NEW SYLLABUS
533
Roll No. .....................................
: 1 :
Time allowed : 3 hours Maximum marks : 100
Total number of questions : 6 Total number of printed pages : 11
NOTE : Answer ALL Questions.
PART–I
1. (a) Secretarial Standard-1 is equally applicable on all the companies, one person company
and a company registered under Section 8 of the Companies Act, 2013, without
granting any exemption to any kind of the company. Comment.
(5 marks)
(b) Draft the Directors’ Responsibility Statement of ABC Limited, which is to be incorporated
in the Directors’ Report.
(5 marks)
(c) S is a Company Secretary in Practice and also the Managing Committee Member
of the Chapter of the Institute of Company Secretaries of India (ICSI). He invited
Y (a senior Government official) to the Chapter’s Independence Day celebration function.
He spends heavily on the Y towards his travel and stay arrangements. He booked
five-star hotel room for one day for Y and gave business class Air Tickets to
Y along with Mrs. Y, to attend the Chapter’s function, with an intention to secure
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professional opportunities from the government department for his professional firm.
The chapter of ICSI has paid for these expenses. Moreover, he has also misused
the confidential data available with the office of the Institute for personal use and
his personal benefits.
Citing the relevant code of conduct of the ICSI, state whether the act of S will
amount to misconduct.
(5 marks)
(d) P is a part time director of ABC Limited. J is a whole-time Director (Finance) and
the Chief Financial Officer (CFO) of the company. The compliance officer had not
been performing his duties in time and that has resulted into non-filling of the annual
return and the financial statements from the financial year 2015-16 to 2019-20. The
name of ABC Limited was struck off by the Registrar of Companies in the year
2023-24. ABC Limited was doing the business continuously till 2023-24. J along
with P were appointed as part time Director in XYZ Limited during 2022-23.
Citing the relevant provision of the Companies Act, 2013 explain the dereliction of
the duty and penal provisions.
(5 marks)
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: 3 :
Attempt all parts of either Q. No. 2 or Q. No. 2A
2. (a) X, a member of the sports club has been paying all his fees in time. In the Annual
General Meeting of the club, a resolution was passed for expelling X with immediate
effect, as a member of the club, without citing any reason or violation of the rules
and bye-laws of the club. Examine the legality of the resolution passed by the Annual
General Meeting.
(5 marks)
(b) Subsequent to the completion of an inquiry proceedings and other actions initiated
by the Securities and Exchange Board of India (SEBI) against ABC Limited on the
allegations of securities malpractices in the market, ABC Limited decided to move
an application for settlement to the SEBI as per Regulation 9 of SEBI (Settlement
Proceedings) Regulations, 2018. Explain various Settlement Terms and also state any
four factors that are to be considered while arriving at these Settlement Terms.
(5 marks)
(c) D accepted the appointment as a director in 25 companies till 31st March 2015.
Consequently, the Registrar of Companies (RoC) had issued a show cause notice
to D in the year 2016. The RoC imposed a penalty of ` 15 lakh on D on the
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basis of a penalty of ` 5,000 per day for the entire period of default. D appealed
to the Tribunal for compounding and the Tribunal compounded the offence for
` 50,000.
The RoC is not satisfied with the decision of the Tribunal and seeks your independent
opinion as per the provisions laid under the Companies Act, 2013. Advise.
(5 marks)
(d) Y is a qualified Company Secretary. Y was in the need of a job since her husband
got transferred to a town and for the past 6 months, she had not been able to
get any job. At last, through her neighbour’s contact, she met with MG, Director
(Finance) of XYZ Limited. She got a job in the secretarial department of XYZ
Limited, through the recommendation of MG, the Director (Finance). It was decided
mutually that if she gets the job in the company, she would part 50% of first-year
salary with MG, Director (Finance), comprising of 50% in cash and remaining through
banking channel and same would be paid within 3 months of joining the company.
Accordingly, she paid the pre-decided amount to MG Director (Finance).
Citing the relevant Code of Conduct of the Institute of Company Secretaries of India,
explain whether Y has been guilty of violating the Code.
(5 marks)
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: 5 :
OR (Alternate Question to Q. No. 2)
2A. (i) (a) You are a partner of ZKB & Associates (Practising Company Secretaries)
and you are responsible for arranging and indexing the records in a way that
permits easy location, access and retrieval of documents. Citing the basic rules
that could serve as a general guideline in structuring folder and file naming.
Give nomenclature of the file in following cases :
(I) Annual Return MGT-7, Financial Year 2022-23 of TZ Pharma.
(II) Search Report of PTK RESORTS, Invoice dated 30 July, 2023, PDF
document.
(III) Mohit Nair Max Life 8561 3 POLICY date 19/October/2022, white
paper structured file naming Strategy document.
(1×3=3 marks)
(b) State whether the following offences under the Companies Act, 2013 are
compoundable. If yes, mention the Compounding Authority.
(I) Failure to keep proper books of account under Section 128(6).
(II) Committing default in complying with the requirements relating to formation
of companies with charitable objects, etc. under section 8(11).
(1×2=2 marks)
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(ii) M, a partner of MNP and Co. (Practising Company Secretaries) has to do the
certification of Annual Return of ZK Limited. Suggest the guiding principles that can
be adopted by M about the extent of checking the Annual Return of the company.
Can a Professional give Certification with Reservation/Qualification/Observations/Adverse
Remarks ? Comment.
(3+2=5 marks)
(iii) Explain the factors that are taken into account by the Securities and Exchange Board
of India (SEBI), while adjudicating quantum of penalty. Also indicate the penalties
under the SEBI Act, 1992, in each of the following :
(a) Penalty for Insider Trading
(b) Penalty for failure to redress investors’ grievances.
(2+3=5 marks)
(iv) A retail company, Cloudtail, sells goods on E-commerce platform. The company sold
pressure cookers made by XYZ Limited, which were not compliant with the mandatory
standards. On noticing the quality lapses, the consumer wanted their money back,
along with damages from the Cloudtail. Whether the Cloudtail shall be liable for damages
or XYZ Limited or both ? Substantiate your answers with reasons.
(5 marks)
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: 7 :
PART–II
3. (a) In a board meeting of the TCD Limited, the Company Secretary gave a presentation
to the Board on Corporate Governance and explained that the Corporate Governance
deals with conducting the affairs of a company in such a way that there is fairness
to all stakeholders and that its actions benefit the greatest number of stakeholders.
There is no illustrative checklist for auditing of Shareholders Interest under Corporate
Governance system and it depends upon the company to follow its own policy.
Comment.
(b) Non-reporting of related party transactions led Secretarial Auditor to penalty. Discuss
with the help of a leading case of Sun Pharmaceuticals industries Limited [Adjudication
order passed by the Registrar of companies (RoC), Gujarat, Dadra & Nagar Haveli
dated 28/04/2023].
(c) Explain various kinds of general and specific skills the internal auditor must possess
for discharging their professional obligation proficiently.
(5 marks each)
4. (a) Why does the “Emphasis of Matter” (EOM) is included in the Audit report ? Give
two examples which could be considered as EOM.
(3 marks)
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(b) The audit committee of the company by a resolution had recommended ABC & Co.
as the Statutory Auditors to the Board of Directors of the company. The Board
also appointed ABC & Co. The shareholders of the company in its Annual General
Meeting had appointed PQR & Co. as the statutory auditors. The Board does not
agree the appointment of PQR & Co. by the shareholders and insists that ABC
& Co. should act as Statutory Auditor. Decide and substantiate your answer with
arguments.
(3 marks)
(c) Explain how does audit trail work.
(3 marks)
(d) Explain about the type of due diligence that uncovers the aspects of operational weakness,
inadequacy of control mechanisms and also gives a better picture of the kind of cost
to the buyer for the expansion.
(3 marks)
(e) RP Limited, a company has been regularly implementing Corporate Social Responsibility
(CSR), as per the provisions contained under the Companies Act, 2013, for the past
three years. The company has been executing the project(s) and now the project(s)
has been completed and it has no ongoing project. It has an unspent amount of
` 20 lakh on 28th December 2022 in their CSR account.
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: 9 :
By which date the company is required to transfer this amount to the Fund Specified
in Schedule VII ?
Also advise the company about the limit of expenditure including administrative overhead
for the purpose of CSR, if its’ past 3 years net profits are ` 5 crore, ` 6 crore
and ` 7 crore, respectively.
(3 marks)
5. (a) The auditor must plan the audit with professional scepticism, so that it is possible
to exercise professional judgement in an objective manner. Practically examine this
statement as an auditor.
(b) GKL & Co., a firm of Practicing Company Secretaries, is the Secretarial Auditor
of ABC Limited. During examination of documents, the auditor had observed a fraud
of ` 2 crore, which was not reflected in the Statutory Auditor’s Report. Examine
in the background of an argument that examination of the financial statement is primary
responsibility of the statutory auditor.
(c) XYZ Limited wants to observe good governance practices. The company has
approached you to suggest controls to prevent and detect frauds and to educate
their employees towards the awareness of frauds. Give your recommendations in this
regard.
(5 marks each)
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Attempt all parts of either Q. No. 6 or Q No. 6A
6. (a) Due diligence on competition law aspects is an examination of the actual operations
and practices of an enterprise and effectiveness of the company’s competition law
compliance policy and training program. Discuss.
(5 marks)
(b) The principle of confidentiality imposes an obligation on the auditor to refrain from
doing certain acts. Explain. How will the Auditor ensure the prevention of unauthorised
access to such confidential information ?
(3+2=5 marks)
(c) Explain the process of selection of the Practice Unit by the Quality Review Board
and submission of the reviewer’s report to the Board.
(3+2=5 marks)
OR (Alternate Question to Q. No. 6)
6A. (i) The Auditor shall assess the efficacy and adequacy of the systems and processes
of the Auditee. Comment. Also cite any four best practices being observed by the
companies for Board processes.
(3+2=5 marks)
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(ii) An auditor is conducting an audit of a company’s financial statements. As part of
the audit, the auditor is reviewing the company’s bank statements to ensure that all
transactions are accurately recorded in the company’s financial records. The auditor
notices a payment of ` 10 lakh to a vendor that does not match any of the vendor
payments recorded in the company’s accounting system. Explain the process the auditor
shall undertake for ensuring the accuracy and completeness of the financial statement.
(5 marks)
(iii) Write any five essential terms of reference of a valid Audit Committee, in compliance
with the Regulation 18 of the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015.
(5 marks)
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