CMA Final–P13.

Corporate & Economic Laws

Full Paper
Total Time: 3Hrs Total Marks: 100
Q1. Choose the correct option. [15 x 2 = 30]
(1) ABC Ltd. has 35% shares in XYZ Ltd. The majority of directors of XYZ Ltd. are appointed and removed by
ABC Ltd. XYZ Ltd. is:
a. Subsidiary of ABC Ltd.
b. Not a subsidiary of ABC Ltd.
c. Depends on Board of ABC Ltd.
d. Depends on Board of XYZ Ltd.

(2) Once declared in AGM, dividend-

a. May be revoked
b. Cannot be revoked
c. May be reduced
d. Payment can be delayed

(3) Under Insolvency Bankruptcy code 2016 where extension of time is requested, the Corporate Resolution
process shall be completed within a period of ......................... from the date of admission of the application to
initiate such process.
a. 60 days
b. 90 days
c. 180 days
d. 240 days

(4) Corporate Governance practices are almost ....................... by companies in India.

a. formalized
b. regulated
c. accepted
d. rejected

(5) The recommendation of the Audit Committee:

a. may not be accepted by Board of Directors
b. has to be accepted by Board
c. In case not accepted, Board has to records the reasons
d. Recommendation need not go to Board meeting.

(6) At the time of IPO, the issuer has to have a:

a. CFO
b. MD
c. Designated Compliance Officer
d. At least one independent director.

(7) SEBI has three functions rolled into one body. Which of the following is not the function of SEBI?
a. Quasi-legislative
b. Quasi –judicial
c. Quasi – executive
d. Quasi- official
(8) The Competition Act has replaced-
a. Companies Act, 1956
b. Consumer Protection Act
c. MRTP Act, 1969
d. None

(9) Zenith Ltd is accompany registered in UK, issues share to citizen of UK. Under the Indian law, the shares are;
a. foreign security
b. Indian security
c. any of the above
d. none of the above

(10) According to Banking Regulation Act 1949, no Banking Company shall pay dividend on its shares until all its
a. Depreciation is fully written off.
b. “Capitalized expenses” have been completely written off
c. Bad debts are provided in full.
d. Contingent liability is settled.

(11) a unit has investment in plant and equipment of ₹55 crore and turnover of ₹300 crores. It will be classified as:
a. micro
b. small
c. medium
d. none of the above

Directions for 12 to 15: ABC limited is a company with paid up capital of ₹ 50 cr. and turnover of ₹310 cr. Mr.
Rajesh Kumar, who is promoter and MD of the company wants to run the company complying with all laws and
regulations. The chairman is non-executive and is an eminent academician. There are two more directors, one is
Director (Finance), Mr Joshi and Director (commercial) Mr. Nirmal Kumar, who is related to the promoter.
Company is in the process of taking substantial loan for capital investment from SBI, where SBI will nominate a
director in the Board.
Based on the above case study, you are required to answer the questions no. from (xii) to (xv).
(12) Is the present Board properly constituted? - Which statement is correct.
a. Company is an unlisted company with four directors, the present Board is properly constituted.
b. Company is an unlisted company with four directors, which is properly constituted, but since the turnover is
more than ₹300 cr., a woman director is required.
c. Company is an unlisted company with four directors, which is properly constituted, but need of one resident
director who has stayed in India for a total period of not less than 182 days in the financial year.
d. Company is an unlisted company, which is properly constituted with a MD.

(13) Can Mr. Nirmal Kumar be considered as independent director?

a. Yes, since he is related to the promoter.
b. No, since he is related to the promoter.
c. Yes, since he is commercial Director.
d. Yes, since he is a whole time /functional Director.

(14) Is there any need of women director?

a. Yes, since the turnover is more than ₹300 cr.
b. No, since the paid up capital is not more than ₹100 cr.
c. No, SBI will nominate a director in the Board.
d. None of the above.
(15) What will be the status of the director nominated by SBI, if she is a woman?
a. She will be classified as Nominee Director.
b. She will be classified as Interested Director.
c. SBI has no right to nominate any women director in the Board.
d. None of the above.

(Answer any five questions out of seven questions given. Each question carries 14 marks.)

Q2A)Describe the procedure which has to be followed by the company while transferring unpaid or unclaimed
dividend from unpaid dividend account to IEPF. [7 Marks]

Q2B)Describe how alternate director and nominee director can be appointed by companies. [7 Marks]

Q3A) “A casual meeting of the directors, even at the office of the company, cannot be treated as a board meeting”
– analyse the legal provisions relating to board meeting under the Companies Act 2013? [7 Marks]

Q3B)Demonstrate prohibited items of LRS & briefly explain what is the rationale for such regulation. [7 Marks]

Q4A)Fair Tech Ltd is a public limited company formed 15 days before, to manufacture computer parts, having a
small factory at Durgapur, West Bengal and registered office at Kolkata. There 4 directors, two from promoter and
balance 2 as professionals, one being full time and the other as non-functional. One of the promoter director is
named as MD. Advise the company by interpreting the provisions of Company law, and help the by clarifying the
following.
(1) Is there any necessary to call a Board meeting?
(2) If so, within what time?
(3) Suggest at least two important agenda item for the meeting.
(4) 3 directors want the meeting to be held in Delhi. Examine the legal provision.
(5) Is necessary to appoint a CFO?
(6) Is written notice necessary?
(7) If so, how many days’ notice? [7 Marks]

Q4B) Illustrate the process of appointment of first auditors in the case of Government Company under section
139(7) of “The Companies Act, 2013”. [7 Marks]

Q5A)Discuss in detail, the book building process. [7 Marks]

Q5B)Nature India Limited filed a petition under Insolvency and Bankruptcy Code, 2016 with National Company
Law Tribunal (NCLI) against Tulip Limited and the petition was admitted. After that, Nature India Limited wanted
to withdraw the petition based on asettlement arrived between the parties. Examine whether it is permissible to
withdraw the petition after it has been admitted? and also infer the legal provision relating to the admission and
rejection of application by an adjudicating authority under the Insolvency and Bankruptcy Code, 2016. [7 Marks]

Q6A)Describe what do you understand by three Ps. List the benefits of Sustainability Management. [7 Marks]

Q6B)What are the various types of cyber-crimes? [7 Marks]

Q7A)A Ltd., a public limited company, has ₹50 crore equity share capital with face value of ₹10 per share. It
manufactures FMCG products. It has taken over 70% equity share split of a company called B Ltd, a banking
company which is a listed company with equity capital of ₹20 crore split into shares with face value of ₹10 per
share. Recently, A Ltd and B Ltd. have decided to merge. Mr. D and other few shareholders of B Ltd. did not agree
with the above decision. They think that the decision of management is not based on fairness and honesty. They
also believe that the decision is associated with money laundering at top level. The CEO of B Ltd. has the following
queries which you have to answer. Prepare a formal report to be submitted to B Ltd. containing answers formulated
with reference to the relevant provisions of law, justification and examples.
(i) Is the decision to merge in order?
(ii) Is the merger to be approved by shareholders of each of the companies?

(iii) Mr. D and other few shareholders did not agree with the above decision. Now what will happen if they do not
give their consent to the above scheme?
(iv) Does this scheme require approval from NCLT?
(v) In which way principles of good governance can resolve the claim of dissenting shareholders.
(vi) Does this scheme require approval from IRDAI and why?
(vii) Does the allegation of Mr. D and others come within the ambit of the Prevention of Money Laundering Act,
2002? Explain with reason. [7 Marks]

Q7B)Balaram is school drop out but took over his father’s business after his sudden death. The business,
aproprietorshipfirm, is manufacturing and selling rubber spares and is located at remote place in the District of
West Bengal.
Turnover of business was ₹342 crore. Though not audited or evaluated, the investment in plant and machineryis
around ₹93 lakhs. The business is not registered with DIC but with GST. He pays income tax.
He wants to expand his business and wants to know:
(i) What category of industry the business is falling?
(ii) Is registration compulsory?
(iii) Where to register?
(iv) What are the benefits of registration? [7 Marks]

Q8A)Discuss the procedure of Investigation under the Prevention of Money Laundering Act. [7 Marks]

Q8B)Describe the role of Reserve Bank of India in management of foreign exchange. [7 Marks]