bank
account within 5 days from the date of declaration of dividend.
(b) The company is required to pay dividend within 30 days from the date of
declaration of dividend.
(c) The company is required to transfer the Unpaid dividend to a separate
bank account within 10 days from the date of expiry of statutory period
from the date of declaration of dividend.
(d) The company is required to prepare a statement containing the names
of shareholders, their last known address and the unpaid dividend
amount to such each shareholder and place on its website within 90 days
from the date of transferring the amount to Unpaid Dividend Account.
4. Choose the correct option in terms that whether the provisions of Corporate
Social Responsibility are applicable to ACC Private Limited.
(a) The provisions of Corporate Social Responsibility are not applicable to
ACC Private Limited as it is a private limited company.
(b) Yes, as ACC Private Limited is having turnover of more than ` 1000
crore.
(c) Yes, as ACC Private Limited is having net profit of more than ` 2.5 crore
in the immediately preceding financial year.
(d) Yes, as ACC Private Limited is having net worth of more than ` 50 crore
in the immediately preceding financial year.
5. The notice for the Annual General Meeting should be served by:
(a) 6th August 2023
(b) 7th August 2023
(c) 8th August 2023
(d) 10th August 2023
Case Scenario 2
Sudeep and Ankit are very fast friend since long. They decided to run a service unit
which will provide “Financial and Investment Consultancy Services”. For this
purpose they formed a limited liability partnership under the name M/s Etharkkum
Advisors LLP on 17th April 2020. For this purpose, they prepared a Limited Liability
Partnership Deed of which one of the clauses provides that a new partner may be
admitted in the LLP with capital contribution which may be in kind or cash. Further
new partner is also required to deposit the agreed amount of capital contribution
within six months from the date of his admission.
After some time, office of the firm was destroyed due to an earthquake and the LLP
was in urgent need of an office premises and some funds for some renovation work.
It is also informed that M/s Etharkkum Advisors LLP approached Manoj on
1st January 2023 to join the firm as third partner. Manoj was out of India for the
period from 1st September 2021 to 23rd December 2022. He agreed to join the LLP
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and also agreed to contribute his office premises at Sanjay Place, Palwal and funds
of ` 5,00,000 as Capital Contribution in the firm. Manoj joined the firm on 25th
January 2023 as limited liability partner. The above said office premises was
purchased by Manoj five years ago for ` 25,00,000 but the fair market value of this
office on 25th January 2023 was ` 32,25,000 and on 1 st January 2023 was
` 30,00,000. Manoj has provided his office to the firm with effect from his admission
and promised to deposit the agreed amount of ` 5,00,000 within six months as
provided in the partnership deed. Before Manoj could deposit the amount with the
firm, it was dissolved. Manoj denied to deposit the amount of ` 5,00,000 with the
contention that he is liable only upto the amount contributed in the firm on the date
of dissolution. A creditor of the firm sued Manoj to deposit the said amount so that
the firm may pay off his liability.
On the basis of above facts and by applying applicable provisions of the Limited
Liability Partnership Act, 2008 and the applicable Rules therein, choose the correct
answer (one out of four) of the following Multiple Choice Questions (MCQs 6-9)
given herein under: -
6. Whether Manoj could be considered as resident or not as per the Limited
Liability Act, 2008?
(a) Manoj could not be considered resident in India as he was not in India
for 182 days in preceding one year
(b) Manoj could not be considered resident in India as he was not in India
for 120 days in preceding one year i.e. only for 33 days from 24th
December 2022 to 25 th January 2023
(c) Manoj could not be considered as he was not in India for 182 days during
the financial year
(d) Manoj will be considered as resident in India as he was in India for 120
days during the financial year (2021- 2022)
7. What would be the worth of Capital Contribution by Manoj?
(a) ` 25,00,000
(b) ` 32,25,000
(c) ` 37,25,000
(d) ` 35,00,000
8. Whether Manoj will be liable to contribute ` 5,00,000 after dissolution of the
firm?
(a) Yes, because a partner is personally liable for the deficiency arising at
the time of dissolution of LLP.
(b) No, because a partner is never personally liable for the deficiency arose
at the time of dissolution of LLP.
(c) Yes, the partner is under obligation to contribute money also to LLP as
per the agreement.
(d) No, because a partner is personally liable only upto the amount
contributed to the LLP on the date of dissolution of LLP.
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9. Finload Limited wants to raise funds for its upcoming project. Accordingly, it
has issued private placement offer letters for issuing equity shares to 57
persons, of which six are qualified institutional buyers and remaining are
individuals.
Choose the correct statement as per the provisions of the Companies Act,
2013:
(a) Finload Limited company is a public limited company hence it can not
issue shares through private placement.
(b) Since, Finload Limited has made an offer or invitation to more than the
prescribed number of persons, it shall be deemed to be an offer to the
public and accordingly, it shall be governed by the provisions relating to
prospectus.
(c) Finload Limited has made an offer or invitation to less than the
prescribed number of persons as qualified institutional buyers are not
counted to calculate the prescribed limit.
(d) Finload Limited cannot issue shares to qualified institutional buyers, as
under private placement shares cannot be issued to qualified
institutional buyers.
10. Company X, a leading automobile manufacturer, has invested in Company Y,
a start-up specializing in electric vehicle technology. Company X holds a 25%
stake in Company Y and actively participates in its strategic decisions. Based
on the provisions of the Companies Act 2013 regarding associate companies,
which of the following statements is correct?
(a) Company X's investment in Company Y does not qualify as an associate
company because Company X does not have control of at least 50% of
the total voting power.
(b) Company Y qualifies as an associate company of Company X since
Company X holds a 25% stake in Company Y and actively participates
in its strategic decisions.
(c) Company Y cannot be considered an associate company of Company X
because it is a start-up and does not meet the minimum criteria for
significant influence.
(d) Company X's investment in Company Y falls under the category of joint
venture and does not qualify as an associate company according to the
Companies Act 2013.
Case Scenario 3
M/s Aryan & Aryan LLP was registered on 2 nd July 2019. Sudeep and Ankit were
partners in the firm. Both Sudeep and Ankit were also the designated partners in
this firm. The LLP deals in manufacturing and trading of electric ceiling fans. One
day Sudeep met with Mr. Kishore, a director of Krtiken Electronics Private Limited.
After discussion, Mr. Kishore showed interest that Krtiken Electronics Private
Limited may work with M/s Aryan & Aryan LLP as partner.

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Krtiken Electronics Private Limited was incorporated on 1 st June 2017 with the
object to deal in electronics. The memorandum and articles of association of Krtiken
Electronics Private Limited also authorised it to work as partner in a LLP.
The partners of M/s Aryan & Aryan LLP and directors of Krtiken Electronics Private
Limited approached a professional consultant Mrs. Archika Jain for providing the
procedure for adding Krtiken Electronics Private Limited as a partner in M/s Aryan
& Aryan LLP. She advised that Krtiken Electronics Private Limited could not be the
partner in M/s Aryan & Aryan LLP because as per Limited Liability Partnership Act
2008, an individual or a body corporate can be a partner in LLP. She informed that
the term ‘body corporate’ was defined in the Limited Liability Partnership Act, 2008
as a company which is defined in section 3 of the Companies Act, 1956. As Krtiken
Electronics Private Limited is registered under Companies Act 2013, it cannot be
termed as body corporate. On the advice of Mrs. Archika Jain, M/s Aryan & Aryan
LLP dropped the idea to add Krtiken Electronics Private Limited.
It is further informed that Ms. Shanaya was admitted as a new partner in the firm
on 17th January 2024. The firm intimated the registrar about her admission on
31st January 2024. On 3rd February 2024, while going to office Ms. Shanaya met
with an accident and lost her memory. The doctor declared her of unsound mind to
work as partner in M/s Aryan & Aryan LLP. It was also confirmed by a competent
court.
On the basis of above facts and by applying applicable provisions of the General
Clauses Act, 1897 therein, choose the correct answer (one out of four) of the
following MCQs (11-13) given herein under:-
11. Whether Krtiken Electronics Private Limited could be partner in M/s Aryan &
Aryan LLP?
(a) No, as Krtiken Electronics Private Limited is not a body corporate as per
the definition of “Body Corporate” given in Limited Liability Partnership
Act, 2008.
(b) Yes, because section 8 of the General Clauses Act, 1897 provides where
any Act or Regulation made after the commencement of this Act, repeals
and re-enacts, with or without modification, any provision of a former
enactment, then references in any other enactment or in any instrument
to the provision so repealed shall, unless a different intention appears,
be construed as references to the provision so re-enacted. Therefore,
after the enactment of Companies Act, 2013, the definition of “Body
Corporate” should be construed as a company which is defined in
section 2(20) of the Companies Act, 2013.
(c) No, as provisions of section 8 of the General Clauses Act, 1897 will not
be applicable because the Limited Liability Partnership (Amendment)
Act, 2021, which amended the definition of “Body Corporate” considering
the company registered under Companies Act, 2013, come to effect from
01.04.2022.
(d) Yes, as the provisions of the General Clauses Act, 1897 are not
applicable while interpreting the provisions of the Limited Liability
Partnership Act, 2008.
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12. Following the provisions of Limited Liability Act, 2008 read with the General
Clauses Act, 1897, what should be the last date to inform the registrar about
the admission of Ms. Shanaya.
(a) 15th February 2024
(b) 16th February 2024
(c) 17th February 2024
(d) 18th February 2024
13. What would be the status of Ms. Shanaya in the firm, M/s Aryan & Aryan LLP
after the accident?
(a) She would continue as a partner in M/s Aryan & Aryan LLP even after
being declared as of unsound mind.
(b) Section 24(2) of the Limited Liability Partnership Act, 2008 provides that
a person shall cease to be a partner of a LLP if he is declared to be of
unsound mind by a competent court. As this sub – section provides only
for male person (“he”), she would continue as a partner in M/s Aryan &
Aryan LLP.
(c) Following the provisions of the General Clauses Act, 1897 which
provides that in all legislations and regulations, unless there is anything
repugnant in the subject or context words importing the masculine
gender shall be taken to include females. Hence, Ms. Shanaya will cease
to be a partner M/s Aryan & Aryan LLP.
(d) She can continue as partner if all other partners agree for that.
14. HBL Private Limited is a project engineering, procurement and construction
company. The company has bagged a contract from the Government of State
of Tamil Nadu for construction of Water Dam. The company has involved a
project consultancy firm situated in Netherlands for preparing techno-
economic feasibility report to enable it to start construction work of dam. The
company had paid USD 7,000,000 to vendor of Netherlands.
The company also availed the services of Software Company situated in UK
for the migration of its accounting software from SAP to Oracle for which the
Company had paid USD 2,000,000 to the software company.
Considering the provisions of Foreign Exchange Management Act, 1999,
which of the below mentioned statement is correct:
(a) The company can make payment of USD 7,000,000 and USD 2,000,000
without any approval.
(b) The company can make payment of USD 7,000,000 without any
approval and USD 2,000,000 after obtaining prior approval of the
Reserve Bank of India (RBI).
(c) The company can make payment of USD 7,000,000 and USD 2,000,000
after obtaining prior approval of RBI.
(d) The company can make payment of USD 7,000,000 after obtaining prior
approval of RBI and USD 2,000,000 without any approval.
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15. Ms. Shalini Gupta had enrolled her for management course of three years with
IIM, Ahmedabad. Out of three years, two years of educational course would
be provided at the campus of IIM, Ahmedabad and one year of educational
course would be provided at University of Auckland under student exchange
program. Ms. Shalini Gupta is required to pay tuition fee of `10 lakh directly
to IIM, Ahmedabad for two years course and USD 200,000 to University of
Auckland.
Ms. Shalini had left India on 20th August 2022 to complete her degree from
University of Auckland. In the last month of final year of the course, she got
an offer from one of the reputed company situated in Auckland and had
accepted the offer and she decided to work there. On 1st September 2023,
Ms. Shalini had visited India for 30 days to meet her family and on 1st October
2023 had left India to carry on her employment.
Considering the provisions of Foreign Exchange Management Act, 1999,
which of the below mentioned options correctly determined the residential
status of Ms. Shalini Gupta:
(a) Ms. Shalini Gupta to be treated as resident in India for Financial Year
(FY) 2023-2024 and FY 2024-2025.
(b) Ms. Shalini Gupta to be treated as resident in India for FY 2022-2023
and FY 2023-2024.
(c) Ms. Shalini Gupta to be treated as non-resident for FY 2023-2024 and
FY 2024-2025 as she left India for higher studies.
(d) Ms. Shalini Gupta to be treated as resident in India for FY 2023-2024
since she stays in India for more than 182 days and non-resident for
FY 2024-2025.

PART – II Descriptive Questions (70 Marks)

Question No.1 is compulsory.
Attempt any Four questions out of the remaining Five questions.
1. (a) Cross Limited is a company incorporated under the erstwhile the
Companies Act, 1956 while XYZ Private Limited is a company registered
under the Companies Act, 2013. XYZ Private Limited has issued
` 1,00,000 convertible preference shares (carrying right to vote) of ` 100
each and 10,00,000 equity shares of ` 10 each fully paid. Cross Limited
is holding all the preference share and 1,00,000 equity shares of XYZ
Private Limited. Examine whether:
(i) The provisions of the Companies Act, 2013 are applicable on Cross
Limited?
(ii) XYZ Private Limited is a public company as per the Companies Act,
2013? (5 Marks)
(b) HelpIndia Limited was incorporated on 1st April 2022. The balances
extracted from its audited financial statement are as given below:

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Financial Year Net Profit before Net Profit after tax (Ignore
(FY) tax Income Tax computation)
2022-23 ` 11.00 crore ` 4 crore
2023-24 ` 10.00 crore ` 5 crore
HelpIndia Limited is considering allocating the minimum required amount
for Corporate Social Responsibility (CSR) activities to be undertaken
during the financial year 2024-25, provided it is mandatory to do so. They
seek advice on this matter.
Furthermore, HelpIndia Limited requests assistance in calculating the
minimum amount to be allocated, if necessary, considering the relevant
provisions outlined in the Companies Act, 2013. (5 Marks)
(c) Mr. Rohan Sharma, an international cricket player has started its cricket
academy, namely, Rohan Sharma Cricket Academy, a private coaching
club, which provides coaching for cricket. The Academy has a cricket
team which participates in cricket matches all over India as well as
outside India.
Rohan Sharma Cricket Academy in a collaboration with Melbourne
Cricket Academy is organizing a cricket event in Melbourne, Australia in
the month of May 2024 and June 2024. Rohan Sharma Academy is
required to remit USD 200,000 to Melbourne Cricket academy as a part
of its share for organizing the cricket event in Melbourne. Advise whether
it can get Foreign Exchange and if so, under what conditions?
(4 Marks)
2. (a) Explain the following as per the provisions of the Companies Act, 2013:
(i) Abridged Form of Annual Return
(ii) Signing of Annual Return (5 Marks)
(b) APR Limited, a company renowned for manufacturing various types of
mats, has established a strong brand presence and garnered a
commendable reputation over the years. As of March 31, 2023, its
Balance Sheet reflects the following financial position:
1. Authorized Share Capital (25,00,000 equity shares of ` 10/- each)
` 2,50,00,000
2. Issued, subscribed and paid-up Share Capital (10,00,000 equity
shares of ` 10/- each, fully paid-up) ` 1,00,00,000
3. Free Reserves ` 3,00,00,000
The Board of Directors intends to propose a bonus issue wherein
existing shareholders would receive 1 additional share for every 2 shares
held. The Board wants to know the conditions and the manner of issuing
bonus shares under the provisions of the Companies Act, 2013.
(5 Marks)

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(c) Explain the following with reference to the provisions of the General
Clauses Act, 1897:
(i) Movable Property
(ii) Oath (4 Marks)
3. (a) Explain the provisions of the Companies Act, 2013- who can get a
licence to operate as a section 8 company (non profit organization)?
(5 Marks)
(b) Wood Limited has received ` 4,00,000 as a non-interest bearing security
deposit under a contract of employment, from its employee Mr. Cotton.
Mr. Cotton draws an annual salary of ` 3,85,000.
Analyse under the provisions of the Companies Act, 2013, whether the
said amount received by Wood Limited will be considered as deposits or
not. (5 Marks)
(c) Explain interpretation of statute aid- ‘Read the Statute as a Whole’.
(4 Marks)
4. (a) Crystal Limited recently received a communication from the Central
Government requesting the preparation of periodical financial results
along with the completion of either a full audit or a limited review of these
financial results. The Board of Directors, however, has raised an
objection, arguing that Crystal Limited, being an unlisted company, are
not obligated to prepare periodical financial results.
Analyze the situation, citing relevant provisions of the Companies Act,
2013, with respect to the company's obligation regarding the preparation
of periodical financial results. (5 Marks)
(b) Mr. Prateek (an individual) has started a Limited Liability Partnership firm
along with Brown Limited and Picture Limited. As per the provisions of
the Limited Liability Partnership Act, 2008, advise Limited Liability
Partnership firm, about who can be the designated partners of the firm.
(5 Marks)
(c) In what way is ‘Heading and Title of a Chapter’ considered as internal
aid in the interpretation of statutes. (4 Marks)
5. (a) Enumerate the circumstances in which a Limited Liability Partnership
may be wound up by the Tribunal. Give your answer in respect of the
provisions of the Limited Liability Partnership Act, 2008. (5 Marks)
(b) Kesar Limited, an unlisted company furnishes the following data:
(a) Paid-up share capital as on 31 st March 2024 ` 49 Crore.
(b) Turnover for the year ended 31st March 2024 ` 100 Crore
(c) Outstanding loan from bank as on 3rd March 2024 is ` 102 crore
(` 105 Crore loan obtained from bank) and the outstanding balance
as on 31st March 2024 ` 95 crore after repayment.
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Considering the above scenario and in accordance with the provisions

outlined in the Companies Act, 2013, determine whether Kesar Limited
is required to appoint an Internal Auditor during the financial year
2024-2025. (5 Marks)
(c) Sheesham Limited is a company engaged in the business of
manufacturing premium quality furniture in the state of Tamil Nadu. In
light of the provisions outlined in the General Clauses Act, 1897, and the
Companies Act, 2013, please advise on the specific timelines regarding
the payment of dividends subsequent to its declaration at the Annual
General Meeting (AGM) held on 8 th August 2023. (4 Marks)
6. (a) Explain the provisions of the Companies Act, 2013, in respect of
‘Inspection of Register of Charges and Instrument of Charges’.
(5 Marks)
OR
(a) Enumerate the provisions of the Companies Act, 2013 in respect to the
following:
(i) Matters not to be included in the minute, as per the opinion of the
Chairman.
(ii) Maximum time allowed for entering minutes of proceedings.
(5 Marks)
(b) What are the documents that must be annexed to a prospectus offering
for subscription in securities of a company incorporated or to be
incorporated outside India, as per the Companies (Registration of
Foreign Companies) Rules, 2014? (5 Marks)
(c) University of Oxford is one of the leading institutes of UK. In the month
of May 2024, they are planning a cultural event in UK. The University
has invited Ms. Kanika Tripathi and her group, an Indian artist to perform
in the event.
Ms. Kanika Tripathi needs to withdrawal foreign exchange of
USD 75,000 for the purpose of visit to UK for performing at cultural event
of University of Oxford in UK. Advise whether she can withdraw Foreign
Exchange and if so, under what conditions? (4 Marks)

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