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COMPANIES ACT
MOCK TEST
Total marks: 50 marks
Total time: 1.5 hours
All Questions are compulsory. (Additional Reading time-10 minutes)
1. (a)
AK Private Limited has borrowed Rs.36 crore from BK Finance Limited. However, as per memorandum of AK Private
Limited, the maximum borrowing power of the company is Rs.30 crore. Examine whether AK Private Limited is liable
to pay this debt? State the remedy, if any available to BK Finance Limited. (4 Marks)
(b)
Explain the concept of "Small Company" as envisaged in the Companies Act, 2013.(3 marks)
2. (a)
Mr. Dhruv was appointed as an employee of Sunmoon Timber Private Limited on the condition that if he were to
leave his employment, he will not solicit customers of the company. After some time, he was fired from company.
He set up his own business under proprietorship and undercut Sunmoon Timber Private Limited’s prices. On the
legal advice from his legal consultant and to refrain from the provisions of breach of contract, he formed a new
company under the name Seven Stars Timbers Private Limited. In this company, his wife and a friend of Mr. Dhruv
were the sole shareholders and directors. They took over Dhruv’s business and continued it. Sunmoon Timber
Private Limited filed a suit against Seven Stars Timbers Private Limited for violation of contract. Seven Stars Timbers
Private Limited argued that the contract was entered into between Mr. Dhruv and Sunmoon Timber Private Limited
and as company has separate legal entity, Seven Stars Timbers Private Limited has not violated the terms of
agreement. Explain with reasons, whether separate legal entity between Mr. Dhruv and Seven Stars Timbers Private
Limited will be disregarded? (4 marks)
(b)
Mike LLC incorporated in Singapore having an office in Pune, India. Analyze whether Mike LLC would be called a
foreign company as per the provisions of the Companies Act, 2013? Also explain the meaning of foreign company.
(3 marks)
3. The paid-up capital of Darshan Photographs Private Limited is Rs.1 Crores in the form of 50,000 Equity Shares of
Rs.100 each and 50,000 Preference Shares (not carrying any voting rights) of Rs.100 each. Shadow Evening Private
Limited is holding 25,000 Equity Shares in Darshan Photographs Private Limited. State with reason,
a) Whether Darshan Photographs Private Limited is subsidiary of Shadow Evening Private Limited?
b) Whether your answer would be different in case Shadow Evening Private Limited is holding 25,000 Equity
Shares and 5,000 Preference Shares in Darshan Photographs Private Limited? (6 marks)
4.
(a) Nolimit Private Company is incorporated as unlimited company having share capital of Rs.10,00,000. One of its
creditors, Mr. Samuel filed a suit against a shareholder Mr. Innocent for recovery of his debt against Nolimit Private
Company. Mr. Innocent has given his plea in the court that he is not liable as he is just a shareholder. Explain whether
Mr. Samuel will be successful in recovering his dues from Mr. Innocent? (4 Marks)
(b) A Company registered under Section 8 of the Companies Act, 2013, has been consistently making profits for the
past 5 years after a major change in the management structure. Few members contented that they are entitled to
receive dividends. Can the company distribute dividend? If yes, what is the maximum percentage of dividend that
can be distributed as per provisions of the Companies Act, 2013? Also, to discuss this along with other regular
matters, the company held a general meeting by giving only 14 days’ notice. Is this valid? (3 marks)
SAHIL GROVER
[CA, LLB., B.COM (H)(SRCC,DELHI UNIVERSITY)] Page 1
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FOR LIVE FACE TO FACE AND PEN DRIVE CLASSES CONTACT: AVJ Institute,Laxmi Nagar,Delhi.
(9310824912)
5. 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 Rs.1,00,000
convertible preference shares (carrying right to vote) of Rs.100 each and 10,00,000 equity shares of Rs.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? (1+5=6 marks)
6. Mr. Shyamlal is a B. Tech in computer science. He has promoted an IT start up and got it registered as a
Private Limited Company. Initially, only he and his family members are holding all the shares in the
company. While drafting the Articles of Association of the company, it has been included that Mr. Shyamlal
will remain as a director of the company for lifetime. Mr. Mehra, a close friend of Mr. Shyamlal has warned
him (Mr. Shyamlal) that in future if 75% or more shares in the company are held by non- family members
then by passing a Special Resolution, the relevant articles can be amended and Mr. Shyamlal may be
removed from the post of director. Mr. Shyamlal has approached you to advise him for protecting his
position as a director for lifetime. Give your answer as per the provisions of the Companies Act, 2013.
(6 marks)
7. The directors of Smart Computers limited borrowed a sum of money from Mr. Tridev. The company's
articles provided that the directors may borrow on bonds such sums as may, from time to time, be
authorized by resolution passed at a general meeting of the company. The shareholders claimed that there
had been no such resolution authorizing the loan, and therefore, it was taken without their authority and
the company is not bound to repay the loan to Tridev. In the light of the contention of shareholders, decide
whether the company is bound to pay the loan.(4 marks)
8.
(a)
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?( 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? (4 marks)
(b)
Nadeem incorporated a "One Person Company" making his sister Nisha as the nominee. Nisha is leaving
India permanently due to her marriage abroad. 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 Nisha is leaving India permanently, is it mandatory for her to withdraw her nomination in the said One
Person Company?
(B) If Nisha maintained the status of Resident of India after her marriage, then can she continue her
nomination in the said One Person Company? (3 marks)
SAHIL GROVER
[CA, LLB., B.COM (H)(SRCC,DELHI UNIVERSITY)] Page 2
