C CA Final Law Test Series (OLD)

Question 1
Mr Azad, an independent director of Freedom Company, was appointed in the AGM for a
period of three years. After the expiry of 3 years he was re-appointed for a period of 5
years. Considering that though Mr Azad has completed two tenures but hasn’t completed
ten years in total, therefore he may be appointed in the upcoming AGM for another 2 years
to complete his total term of 10 years. Conferring in the light of the Companies Act, 2013,
state the validity of reappointment of Mr Azad for further term in the company. (4 Marks)

Question 2
Examine the following with reference to the provisions of the Companies Act, 2013:Mr.
Arthav, a director resigns after giving due notice to the company and he forwards a copy of
resignation in e-form DIR-11 to the Registrar of Companies (RoC) within the prescribed
time. What would be the status of Mr. Arthav if the company fails to intimate about the
resignation of Mr. Arthav to RoC? (4 Marks)

Question 3
(a) The Board of Directors of Superwood Limited decides to appoint on its Board, Mr.
Ramakant as a nominee director upon the request of a bank which has extended a long
term financial assistance to the company. The Articles of Association of the company do not
confer upon the Board any such power. Also, there is no formal agreement between the
company and the bank for any such nomination. (2 Marks)
(b) State the legal position in the given situation: Mr. Financer is a CEO in a public company.
State whether the limits on managerial remuneration under section 197 and schedule V
apply to Mr. Financer. (2 Marks)

Question 4
Mr. Doubtful was appointed as Managing Director of Carefree Industries Ltd. for a period of
five years with effect from 1.4.2011 on a salary of ₹ 12 lakhs per annum with other
perquisites. The Board of directors of the company on coming to know of certain
questionable transactions terminated the services of the Managing Director from 1.3.2014.
Mr. Doubtful termed his removal as illegal and claimed compensation from the company.
C CA Final Law Test Series (OLD)

Meanwhile the company paid a sum of Rs. 5 Lakhs on ad hoc basis to Mr. Doubtful pending
settlement of his dues. Discuss whether:
(i) The company is bound to pay compensation to Mr. Doubtful and, if so, how much.
(ii) The company can recover the amount of Rs. 5 Lakhs paid on the ground that Mr.
Doubtful is not entitled to any compensation, because he is guiding of corrupt practice.
(4 Marks)

Question 5
Choose the correct option from the available alternatives: (9 x 1) Marks

1. No company shall appoint or re-appoint any person as its MD/WTD/Manager for a

term exceeding ____ years at a time.
a. Three
b. Ten
c. Five
d. Fifteen

2. On the basis of the principle of proportionate representation mentioned under Section

163, a public company shall mandatorily appoint:
a. Two third of the directors of the company
b. Half of the directors
c. Two third of Managing Directors
d. None of the above

3. The maximum remuneration payable to all directors (including MD, WTD, and
Manager) is ____ of Net Profits of the Company.
a. 3%
b. 5%
c. 10%
d. 11%

4. A and B were the directors of ABC Ltd. During the financial year 2015-16 the directors
has re-instated the profit of the company by showing a profit of Rs.50 Crores whereas
the actual profit was Rs. 30 Crores. What is the course of action by ABC ltd. Against A
and B who are no more a director?
a. Reduce the remuneration given by the company by the percentage of profit received
by them
b. Recover the amount of remuneration paid to the directors
c. Both a and b
d. Cannot do anything against the directors
C CA Final Law Test Series (OLD)

5. Any payment made to a MD OR WTD or manager for the compensation for loss of
office shall not exceed the remuneration which he would have earned if he had been in
office for the remainder of his term or for ___ years, whichever is shorter.
a. 10
b. Five
c. Three
d. One

6. Mr. Ashok, director of the company has convicted for an offence recently under Section
188 of the Companies Act, 2013. Which of the following is incorrect?
a. Such director should vacate his office under section 167.
b. He is disqualified for directorship in such company.
c. He is disqualified for appointment in any other company.
d. None of above is incorrect.

7. Total Income and Turnover of Taza Ltd is 900 Lakhs and 110 Crs. respectively. Mr. Hari is
having transactions with Taza Ltd. of 30 Lakhs in the preceding FY. Which of the
following is in accordance with Company Law?
a. Spouse of Mr. Hari is eligible to be appointed as an independent director.
b. Mr. Hari is eligible to be appointed as an independent director.
c. Both are NOT eligible
d. Both are eligible

8. The casual vacancy occurred by the removal of the director under section 169, can be
filled up by passing:
a. Resolution by circulation of board
b. Ordinary resolution in GM only
c. Board resolution in the board meeting
d. None of the above

9. If any person has failed to be appointed as director of any company in the general
meeting then, he shall not be eligible for the appointment in such company by the board
as:
a. Additional Director
b. Nominee Director
c. Alternate Director
d. None of the above