CA Intermediate (Batch February 2023)

Test – Chapter 1 (Preliminary)

Maximum Time = 1 hour

Attempt All MCQs (1 marks each X 10 MCQ = 10 Marks)

Q1: Seema Bulbs Ltd. is desirous of having significant influence in Shaukeen LED Bulbs and Tubes Ltd. so
that the latter becomes its ‘associate company’. For exercising ‘significant influence’ one of the options
available to Seema Bulbs is to control at least 20% of total voting power of Shaukeen LED Bulbs and Tubes.
What is the other option available?
(a) To control or participate in the recruitment decisions relating to appointment of middle management personnel of
Shaukeen LED Bulbs and Tubes under an agreement.
(b) To control or participate in the dividend decisions of Shaukeen LED Bulbs and Tubes under an agreement.
(c) To control or participate in the business decisions of Shaukeen LED Bulbs and Tubes under an agreement.
(d) To control or participate in the export decisions of Shaukeen LED Bulbs and Tubes under an agreement.

Q2: In case of a company limited by guarantee, the liability of the members can be enforced
(a) At any time when the company so decides
(b) Only at the time of winding-up of the company
(c) Only by an order of NCLT
(d) Only by order of Registrar of companies

Q3: In Sumit Marketing Company Private Limited (Authorised capital 50,000 shares of Rs. 10 each and paid-up
share capital of Rs. 4,50,000), 1000 shares are jointly held by Abeer and Abheek; another 800 shares are
jointly held by Seema and Srividya; another 1200 are jointly held by Ramesh, Raksha and Rajneesh and
another 3 shares are held by Vishnu and Vishal. Further, 42,000 shares are held by 193 individual persons
in their individual capacity. Is it possible for the company to induct more persons?
(a) The company is unable to induct more persons since it already has two hundred individual members.
(b) The company can induct four more persons as members.
(c) The company can induct three more persons as members.
(d) The company can induct one more person as its member.

Q4: Which of the following is true in relation to OPC?

(a) OPC can have only 1 member and only 1 director
(b) OPC has minimum 1 member and minimum 1 director
(c) OPC can have only 1 member but minimum 1 director
(d) OPC can have only 1 director but minimum 1 member

Q5: BPCL Limited is a company registered under Companies Act, 2013. Apart from ordinary equity shares,
BPCL Limited has also issued equity shares with differential voting rights. It will be classified as a
Government company when _______ is held by Government
(a) More than 50% of the Paid-up share capital
(b) More than 50% of the Total Voting Power
(c) 51% or more of the Paid-up share capital
(d) 51% or more of the Total Voting Power

Q6: Which of the following are true in relation to a Private company?

(a) It prohibits the transfer of shares and invitation to public to subscribe to its securities
(b) It restricts the transfer of shares and invitation to public to subscribe to its securities
(c) It prohibits the transfer of shares and restricts the invitation to public to subscribe to its securities
(d) It restricts the transfer of shares and prohibits the invitation to public to subscribe to its securities

CA Harsh Gupta CA_Law_HarshGupta

Q7: Roma along with her six friends has got incorporated Roma Trading Ltd. in May 2017. She kept the paid-up
share capital at Rs. 90 lakhs. Further, in April 2018, she noticed that in the last financial year, the turnover
of the company was well below Rs. 20 crores. Advise whether the company can be treated as a ‘small
company’.
(a) Roma Trading Ltd. is definitely a ‘small company’ since its paid-up capital is much below Rs. 2 crores and also its
turnover has not exceeded the threshold limit of Rs. 20 crores.
(b) The concept of ‘small company’ is applicable only in case of a private limited company/OPC and therefore, despite
meeting the criteria of ‘small company’ it being a public limited company cannot enjoy benefits of ‘small company’.
(c) Unlike a private limited company/OPC which automatically becomes a ‘small company’ as soon as it meets the
criteria of ‘small company’, Roma Trading Ltd. being a public limited company has to maintain the norms applicable
to a ‘small company’ continuously for two years so that, thereafter, it is treated as a ‘small company’.
(d) If all the shareholders of Roma Trading Ltd. give an undertaking to the ROC stating that they will not let the paid
share capital and also turnover exceed the limits applicable to a ‘small company’ in the next two years, then it can
be treated as a ‘small company’.

Q8: A Ltd. is the holding company of B Ltd. Another company C Ltd. is the subsidiary company of B Ltd. Is
there any relationship between A Ltd. and C Ltd?
(a) There is no relationship between A Ltd. and C Ltd.
(b) C Ltd. is deemed to be the subsidiary of A Ltd.
(c) A Ltd. shall be deemed to be the holding company of C Ltd. provided A Ltd. acquires at least 10% stake in C Ltd.
(d) C Ltd. shall be deemed to be the subsidiary of A Ltd. if the latter company acquires minimum 10% stake in the
former company within six months after C Ltd. becomes subsidiary of B Ltd.

Q9: Which one of the following statements is least likely to be true? A company is a subsidiary if another
company:
(a) exercises more than 50% of the total voting power
(b) controls the composition of its board of directors
(c) is holding of a company which is the holding for the first mentioned company
(d) is subsidiary of a company which is subsidiary of the first mentioned company

Q10: A, B, C, D, E, F, G want to incorporate a public limited company. However, G wants his private limited
company to be its member instead of himself. Following this proposition of G, D also wants his registered
partnership firm to be its member instead of himself.
(a) Both G and D are required to sign the Memorandum of newly formed company in their individual capacity and not
through their concerns.
(b) Private Limited company of G can be the subscriber to the Memorandum of newly formed company but D has to
sign the Memorandum in his individual capacity.
(c) Both G and D have to obtain the consent of other five persons in writing before their private limited company and
partnership firm subscribe to the Memorandum.
(d) Private Limited company of G cannot be the subscriber to the Memorandum of newly formed company but
registered partnership firm of D can be the subscriber to the Memorandum

CA Harsh Gupta CA_Law_HarshGupta

 Question 1 is compulsory

Attempt any 3 out of remaining 4

1. The information extracted from the audited Financial Statement of Bear Private Limited as at 31st March, 2020 is as
below -
i. Paid-up equity share capital 60,00,000 divided into 6,00,000 equity shares (carrying voting rights) of 10 each.
There is no change in the paid-up share capital thereafter.
ii. The turnover is 19,00,00,000.

It is further understood that Bull Limited, which is a public limited company, is holding 3,00,000 equity shares, fully
paid-up, of Bear Private Limited. You are to advise on the following points explaining the provisions of the Companies
Act, 2013 -
a. Whether Bear Private Limited shall be deemed to be a small company whose significant equity shares are held
by a public company?
b. Is there any relation between Bear Private Limited and Bull Limited?

2. Mars Private Ltd. is a private company as per the articles. However, Pluto Limited acquired 60% voting power in Mars
Private Ltd. State the impact of acquisition of shares.

Further, if Neptune Private Limited is a subsidiary of Mars Private Ltd., will the above-mentioned acquisition, have any
impact on the status of Neptune Private Limited?

3. Sincere Limited was registered as a public company. There are 235 members in the company as noted below –

a. Relatives of Directors 40
b. Employees 20
c. Ex-employees (they acquired the shares after leaving the employment) 15
d. 10 couples holding shares jointly in the name of husband and wife (10*2) 20
e. Others 140

The Board of Directors of the company propose to convert it into a private company. Advise whether reduction in the
number of members is necessary.

4. The paid-up share capital of Saras Private Limited is ` 1 crore consisting of 8 lakh equity shares of ` 10 each and 2
lakh cumulative preference shares of ` 10 each. Jeevan Private Limited and Sudhir Private Limited are holding 2 lakh
equity shares and 2,50,000 equity shares respectively in Saras Private Limited. Jeevan Private Limited and Sudhir
Private Limited are the subsidiaries of Piyush Private Limited. With reference to the provisions of Companies Act, 2013
examine whether Saras Private Limited is a subsidiary of Piyush Private Limited?

Would your answer be different if Piyush Private Limited has 5 out of 9 Directors on the Board of Saras Private Limited?

5. Teresa Ltd. is a company registered in New York (U.S.A.). The company has no place of business established in India,
but it is doing online business through data interchange in India (the main sever being located in New York itself).
Explain with reference to relevant provisions of the Companies Act, 2013 whether Teresa Ltd. will be treated as Foreign
Company.

(5 marks each)

CA Harsh Gupta CA_Law_HarshGupta