Amendment Based Questions for Practice – Company Law Important Questions

Amendment Based Questions for Practice – Company Law Important Questions

Question 1.
Define the term “Nidhi” as per rule 3(da) of Nidhi (Amendment) Rules, 2019. Also, state the date of applicability of such term “Nidhi”.
Answer:
1. As per rule 3(da) of Nidhi (Amendment) Rules, 2019, “Nidhi” means a company that has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with the rules made by the Central Government for regulation of such class of companies.

2. The definition is inclusive one includes the activities to be carried out by the Nidhi as well as gives exclusive power to the Central Government to make rules and regulations for “Nidhi” operating in India.

3. The effective date for the applicability of the term “Nidhi” is 15th August 2019.

Question 2.
In light of new rule 3A of Nidhi (Amendment) Rules, 2019, if Nidhi Company does not file Form NDH-4 within the prescribed time limit then in such situation which forms are disallowed to be filed by Nidhi Company?
Answer:
1. As per the first proviso of rule 3A of Nidhi (Amendment) Rules, 2019,
A Nidhi incorporated under the Act on or after the commencement of the Nidhi (Amendment) Rules, 2019 shall file Form NDH-4 within sixty days from the date of expiry of:
(a) one year from the date of its incorporation; or
(b) the period up to which extension of time has been granted by the Regional Director under sub-rule (3) of rule 5.

2. A Nidhi Company does not comply with the requirements of the provisions of rule 3A of Nidhi (Amendment) Rules, 2019 and disallowed to file:

  • Form No. SH-7 (Notice to Registrar of any alteration of share capital), and
  • Form PAS-3 (Return of Allotment).

Question 3.
As per rule 23 A of Nidhi (Amendment) Rules, 2019: A Nidhi Company having date of incorporation 20-01-2019. What time frame within which the Company needed to comply with the provisions of rule 3A?
Answer:
1. As per rule 23A of Nidhi (Amendment) Rules, 2019:
Every company referred to in clause (b) of rule 2 and every Nidhi incorporated under the Act, before the commencement of Nidhi (Amendment) Rules, 2019, shall also get itself declared as such in accordance with rule 3A within a period of one year from the date of its incorporation or within a period of nine months from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is later.

2. The time frame to comply is later of the following: [Later of (1) or (2) below]

  1. One year from the date of its incorporation ie. 19-01-2020.
  2. Within a period of six months from the date of commencement of Nidhi (Amendment) Rules, 2019 ie. 15-02-2020.

Thus, within 15-02-2020. (Later of above two)

Question 4.
The director of the Company Mr. P wants to seek clarification on filing of DIR-3 KYC. He already filed the Form DIR-3 KYC. He wants to know whether he is required to file DIR-3 KYC Or DIR-3 KYC Web through Web Service?
Is there any difference in your answer if he wants to change his E-mail Id & Mobile Number this year?
Answer:
The situation I: When Director KYC has already done and no change in details in this year:
Mr. P requires to file DIR-3 KYC Web through Web Services for every financial year till 30th September for the previous financial year.

Situation II: When Director KYC has already done and there is a change in Email and Mobile No. in this year:
Mr. P requires to file DIR-3 KYC for every financial year till 30th September for the previous financial year.
Yes, the answer is different.

In case of change in E-mail Id and Mobile Number this year DIR-3 KYC is required to be filed instead of DIR-3 KYC Web through Web Services.

Question 5.
The Company limited by shares issue equity shares with differential rights as to dividend, voting, or otherwise unless the shares with differential rights exceeding the specified percentage of the total voting power.
(a) What is a requirement of a specified percentage of total voting power in case of differential rights issue.
Answer:
As per rule 4(l)(c) of the Companies (Share Capital & Debentures) Amendment Rules, 2019, No Company limited by shares shall issue equity shares with differential rights as to dividend, voting, or otherwise, unless the shares with differential rights shall not exceed 7496 of total voting power including voting power in respect of equity shares with differential rights issued at any point of time.

(b) Is the Company also require a consistent track record of distributable profits for the last three years for such issue?
Answer:
No, not required as clause (d) of rule 4(1) omitted vide MCA notification dated 16th August 2019.

Question 6.
The auditor of Unlisted Public Company having an annual turnover of INR 200 crores as of 31st March 2019 covered under rule 3 of National Financial Reporting Authority Rules, 2018; shall file an annual return under Rule 5 of NFRA Rules, 2018.
What is the time limit to file such returns under Rule 5 as per NFRA (Amendment) Rules, 2019?
Answer:
As per National Financial Reporting Authority Rules, 2018 read with National Financial Reporting Authority (Amendment) Rules, 2019:
Every Auditor referred to in Rule 3 of National Financial Reporting Authority Rules, 2018 shall file a return with the National Financial Reporting Authority on or before 30th November every year in Form NFRA-2.

Note: Vide MCA General Circular dated 5-3-2020, the time limit for filing of Form NFRA-2 for the reporting period Financial Year 2018-19 will be 150 days from the date of deployment of this form on the website of National Financial Reporting Authority (NFRA).

Question 7.
As per National Financial Reporting Authority (Meeting for Transaction of Business) Rules, 2019;
Answer the following:
(I) Is the Video Conferencing option is available for members to attend meetings of the National Financial Reporting Authority?
Answer: As per National Financial Reporting Authority (Meeting for Transaction of Business) Rules, 2019:
Yes, as per Rule 3(6) of said rules: a Video Conferencing option is available.

(II) Who is authorized to decide in advance the date, time, place, and agenda of each meeting of the National Financial Reporting Authority?
Answer:
As per Rule 3(2) of the said rules: The chairperson is authorized to decide in advance the date, time, place, and agenda of each meeting of the National Financial Reporting Authority.

(III) What is the Quorum for Meeting of National Financial Reporting Authority?
Answer:
As per Rule 3(9) of the said rules: The Quorum for Meeting of National Financial Reporting Authority shall be 4 members of which at least 1 member shall be a full-time member.

Question 8.
The Indian Institute of Corporate Affairs notified under Section 150(1) of the Companies Act, 2013 shall create and maintain a databank of persons willing and eligible to be appointed as independent directors.
Prepare the list of details in respect of each person included in the databank to be eligible and willing to be appointed as Independent director?
Answer:
The list of details in respect of each person included in the databank to be eligible and willing to be appointed as Independent director as mentioned below in terms of Rule 3 of Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019:
(a) DIN (Director Identification Number), if applicable;
(b) Income Tax PAN;
(c) the name and surname in full;
(d) the father’s name;
(e) the date of Birth;
(f) gender;
(g) the nationality;
(h) the occupation;
(i) full Address with PIN Code (present and permanent);
(j) phone number;
(k) e-mail id;
(l) the educational and professional qualifications;
(m) experience or expertise, if any;
(n) any pending criminal proceedings as specified in clause (d)of sub-section (1) of section 164;

(o) the list of limited liability partnerships in which he is or was a designated partner along with:

  • the name of the limited liability partnership;
  • the nature of the industry; and (m) the duration- with dates;

(p) the Hst of companies in which he is or was director along with:

  • the name of the company;
  • the nature of the industry;
  • the nature of directorship: Executive or Non-executive or Man-aging Director or Independent Director or Nominee Director; and
  • duration – with dates.

Question 9.
Write Short Note On eCSIN.
Answer:
1. Applicability: Mandatory for members entering into employment with effect from 1 st October 2019 and the Members already holding employment shall mandatorily be required to generate eCSIN not later than 31st December 2019.

2. Any non-compliance with eCSIN Guidelines shall render the members liable for action under the Companies Secretaries Act, 1980 read with First Schedule and Second Schedule to the Company Secretaries Act, 1980.

Question 10.
Write Short Note On UniQuestion Document Identification Number.
Answer:
1. UDIN can be generated by logging onto udin.icsi.edu and will be quoted in the certificate, report, and documents along with the Certificate of Practice Number.

2. ICSI UDIN will be mandatory for prescribed documents signed or certified by a Practicing Member with effect from 1st October 2019.

3. Major significance are:

  • prevent falsification
  • prevent fraud
  • generate trust

4. Any non-compliance with UDIN Guidelines shall render the members liable for action under the Company Secretaries Act, 1980 read with First Schedule and Second Schedule to the Company Secretaries Act, 1980.

Question 11.
Any change in the Capital Structure of the Company during the year includes some specific information which is to be included in the Board Report of the Company as per Secretarial Standard 4 (SS-4). Enumerate the list of specific information regarding changes in capital structure.
Answer:
As per Secretarial Standard 4 (SS-4), any changes in the capital structure of the company during the year, including the following:
(a) change in the authorized, issued, subscribed, and paid-up share capital;
(b) re-classification or sub-division of the authorized share capital;
(c) reduction of share capital or buyback of shares;
(d) change in the capital structure resulting from restructuring; and
(e) change in voting rights.

Question 12:
What disclosures pertaining to the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 are required as per Secretarial Standard 4 (SS-4)?
Answer:
As per Secretarial Standard 4 (SS-4), the disclosure shall include the following:
(a) A statement that the company has complied with the provision relating to the constitution of the Internal Complaints Committee under the Sexual
Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

(b) The details of a number of cases filed and disposed of as required under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Question 13.
Write Short Note On Right of Members to have Copies of the Board Report as per Secretarial Standard 4 (SS-4).
Answer:
1. A copy of the Report along with the financial statement and the Auditor’s Report shall be sent, either physically or in electronic form, to every member at least twenty-one clear days in advance of the annual general meeting.

2. The copies of the above documents can be sent less than twenty-one clear days in advance of the annual general meeting if it is so agreed by members:
(a) holding, if the company has a share capital, the majority in number of members entitled to vote and who represent not less than ninety-five percent of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or

(b) having, if the company has no share capital, not less than ninety-five percent of the total voting power exercisable at the meeting.

3. In the case of section 8 companies, the said documents shall be sent to the members not less than fourteen clear days before the date of the annual general meeting.

Question 14.
As per Secretarial Standard 4 (SS-4), If the Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016 (IBC). In such a case what disclosure is required to be made in Board Report about Corporate Insolvency Resolution Process?
Answer:
The disclosure shall include the following:
(a) details of any application filed for corporate insolvency resolution process, by a financial or operational creditor or by the company itself under the IBC before the NCLT;
(b) status of such application; and
(c) status of the corporate insolvency resolution process, if any, initiated under the IBC.

Question 15.
As per Secretarial Standard 4 (SS-4), discuss the disclosure requirement regarding Risk Management in Board’s Report.
Answer:

  1. A statement indicating the development and implementation of a risk management policy for the company.
  2. Such statement shall, inter alia, disclose:
    (a) Various elements of risk which, in the opinion of the Board, may threaten the existence of the company, and
    (b) Strategy to mitigate such risks.

Question 16.
What general information is required to be disclosed in Board’s report as per Secretarial Standard 4 (SS-4)?
Answer:
As per Secretarial Standard 4 (SS-4), the following general information is required to be disclosed in Board’s report:

  • Overview of the industry and important changes in the industry during the last year;
  • External environment and economic outlook;
  • Induction of strategic and financial partners during the year; and
  • In case of a company, which has delisted its equity shares, during the year or till the date of the Report, the particulars of delisting activity giving details like price offered pursuant to delisting offer, offer period of delisting, number of shares tendered and accepted, the total consideration paid and the holding of the Promoters in the company post-delisting.

Question 17.
Disclosures in case of Issue of Non-convertible securities under Secretarial Standard 4 (SS-4).
Answer:
As per Secretarial Standard 4 (SS-4), the disclosure in case of issue of non-convertible securities shall include the following:
(a) date of issue and allotment of the securities;
(b) number of securities;
(c) whether the issue of the securities was by way of preferential allotment, private placement, or public issue;
(d) brief details of the debt restructuring pursuant to which the securities are issued;
(e) issue price;
(f) coupon rate;
(g) maturity date;
(h) amount raised.

Question 18.
Write Detailed Note On Active Company Tagging Identities and Verification (Active).
Answer:
1. As per Rule 25A of Companies (Incorporation) Amendment Rules, 2019: Every company incorporated on or before the 31st December 2017 shall hie the particulars of the company and its registered office, in e-Form Active (Active Company Tagging Identities and Verification) on or before 25.04.2019.

2. MCA e-form Active (INC-22A) is required to be hied to comply with Rule 25A of the Companies (Incorporation) Amendment Rules, 2019.

3. Following cannot be done if MCA e-form Active (INC-22A) is not done within due date unless e-form Active (INC-22A) is filed:

  • SH-07 (Change in Authorized Capital);
  • PAS-03 (Change in Paid-up Capital);
  • DIR-12 (Changes in Director except for cessation);
  • INC-22 (Change in Registered Office);
  • INC-28 (Amalgamation, demerger).

4. Following companies are not required to file MCA e-form Active (INC-22A):

  • Companies that have been struck off or are under the process of striking off; or
  • Companies under liquidation; or
  • Companies amalgamated or dissolved, as recorded in the register.

5. Following companies are restricted from filing MCA e-form Active (INC-22A):

  • any company which has not filed its due financial statements under section 137 with the Registrar; or
  • any company which has not filed its due annual returns under section 92 with the Registrar; or
  • both with the Registrar.

6. Consequences of non-filing of MCA e-form Active (INC-22A):

  • The Company shall be marked as “Active-non-compliant” on or after 26th April 2019; and
  • shall be liable for action under sub-section (9) of section 12 of the Act
  • The penalty of INR 10,000: Where a company files “e-Form Active”, on or after 26th April 2019, the company shall be marked as “Active Compliant”, on payment of a fee of ten thousand rupees.

Question 19.
Write Short Note on Commencement of Business
Answer:
1. As per section 11 of the Companies Act, 2013, now all newly incorporated Public and Private Companies having Share Capital would be required to obtain a certificate of commencement of business from the concerned Registrar of Companies before commencing the business or exercise of borrowing powers.

2. A public company or a private limited company not having share capital is not required to comply with any other formalities and may commence its business activities immediately after obtaining the certificate of incorporation from the concerned Registrar of Companies.

3. The commencement of business certificate must be obtained within 180 days of incorporation of the company.

4. While filing the application for commencement, each of the Directors of the company must declare that every subscriber of the memorandum has paid the value of the shares agreed to be taken by him/her on the date of the making of such declaration.

5. MCA e-form-INC 20A is required to be filed within 180 days of incorporation of the company for such purpose.
Note: As per special measures under the Companies Act, 2013 in view of the covid-19 outbreak, an additional period of 180 days is allowed for this compliance as per MCA General Circular dated 24th March 2020.

Question 20.
Write Short Note on E-Form PAS- 6?
Answer:

  1. Rule 9A(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 Every unlisted public company governed by this rule shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014.
  2. The Form PAS-6 within sixty days from the conclusion of each half year.
  3. The certification by a company secretary in practice or chartered accountant in practice is mandatory.

Question 21.
Write a Short Note on the Compliance Monitoring System of MCA.
Answer:
1. The Ministry of Corporate Affairs introduced :

  • MCA has launched an Artificial Intelligence initiative known as the “Ministry of Corporate Affairs – Compliance Monitoring System” (MCA-CMS)
  • to monitor the companies’ compliance level and trace the transparency of their affairs.

2. MCA-CMS is the online portal invented by MCA for issuance of electronic SCN to the company or director or any officer in default regarding any non-compliance of any provisions of the Act.
Also, it mandates recipients of the SCN to submit replies through the same portal electronically.

3.MCA-CMS has already started issuing notices to the company or its directors for non-compliance.

4. Currently SCNs are being issued only for the non-compliance of section 96 (Annual General Meeting) and section 204 (Secretarial Audit) and recipients of such SCN must file a reply within 15 days of the date of SCN.

Question 22.
Write a Short Note on ICSI RVO.
Answer:
1. To enable the members of the Institute/others to practice as Registered Valuers, the Institute incorporated ICSI-RVO.

2. ICSI- RVO is a Section 8 company that has been formed with the intent to enroll, register, educate, train, promote, develop and regulate Registered Valuers Rules while establishing and promoting high standards of practice and professional conduct and furthermore, to promote good professionalism, ethical conduct, and competency of Registered Valuers for ensuring the quality of valuation work.

3. The IBBI recognized ICSI RVO as a Registered Valuers Organisation for the Asset Class(es):

  1. Land and Building ;
  2. Plant and Machinery ;
  3. Securities or Financial Assets.

Question 23.
As per Companies (Meetings of Board and its Powers) Second Amendment Rules, 2019, notified by Ministry of Corporate Affairs vide Notification dated 18th November 2019, explain the approval limits for related party transactions with the prior approval of the members of the company by an ordinary resolution?
Answer:
MCA vide Notification dated 18th November 2019 has amended the Companies (Meetings of Board and its Powers) Rules, 2014 to provide a new threshold limit for contracts or arrangements entered into with related party under section 188 with the prior approval of the members of the company by an ordinary resolution:

  1. Sale, purchase, or supply of any goods or materials directly or through the appointment of an agent amounting to 10% or more of the turnover of the company.
  2. Selling or otherwise disposing of, or buying, property of any kind directly or through the appointment of an agent amounting to 10% or more of the net worth of the company.
  3. Leasing of property of any kind amounting to 10% or more of the turnover of the company.
  4. Availing or rendering of any services directly or through the appointment of an agent amounting to 10% or more of the turnover of the company.

Question 24:
Write Short Note On Companies Fresh Start Scheme, 2020?
Answer:
1. The Scheme “Companies Fresh Start Scheme, 2020” gives an opportunity to the defaulting companies and to enable them to file the belated documents on the MCA-21 registry, the Central Government in the exercise of powers conferred under section 460 read with Section 403 of the Companies Act, 2013.

2. It is a one-time opportunity provided by MCA to the companies.

3. This Scheme shall come into force on 1st April 2020 and shall remain in force till 30th September 2020. Further, the extension is granted till 31st December 2020.

4. Major benefits of CFSS, 2020:

  • No additional fees are required to be paid in the relevance of any period.
  • Immunity from the prosecution.
  • No penalty on account of delay in filings.

Question 25.
Write a Short Note on Special provisions for Inactive Companies under the Companies Fresh Start Scheme, 2020 (“CFSS, 2020”)?
Answer:

  1. This fresh start scheme also provides a major benefit to defaulter inactive companies.
  2. Every defaulter inactive company can along with the filing of documents under this scheme also apply for any of the following two options as per their choice.

Option 1: Apply to get themselves declared as “Dormant Company under section 455 of the Companies Act, 2013. This option can be availed by filing the Form MSC-1 electronically by paying a nominal fee on the said form;

Option 2: Apply for striking off their names from the register of companies. This option can be availed by electronically filing the Form STK-2 along with a deposit of nominal fees prescribed for this form.

Question 26.
Write Short Note on Non-Applicability of CFSS, 2020?
Answer:
The CFSS, 2020 shall not apply:

  1. To Companies against which action for final notice for striking off the name u/s 248 of the Companies Act, 2013 (previously Section 560 of the Companies Act, 1956) has already been initiated by the designated authority;
  2. Where an application has already been filed by the Company for striking off the name of the Company from ROCs;
  3. Companies amalgamated under the scheme of compromise & arrangement;
  4. The Company applied for Dormant Status under section 455 of the Companies Act, 2013 before the scheme introduction;
  5. Vanishing Companies.

Question 27.
Explain the detailed provisions regarding “Application for issue of immunity”, “Certificate of Immunity” and “Effect of getting immunity Certificate” under CFSS, 2020?
Answer:
1. The application for seeking immunity by the government in relation to belated documents needs to be filed electronically in the Form CFSS- 2020. No fees shall be charged for filing an application of immunity with the government.

2. This application can be filed by the company after closure of the scheme and after the documents for which immunity is being asked are filed by the company or taken on record or approved by the designated authority as the case may be. It may be noted that under any circumstances.

3. The application for seeking immunity can’t be filed after the expiry of 6 months from the closure of the scheme.

4. Circumstances where immunity shall not be provided:

  1. In cases where the matter is already pending before the court of law.
  2. In cases where the management disputes of the company are pending before the court of law.
  3. No immunity shall be provided in case order for conviction or penalty has been passed by adjudicating authority or by the court under the Act and no appeal against such order has been preferred against such order of the court or adjudicating authority as the case may be before this scheme has come into force Le. 1st April 2020.

5. Order granting Immunity: After the e-form CFSS 2020 has filed by the Company online, an immunity certificate shall be issued by the designated authority under this scheme after the authority is satisfied with the claim and declaration made in the Form: CFSS-2020.

6. Effect of getting Immunity: The concerned designated authority shall withdraw all the prosecutions pending before the concerned authorities. But the proceedings that shall need to be withdrawn should be those relating to the default for submission of the documents or statements and not for any other default for which immunity is not allowed under the scheme. So, accordingly, immunity shall be provided from the designated authority without any further action pending on their part.

Question 28.
Suppose XYZ Limited is a Listed Company. The details of donation made by the listed entities as follows:
1. Donated INR 1 crore towards “Prime Minister’s National Relief Fund” on 8th January 2020.
2. Donated INR 2 crores towards Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)” on 2nd June 2020.
3. Donated INR 1 crore towards “Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents are including widows” on 30th June 2020.
(A) What is the total amount contributed towards CSR as per Schedule VII of the Companies Act, 2013 for Financial Year 2019-2020?
(B) What is the total amount contributed towards CSR as per Schedule VII of the Companies Act, 2013 for Financial Year 2019-2020?
Answer:
1. MCA notification dated 26th May 2020 inserted PM CARES Funds in Schedule VII to the Companies Act, 2013. It is deemed to have come into force on 28th March 2020.
Further, the “Prime Minister’s National Relief Fund” is already part of Schedule VII to the Companies Act, 2013.

2. MCA notification dated 23rd June 2020 inserted “Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows”.

It shall come into force on the date of its publication Le. 23rd June 2020. (A) Therefore, the total amount towards CSR contribution by XYZ Limited for Financial Year 2019-2020 as per Schedule VII is equal to:

Prime Minister’s National Relief Fund + Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund.
= 1 + 2 crores
= 3 crores.

Note: Insertion of PM CARES Funds in Schedule VII to the Companies Act, 2013 deemed to have come into force on 28th March 2020.

(B) Therefore, the total amount towards CSR contribution by XYZ Limited for Financial Year 2020-2021 as per Schedule VII is equal to a donation towards “Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows”
= 1 crore.

Note: Insertion of “Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents are including widows” in Schedule VII to the Companies Act, 2013 have come into force on 23rd June, 2020.

Question 29.
The data of Alpha Private Limited are as follows as per the latest audited financial statements:

Paid-up share capital INR 9 crores
Turnover INR 50 crores

The unaudited financial statements figures estimated as follows:

Paid-up Share Capital INR 10.5 crores
Turnover INR 50.4 crores

Answer with reason, whether the appointment of whole-time company secretary is mandatory in terms of provisions of the Companies Act, 2013 for FY 2020-21 in Alpha Private Limited.
Answer:
1. As per Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020 the Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 shall be substituted.

2. As per New Rule 8A of the said rules read with Section 203 of the Companies Act, 2013, Every private company which has a paid-up share capital of ten crores rupees or more shall have a whole-time company secretary.

3. The paid-up share capital as per the last date of the latest audited financial statement shall be taken into account for the said purpose.

Therefore, the paid-up capital of Alpha Private Limited falls below 10 crores.
Thus, the appointment of a whole-time company secretary is not mandatory in Alpha Private Limited for FY 2020-21.

Question 30.
The financial figures of Beta Private Limited are as follows as per the latest audited financial statement of the Company.

Particulars Amount (INR in Crores)
Paid-up Share Capital 80
Turnover 2000
Outstanding Loan from banks 150

Answer with reason, whether a secretarial audit is applicable on Beta Private LfiUlted for the FY 2020-2021 as per the provisions of Section 204 Companies Act, 2013 read with relevant rules?
Answer:
1. As per Section 204(1) Companies Act, 2013:
Every listed company and a company belonging to another class of companies as may be prescribed shall annex with its Board’s report made in terms of sub-section (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.

2. As per Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended by Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020:

The other class of companies shall be as under
(a) Every public company having a paid-up share capital of fifty crore rupees or more; or
(b) Every public company having a turnover of two hundred fifty crore rupees or more; or
(c) Every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.

Explanation: It is hereby clarified that the paid-up share capital, turnover, or outstanding loans or borrowings as the case may be, existing on the last date of the latest audited financial statement shall be taken into account.

Therefore, Beta Private Limited is a private company having outstanding loans from banks of INR 150 crores. Referring to discussed provisions, the secretarial audit is applicable on Beta Private Limited for the FY 2020-2021.

CS Executive Company Law Questions and Answers

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