AVJ MOCK TEST SERIES FOR CA INTERMEDIATE JAN 2025

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 COMPANIES ACT
MOCK TEST
Total marks: 50 marks
Total time: 1.5 hours
(10 min reading time extra)

1. Mr. Representative, had purchased shares from Mr. Owner on 30th November 2015. He applied to the
company for the transfer of shares in his name but the company failed to register the shares in his
name. On 20th January 2016, the company declared dividend. Referring to the provisions of the
Companies Act, 2013, comment whether Mr. Representative is entitled to receive the dividends?
(4 marks)

2. R Limited did not have sufficient profits during the preceding financial year. The Board of Directors of the
company propose to declare dividend out of the accumulated profits earned during the previous years
which were transferred to some other reserves other than free reserves. Examine the validity of the above
act referring to the provisions of the Companies Act, 2013.(4 marks)

3. Mr. D, one of a Director in PQR Limited was not satisfied with the performance of its subsidiary
company in financial matters. He authorised Mr. F, a financial expert, to inspect the books of
accounts of the company on his behalf. Decide, under the provisions of the Companies Act, 2013
whether the said company can refuse to allow Mr. F to inspect the books of accounts of its subsidiary
company?(4 marks)

4. Blacksmith Coal Limited suffered losses in the first and second quarter of the financial year 2015-16. In
the third quarter of the year company has earned large amount of profits. In order to maintain credibility
of the company, the Board of Directors declares an interim dividend at the rate of 25 percent on the
paid-up equity share capital. The Managing Director of the company gives the Board the following details
regarding the dividend declared in the previous 4 years

Financial year ending 31st March Rate of Dividend declared

2012 15%
2013 15%
2014 15%
2015 30%
Examining the provisions of the Companies Act, 2013, decide the validity of the Board’s declaration of 25%
interim dividend as stated above.(4 marks)

5. The registered office of Bharat Limited is situated in the classified backward area of Maharashtra. The
Board wants to keep its books of account at its corporate office in Mumbai which is conveniently located.
The Board seeks your advice about the feasibility of maintaining the accounting records at a place other
than the registered office of the company. Advise.(4 marks)

6. With reference to Companies Act 2013 explain in brief the roles/functions of National Financial Reporting
Authority (NFRA).(4 marks)
7. The Board of Directors of Moon Light Limited, a listed company appointed Mr. Tel, Chartered Accountant
as its first auditor within 30 days of the date of registration of the Company to hold office from the date of
incorporation to conclusion of the first Annual General Meeting (AGM). At the first AGM, Mr. Tel was re-
appointed to hold office from the conclusion of its first AGM till the conclusion of 6th AGM. In the light of
the provisions of the Companies Act, 2013, examine the validity of appointment/ reappointment in the
following cases:
i. Appointment of Mr. Tel by the Board of Directors.
ii. Re-appointment of Mr. Tel at the first AGM in the above situation.
iii. In case Mr. Bell, Chartered Accountant, was appointed as auditor at the first AGM to hold office from
the conclusion of its first AGM till the conclusion of 5th AGM. i.e., 4 years tenure. (6 marks)

8.

i. As per provisions of the Companies Act, 2013, define the status of Hillways Ltd., a Company
incorporated in London, which has a share transfer office at Mumbai?
ii. LMP Paper Ltd. is a company registered in Thailand. Although, it has no place of business established in
India, yet it is doing online business through telemarketing in India. Explain whether it will be treated as
a Foreign Company under the Companies Act, 2013?
iii. In case, a foreign company does not deliver its documents to the Registrar of Companies as required
under section 380 of the Companies Act, 2013, state the penalties prescribed under the said Act, which
can be levied.
(2*3=6 marks)

MULTIPLE CHOICE QUESTIONS

(14 marks)

I. Super Fabrics Limited is a listed entity. It finalised its annual accounts for the year ended on 31st
March, 2023.The Audit Committee recommended it and subsequently the Board approved the
same. Annual General meeting of the shareholders was convened on 25th August, 2023, in which
the annual accounts of the company were presented before the shareholders. The shareholders
have approved dividend @ 10%. A report of the Board of Directors was attached with the annual
accounts of the company. During the said meeting, a shareholder pointed out that during the year of
2022-23 there was a big news in the media and newspaper that a fraud has happened in the
company of an amount of Rs.75 lakh, with the involvement of a senior management official of the
company, who is absconding since the news came into media. However, there was no mention
about the fraud in the Auditor’s Report as well as no comment in the Board’s Report. The auditor,
who was also present in the General Meeting of the shareholders, informed that fraud was detected
during the course of audit but no further action was taken by him (auditor).

A. Going by the facts of the case, by what date should the amount be deposited in a separate account
maintained with the scheduled bank for dividend purposes?
a) By 30th August 2023
b) By 1st September 2023
c) By 7th September 2023
d) By 24th September 2023 (2 Marks)

B. By what date should the dividend declared in the meeting, be paid to the members of the company?
 a) By 30th August 2023
b) By 1st September 2023
c) By 7th September 2023
d) By 24th September 2023 (2 Marks)

C. With regard to preservation of the books of Super Fabrics Limited, the books of accounts for the
Financial Year (FY) 2022-23 needs to be kept in good order until at least which of the following years?
a) FY 2027-28
b) FY 2028-29
c) FY 2029-30
d) FY 2030-31 (2 Marks)

D. The auditor had noticed that a fraud was committed by the senior management. Which is the correct
statement in this respect:

a) The auditor shall report the matter to the Central Government immediately.
b) It is not necessary to disclose the details of fraud in the Board’s Report
c) The auditor shall report the matter to the audit committee constituted under section 177 or to
the Board.
d) Since the Senior Management Personnel is absconding, the auditor is not required to take any
action. (2 Marks)

II. Krishnakant Limited was incorporated on 24th September, 2010 under the jurisdiction of Registrar of
Companies, Rajasthan with its registered office located in Jaipur and its manufacturing units spread
out in Mumbai, Kanpur, Delhi and Ludhiana. Under the dynamic leadership of Hans Rajpal, the
Chairman and Managing Director (CMD) of the company, the company had reached new heights of
success. The directors of the company numbered eight including CMD out of which two were the
independent directors.
The turnover of the company for the Financial Year 2019-2020 was Rs. 750.00 crores - a whopping
rise of more than 20% from the previous year and the net profit stood at an impressive figure of Rs.
6.60 crores -- an increase of Rs. 1.80 crores as compared to the net profit of the previous year. The
company had a net worth of Rs. 250.00 crores; and it was noticed that the net worth had also
registered a northern-western trend by more than 15%. The authorised and paid-up share capital of
the company was Rs. 8.00 crores. Keeping in view the applicability of forming a CSR Committee for
the current financial year 2020-21, a CSR Committee was formed with four directors as members of
which one was an independent director. The Committee was, among other objectives, given the
responsibility of formulating and recommending to the Board, a Corporate Social Responsibility
Policy which would indicate the activities to be undertaken by the company within the framework
specified in Schedule VII.
As the company has huge profits it has proposed a dividend @ 10% for the year 2019-20 out of the
profits of current year.
The company plans to diversify its business by adding another segment to manufacture steel utensils
and therefore, is desirous of shifting its registered office to Mumbai from Jaipur which will help the
company in carrying on the new business for effectively. Another strategically important segment
which the company tapped earlier and now wishes to engage itself in on a large scale relates to
manufacturing of stationery items.
During the current Financial Year 2020-21, the company provided ample support for improvement of
infrastructure in schools established at Mumbai, Kanpur, Delhi and Ludhiana as part of its CSR
activities. In addition, the company contributed towards establishment of Digital Smart Classroom,
 Libraries and computer labs in these cities. The company also deployed mobile medical units
equipped with medical facilities and qualified doctors. In addition to this a large number of public
health and sanitation activities had been initiated under Swachh Bharat Abhiyan. The total amount
spent on these activities was, till date, almost equal to the minimum amount prescribed and it is
hoped that as the current Financial Year 2020-21 approaches its end, the total spending on CSR
activities will certainly exceed the budgeted figure.
Multiple Choice Questions [3 MCQs of 2 Marks each: Total 6 Marks]

A. Which of the following factors would have prompted Krishnakant Limited to mandatorily form a Corporate
Social Responsibility (CSR) Committee for the current financial year?
a) The net profit had increased to Rs. 6.60 crores and it was more by Rs. 1.80 crores in comparison to
previous year's net profit.
b) The turnover was Rs. 750.00 crores which was an increase of more than 20% as compared to the
previous year.
c) The net worth was Rs. 250.00 crores which when compared to the previous year had registered an
increase by more than 15%.
d) The paid-up share capital was Rs. 8.00 crores.
B. What is the minimum amount (in percentage) that Krishnakant Limited is required to spend during the
Financial Year 2020-21 on the CSR activities?
a) 2% of the average net profits made during the two immediately preceding financial years.
b) 2% of the average net profits made during the three immediately preceding financial years.
c) 2.5% of the average net profits made during the two immediately preceding financial years.
d) 2.5% of the average net profits made during the three immediately preceding financial years.

C. In the given case scenario, Krishnakant Limited decided to undertake CSR activities on its own. In case, it had
decided to engage an external Sectior18 company. for undertaking its CSR activities and such charitable
company is not established by Krishnakant limited nor it is established by the Central/State Government or
by any entity established under an Act pf Parliament or a State Legislature, then what should be the
established track which this Section 8 company should have in undertaking similar programs or projects
which Krishnakant Limited wants it to accomplish?
a) Track record of minimum one year
b) Track record of minimum two years
c) Track record of minimum three years
d) Track record of minimum four years